I WAS DIVORCED IN 2008 AND MY HUSBAND AND I OWNED A BUSINESS. IN THE DIVORCE HE BOUGHT ME OUT OF THE BUSINESS. WHAT IS THE LEGAL WAY FOR HIM TO CLAIM HE IS PAYING ME OFF AND AM I RESPONSIBLE FOR PAYING TAXES ON THIS AMOUNT FROM THE BUYOUT?
I've already tried...
I HAVE TRIED COMMUNICATING WITH HIM AND HE REFUSES TO SPEAK WITH ME ANY MORE ABOUT THIS ISSUE. HE HAS SENT ME A 1099 WITH THE AMOUNT FIRST UNDER NONEMPLOYEE COMPENSATION AND THEN CHANGED IT TO OTHER INCOME. I DID NOT WORK FOR THIS COMPANY AT ALL LAST YEAR.
Answers
Expert
The 1099 does not determine the tax treatment of the payment. You had a tax basis in the business when you got divorced. The payment you received was most likely partially interest and partially a sale of your interest in the business. The interest would be reported on schedule B and the gain on form 4797.
About the Expert
I’m a former IRS Agent. I’ve had my CPA license in Colorado since 1996. In addition to tax return preparation and planning, I offer tax advice and tax resolution services. View Profile
THANK YOU FOR YOUR TIME BUT GUESS IT IS TIME TO GO SEE AN ATTORNEY AS I AM LOSING SLEEP OVER THIS MESS. AGAIN THANK YOU.
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