Bergen County divorce lawyer Paul Goldhamer, Esq. is a founding partner at the NY & NJ law firm of Kantrowitz, Goldhamer & Graifman. Mr. Goldhamer was selected by the prestigious Superlawyers.com as a “Super Lawyer” in 2014 for his work in matrimonial law and estate law. Mr. Goldhamer also keeps busy with teaching, lecturing, charity work and as a guest on various media outlets.
From Paul Goldhamer, Esq.:
The new Tax Law, Divorce & Business Valuations:
There are reasons to delay a dissolution. Tax-driven divorce issues require caution. One is how private businesses should be valued. This has always been an important component of divorce settlements.
But the new tax law increases the cash flow of certain pass-through entities — businesses where the taxes on the earnings are paid by the owner, not the company — in a way that may raise their value. With increased cash flow and reduced taxes, a business could have a substantial increase in value. The Forensic Accountants will have to examine the result. A family owned business is almost always the most contested asset in a divorce.
It affects many issues: child support, alimony & sometimes Equitable Distribution. You must get the valuation done correctly. Higher cash flow from the change in the tax law this year will not be known until the business owner files a tax return next year. The difference can be big or small. A good accountant can run the numbers both ways. But, not knowing that exact valuation throws more uncertainty into the negotiations. So for couples going through a divorce now, and expecting a big increase in the value of their business next year, it might be better to postpone.