When some marriages breakup in Maryland and elsewhere, one spouse may attempt to hide assets in order to try and reduce the size of their spouse’s share of the marital assets or to minimize the amount of child or spousal support to be paid. Finding such assets, especially if private investigators are used, can greatly increase the expenses of a divorce. Often, however, past tax returns, especially those filed before there was any indication that the marriage was troubled, may furnish valuable clues.
Small business owners, in particular, may be especially prone to attempting to hide assets. This is especially true if the business deals in cash. Past tax returns can show expenses taken for depreciation of equipment and other capital assets purchased in the past or Sec. 179 expensed off deductions in the year of purchase. Other past expenses for inventory to be sold is an indication of what goods should still be on hand or income that should have been reported for its sale if it is gone.
Looking for safe deposit boxes can also be an important way of discovering hidden caches of cash. Often errant spouses, if they have been hiding cash, may be eager to avoid court testimony concerning it for fear of tax consequences. This can prompt them to offer more in the divorce settlement negotiations. Schedule B of a tax return can reveal mutual fund investment, banks and other sources of interest and dividends in the past. Other useful schedules on past tax returns include Schedule D showing capital gains and losses, and Schedule E, which relates to rental income and royalties, as well as income from partnerships and S corporations.
Experienced divorce attorneys know what to look for when it comes to hidden assets. If such assets are found, that spouse could end up losing more than what he planned on hiding. It’s important to make sure your interests are protected during a divorce so you can get all of what you deserve.
Source: Huffington Post, “Using Tax Returns to Unearth Hubby’s (or Wifey’s) Hidden Assets” Julian Block, Dec. 16, 2013