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What is the Significance of Pass-Through Income from a S Corporation in an Orlando, Florida Area Divorce Case?

Undistributed pass-through income that has been retained by a corporation for corporate purposes does not constitute income within the meaning of Florida Statutes chapter 61 on Dissolution of Marriage, Support and Time-Sharing. Specifically, undistributed pass-through income that has been retained for corporate purposes is not available income under Florida Statutes section 61.046(7) or business income under Florida Statutes section 61.30(2)(a)(3). 

This is because the undistributed pass-through income will be used by the corporation to maintain corporate operations and therefore cannot be used by a shareholder spouse to satisfy financial obligations imposed upon him/her by a judge in a dissolution of marriage case in the Orlando, Florida area. 

In contrast, where undistributed pass-through income has been retained for non-corporate purposes, such as to shield this income from the reach of the other spouse during a dissolution of marriage action in the Orlando, Florida area, the improper motive for its retention makes it available income under Florida Statute on business income. 

This is a very important point because it means that the pass-through income from a S corporation can be considered income for the purpose of calculating alimony, child support, and attorney’s fees. That can mean that the non-corporate spouse could receive a lot more money because of that principal of law in their Orlando, Florida area dissolution of marriage case. Most people want to obtain all they are legally entitled to in an Orlando, Florida area divorce case. Having this knowledge could help you in trying to accomplish that goal. 

The court case that explains the analysis of pass-through income is Zold v. Zold, 911 So. 2d 1222 (Fl. 2005). This Florida Supreme Court case has a lengthy analysis on the subject of pass-through income from an S corporation. 

If you have more questions regarding a Marital and Family Law matter, you may call Ann Marie Giordano Gilden at Ann Marie Giordano Gilden, P.A. at 407-732-7620 and set an initial consultation

 

This article is for informational purposes only and does not form an attorney client privilege. 

 

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