The starting point in determining a person’s income is Line 150 from their most recent income tax returns. For self-employed individuals, Line 150 is often adjusted when calculating support payments to truly account for total monetary benefits received.
Due to the variable nature of self-employment income, professional valuations are crucial. The same can be said for business valuations. Relevant financial documents often rely on self-report—forensic accounting experts may be called upon when necessary.
The value of businesses are typically divided equally between parties. A number of strategies can be relied upon to mitigate costly tax implications or liquidation. Consult a family lawyer for guidance.
Your spouse is entitled to half the value of your business. Common exclusions include the value of assets that you brought into the relationship and any gifts or inheritances you received that remain traceable to the business.
You may keep the business provided you pay the equalization value of your spouse’s one-half interest. If you are unable to satisfy equalization payments with assets outside of the business, you may have to encumber, sell, or liquidate your business to satisfy the equalization payment. Other options available through out-of-court negotiations.
It is highly unlikely that your spouse will become a shareholder in your business if there are other feasible ways of dividing the value of your business, including reapportioning other assets.
Information about third-party shareholders and owners with respect to the business should be disclosed to the extent that there is sufficient information to accurately assess the value of your interest in the business.
In most situations, no. Forensic accounting is a costly and timely exercise that costs tens of thousands of dollars, although it may be warranted under highly suspicious circumstances.
The value of the business may be reduced by a minority shareholder discount provided the value of your interest in the business is affected by the fact that others have control of the business.
As the valuation is used to assist both parties in resolving the issue of business division, both parties share the cost.
Yes. However, the value of the business when you inherited it, or at the time of relationship commencement—whichever is later—is an exclusion to family property, which will be deducted from the value of the business now subject to division.
Jessica England and Louise Lam are a team of family law professionals in Vancouver, BC that strive to protect clients and their children from the hardships of separation, and help them to build a brighter and happier future. We are passionate about what we do because we affect meaningful and positive changes for families going through separation. We bring over 20 years of family law experience to the table and we are skilled in dealing with even the most complex and challenging situations.
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