Anyone want to guess what this money is?

[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 soon-to-be-ex (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. I also want to know what category this money falls under. He claims it's not trust money but what else could it be that he doesn't have to claim it as income?

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?

We're running short on time to compel him to produce this info before divorce trial, so I'm trying to sort of figure it out myself in the hopes of avoiding continuance.

Thanks in advance for any and all speculation.

 

[Dandy Don]

What does STBX stand for?

 

[Just Blue]

What does STBX stand for?

STBX = Soon to be Ex (wife or hubby).

 

[tranquility]

duplicate post

 

[curb1]

If STBX is receiving a gift of $12,000 per year it is not taxable income for him and does not need to be reported by him.

 

[killerzoey]

If STBX is receiving a gift of $12,000 per year it is not taxable income for him and does not need to be reported by him.

Yes, I'm aware of that but there is another $20K on top of that that is not reported. The fact that his mom is careful to stay within the $12K limit on the gift money makes me think the $20K or so must be structured in some way that makes it tax-exempt. It's just baffling to me that there is no paperwork submitted to the IRS by him about this money. Maybe it's additional gift money and his mom pays the taxes on it? Who knows. I will probably never know unless I subpoena his mom, who lives in another state. This wouldn't be so important if he wasn't trying to wiggle out of child support. I feel like I need to get to the bottom of this money so I can prove it is ongoing. He may begin to cash the checks or do something else with it in the future.

 

[latigo]

If it were me, I would concentrate on learning whether or not you have a marital property interest in his “secret” income and stop worrying about the IRS! Which could conceivable come back and take a bite out of the marital assets.

Set your priorities. Is it more important that you "avoid a continuance" and get the divorce behind you and possibly leave money on the table, or efficiently pursue discovery?

 

[tranquility]

What latigo said. Completely, totally, without a doubt. Guessing will make a person crazy, decide your course.