What tax category does this fall under?

[killerzoey]

What is the name of your state (only U.S. law)? HI

I am going through a divorce and finding out more and more about what my STBX lives off of. There is a substantial amount of money that is not reported on his taxes, and I want to know what the possibilities are for this being legal.

He gets:

Apprx. $6K a year as reported on his K-1's (2 of them).
$12K a year in gift money from his mom.

But then...
there are deposits of approximately $20K additional money that is not accounted for on his tax forms.

I have never seen these checks and never knew until now the amount. I used to think it was trust money but now he says it's money his mom gets from investment property (through the LLC set up for the family, from which this money is distributed), and it is passed on to him.

I do not really know for sure, though:
If the money really goes first to his mom and then to him.
OR
If his mom has it set up so that the money goes directly to him. I tend to think it's the latter but again, I can't be sure at this time.

Either way, is there a way that this can be structured so that it is completely legal for him to not even mention the receipt of this money on his taxes? Again, he claims it's not "trust money".

I am no tax expert but wouldn't the money have to be reported and then proved to be non-taxable?

He failed to submit anything divulging the structure of these payments in discovery, as requested. Probably going to try to claim it's not something he can count on in the future, therefore off limits for child support, but that's another subject, I'm sure.

Thanks in advance.

 

[tranquility]

How can anyone guess where the income is from?

 

[killerzoey]

I know where it is from. It is from income from commercial property rental.

What I am wondering is if there is some obvious tax loophole in which this would be not required to be reported.

I have no idea personally as I am not a tax person. But it might be obvious to someone who is.

 

[tranquility]

How is the rental held? Who is on title? Was the money a distribution or guaranteed payment or return or capital?

No one can guess the "loophole". Get the paperwork, find the number.

 

[davew128]

OP, there is no correlation between money an owner receives from a K-1 entity and the income tax amount reported on the K-1. The two items have nothing to do with one another. In the case of an LLC, amounts paid to an LLC owner from the LLC owning solely real estate are most likely capital distributions which are 99% of the time NOT income to the owner.