January 04, 2023

The Perils of Constructive Dividends in Divorce Cases

Indiana Lawyer

Business litigation and family law partner Drew Soshnick authored an article for Indiana Lawyer titled “The Perils of Constructive Dividends in Divorce Cases,” which discusses potential unintended tax consequences when dividing a family-owned corporation at divorce.

Soshnick explains that in divorce cases, most attorneys rely on § 1041 of the Internal Revenue Code for tax-free transfers of marital property incident to a divorce decree. He notes that a review of case history and clarifying input from taxing authorities can help to avoid issues such as “cashing out” one spouse from a business owned by both divorcing spouses.

Soshnick adds that a firm understanding of prior precedent and current Treasury Regulations is essential to properly understanding and allocating tax consequences and avoiding unintended tax consequences.

The full article is available for Indiana Lawyer subscribers.
Full Article

The Faegre Baker Daniels website uses cookies to make your browsing experience as useful as possible. In order to have the full site experience, keep cookies enabled on your web browser. By browsing our site with cookies enabled, you are agreeing to their use. Review Faegre Baker Daniels' cookies information for more details.