Should Long Term Capital Gains Be Input Into DissoMaster For Support?

[ProPerDoper]

What is the name of your state? CA

Sale of residential rental/investment property occurred in 2006. In October of 2006, trial on reserved issues including support was held. Support was calculated, but ~ $85,000 of long term capital gains from sale of real estate investment rental property by one of the parties was not input.

Support was requested against those long term gains, but denied as "argument not pursuasive".

Judges rarely advise why they rule the way they do. If the gain was from investments such as stocks/bonds or other regularly accepted funds, the court would have input that into the DissoMaster without question.

I have read case law in the past where residential real estate equity cannot be considered for support. (Orange County CA case...I believe) Does this same prescident apply for residential real estate clearly held as investment property?

 

[nextwife]

The problem is that it is a One Time event. The result of many years of owning and managing a property, and can't be expected to repeat annually. I sold a property that I owned for years before becoming a parent, and I sure did not "share" my return on investment with my kid. The return did not just occur in the one year that was year it was liquidated, it occurred because of all those years I fed money INTO it..

 

[ProPerDoper]

The problem is that it is a One Time event. The result of many years of owning and managing a property, and can't be expected to repeat annually. I sold a property that I owned for years before becoming a parent, and I sure did not "share" my return on investment with my kid. The return did not just occur in the one year that was year it was liquidated, it occurred because of all those years I fed money INTO it..

Hmm.... While I certainly understand (and agree) with your premise, I still wonder what California Family Code or Case Law prescident says about a one-time gain in investment.

Let's say that I invest $50k into a stock fund, and in the first year I gain $25% growth, then sell it. The capital gains will most certainly show up as reported income, and I'll pay income tax on it. The court would surely input those gains into the DissoMaster if support was at issue.

I agree that this example doesn't address the issue you raised about gains being accumulated over a number of years, vs. all reported at time of sale, but there must be other examples of gain at time of sale that the court would consider income....I wonder?

 

[Perky]

Was the real estate considered marital property at the time of the divorce?

 

[ProPerDoper]

Was the real estate considered marital property at the time of the divorce?

Good question. I thought about this omission after the original post.

No...it was separate property.

 

[nextwife]

How long term was the investment?

 

[ProPerDoper]

How long term was the investment?

Another good point. The investment period, or the time it was actually rented out vs. used as a primary residence was between mid 1992 thorough mid 2006.