Retained Earnings in a Sub-S Corporation. The treatment of Sub-S retained earnings that pass-through to the parent-shareholder’s tax return has long vexed mediators and lawyers in support cases. When calculating support, do we include the income which is taxable to the recipient but undistributed to him? In a case of first impression, the Supreme Judicial Court has weighed in with some useful guidance. Courts must now determine, on a case-by-case basis, “what portion (if any) of that pass-through income realistically and fairly is or should be deemed available to the shareholder for purposes of paying child support.” Courts must (1) consider “a shareholder’s level of corporate distributions;” (2) “evaluate the legitimate business interests justifying retaining corporate earnings;” (3) “weigh affirmative evidence of attempts to shield income by means of retained earnings . . . In that regard, the corporation’s history of retained earnings and distributions may be relevant.” J.S. v. C.C., 454 Mass. 652 (9/10/09)
- Alimony
- Arbitration of Family Law Issues
- Attorney-Client Privilege
- Attribution of Income
- Beneficiary Designation
- Child Support
- College
- Contempt
- Dependency Exemptions
- Division of Assets
- Earned Bonus
- Earning Capacity / Imputed Income
- Earnings in a Sub-S
- Emancipation
- Financial Restraining Order on Assets
- Foreign Custody
- Grandparent Visitation
- Health Insurance
- Imputing Income
- Income Equalization
- Income of Second Spouse
- Inheritance
- Inherited Assets
- Joint Legal Custody
- Judicial Discretion
- Jurisdiction
- Life Insurance
- Marital Estate
- Mediation / Unauthorized Practice of Law
- Merger and Survival
- Modification
- Non-Disparagement Provision
- Parent Coordinator
- Parental Fitness
- Parenting Time
- Plan Document Rule
- Postnuptial
- Prenuptial
- QDRO
- “Real Advantage” Standard
- Restraining Order
- Retained Earnings
- Retroactive Support
- Rights of Unmarried Partners
- Same Sex Marriage
- Self-Employment Income
- Stock Options
- Valuation Date
