I am required to pay my ex half of my partnership distributions annually. I've noticed it's not being reported as income on his tax returns. Given this is a court mandated obligation, shouldn't he report this to the IRS and pay taxes on his share?
If you are paying him in the form of court-ordered alimony payments, then he should be reporting the distributions as income. However, if he is getting his own separate K-1 from the partnership, then he only needs to report the amount of income (and deductions) shown on the K-1.
Ms. Willi is a tax attorney, CPA, and Ohio-Certified Specialist in Estate Planning, Trust & Probate Law, with offices in Westerville, Ohio. She serves client families and private business owners throughout Ohio. Ms. Willi responds to Avvo questions as a public service to help educate and provide general guidance to questioners, but her responses are not legal advice and do not create an attorney-client relationship. Her posts are provided for informational purposes only and are not a substitute for advice provided by an attorney or licensed tax professional. Her phone number is 614-890-0500 and her website is www.willilaw.com.
I agree with my above colleague. I would add that an important factor is whether he is still listed as an owner in the partnership records. It does appear that either way if it's court ordered alimony or distributions via an ownership interest (K-1 Income) he should be reporting it as income.
I agree with the two previous attorneys. This is just a matter of what the income is classified as on your ex's return, but it appears that either way your ex has to claim the income. If this is classified as court ordered alimony you will need to take the deduction on your tax return and your ex will pick up the income on theirs.
Mr. Lively is a Certified Tax Specialist by the State Bar of California Board of Legal Specialization. Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.
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