Define "Self Employed"

[ProPerDoper]

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

I have an upcoming court date on my motion for modification of support. I have primary physical custody of our two young children.

I want to insure against a delay in the hearing going forward by objection from my Ex as to complete financial disclosure on my part.

She will argue that I am self employed and should provide tax returns from my employer. I will argue that I am in fact not self employed but rather paid by salaried W2 earnings via Administaff. (payroll functions and HR outsourced)

It is true that am 1 of 3 shareholders of stock in a small business established as a corporation, ( S or C...I can never remember) with 42% ownership. However, with three board members I am clearly unable to make unilateral decisions about wages, expenses, etc.

There is a concern over right to privacy for the other two owners, yet I don't want to delay the motion.

Am I obligated to provide income tax information on the company for the purpose of this motion?

 

[meg_dogg]

Do you get profits as well from your share? or do you only recieve the w-2 salary?

are your profits/losses from your share claimed on your personal income tax returns? if they are your own personal tax return should be sufficient. i agree with the other share holders as to not disclosing that information without a court order requiring it, smart business sence, you know

 

[ProPerDoper]

Do you get profits as well from your share? or do you only recieve the w-2 salary?

are your profits/losses from your share claimed on your personal income tax returns? if they are your own personal tax return should be sufficient. i agree with the other share holders as to not disclosing that information without a court order requiring it, smart business sence, you know

I have received bonus income in the past, depending upon the business level from year to year, but it is disclosed as W2 income. No bonuses have been received for several years now, and in this economy it's highly unlikely that any of us will receive one through the next year.

As a matter of fact, the three owners have been operating having to fund their own territory expenses since about March 09 without reimbursement. There's a section on the I&E that asks about un-reimbursed business expenses, and I attached a declaration with each months expense report attached stating the lack of reimbursement under oath. Not sure what effect this will have at the hearing on Dissomaster input.

At this point, my greatest concern is a delay of hearing due to my lack of financial disclosure. I need to determine if the company income tax disclosure is required by Family Code or Local Rule given our corporate status.

 

[meg_dogg]

it is only required IF YOUR shares are NOT reported on w-2 earnings, since they are, the business records are not required. she is obviously trying to claim you have more income that is NOT reported on your w-2, it is her obligation to prove this to be the case, and short of you being busted for tax evasion, not a chance of her proving anything. what might help any delay is a statement from the company (the other two shareholders) that each of your earning are reported on your w-2's, maybe even one from the outsourced HR company that handles it, that should suffice in preventing the judge from even contemplating the possibility of her claims. (worked for my husband)

 

[LdiJ]

I have received bonus income in the past, depending upon the business level from year to year, but it is disclosed as W2 income. No bonuses have been received for several years now, and in this economy it's highly unlikely that any of us will receive one through the next year.

As a matter of fact, the three owners have been operating having to fund their own territory expenses since about March 09 without reimbursement. There's a section on the I&E that asks about un-reimbursed business expenses, and I attached a declaration with each months expense report attached stating the lack of reimbursement under oath. Not sure what effect this will have at the hearing on Dissomaster input.

At this point, my greatest concern is a delay of hearing due to my lack of financial disclosure. I need to determine if the company income tax disclosure is required by Family Code or Local Rule given our corporate status.

You are a shareholder and work for a closely held corporation. You own 42% of the shares which is clearly more than a third. A decent attorney can certainly make a case for you having to provide a copy of the corporation's tax return, and I can certainly see a judge ordering you to provide the same. I can see that even more particularly due to the fact that you are claiming non reimbursement for company related expenses.

You would be in a stronger position to argue against it if you were an S-corp, because in that instance your share of the company's profits would flow through to your personal return via a Schedule K1. However, based on your answers to previous questions it doesn't appear that you are an S-corp.

 

[nextwife]

You are a shareholder and work for a closely held corporation. You own 42% of the shares which is clearly more than a third. A decent attorney can certainly make a case for you having to provide a copy of the corporation's tax return, and I can certainly see a judge ordering you to provide the same. I can see that even more particularly due to the fact that you are claiming non reimbursement for company related expenses.

You would be in a stronger position to argue against it if you were an S-corp, because in that instance your share of the company's profits would flow through to your personal return via a Schedule K1. However, based on your answers to previous questions it doesn't appear that you are an S-corp.

This reminds me of a gentlemen I sold a house to years ago. He HAD worked for McDonalds, in the corporate operation. He (and his family) was relocating here to buy a formerly CORPORATE owned store, and operate it as a franchise. HE was under strict non-disclose agreement which forbade him releasing numbers regarding the stores income & expenses. This made financing his home purchase problematic, to say the least. We found a local lender who underwrote it on faith and reputation and never did get income figures for the corporate owned period..

In looking back, it occurs to me that such a scenario could also impact a CS case. There are scenarios in which release to others of operating numbers could be legally problematic as to pre existing operating agreements..

 

[LdiJ]

This reminds me of a gentlemen I sold a house to years ago. He HAD worked for McDonalds, in the corporate operation. He (and his family) was relocating here to buy a formerly CORPORATE owned store, and operate it as a franchise. HE was under strict non-disclose agreement which forbade him releasing numbers regarding the stores income & expenses. This made financing his home purchase problematic, to say the least. We found a local lender who underwrote it on faith and reputation and never did get income figures for the corporate owned period..

In looking back, it occurs to me that such a scenario could also impact a CS case. There are scenarios in which release to others of operating numbers could be legally problematic as to pre existing operating agreements..

Yes, I definitely can see the point you are making. However, judges have a way around that by ordering that documentation of that nature be given to the judge only, to use in the calculations. A contract of non-disclosure doesn't override a judge's order.

 

[ProPerDoper]

The dialogue here helps me with perspective, something I've always appreciated about this site....thanks.

On reflection I realize that my concerns are mostly related to what the X might claim in connection with my income, given that 2008 was a pretty good year as it appears on our Federal tax return, although expenses were very high so no profits and low owners' income as a result.

If 2009 tax returns were ready, I'd be able to demonstrate easily the roughly 50% reduction in income and resultant layoff of 5 positions with salary cuts for everyone else. This same scenario occurred in 2000 and a 730 expert CPA was appointed to review my income. He confirmed everything I claimed.

I realize that if she really wants the disclosure, she'll get it via court order. I think that I was hoping that she'd be rational for once as I've stated in my motion that I'm willing to stipulate to the existing perks imputed by the court after the last business evaluation, just to keep costs down even though most of those perks no longer exist, and the affect on support = ~ $50/month. (copies of my expense reports submitted under oath as evidence)

My error is to assume that for once she might take a rational approach. Anger seems to drive her, so possibly better to draft a confidentiality agreement based on the last version used, give her the documents, provide some sort of documentation on YTD income for 2009 to demonstrate the reduction, (Quickbooks report?) and try to head off appointment of another 730 expert CPA. (I've got nothing to hide...it's just the unnecessary expense that bothers me, plus the burden on co-owners to produce documents which are located at another home office 400 miles from me)

Yesterday I asked our company CPA to email 2007 and 2008 tax returns, which I've received. I'll look them over and consider providing them ahead of the hearing date, on calendar for 2/24/10. I'm undecided at this point.

 

[LdiJ]

The dialogue here helps me with perspective, something I've always appreciated about this site....thanks.

On reflection I realize that my concerns are mostly related to what the X might claim in connection with my income, given that 2008 was a pretty good year as it appears on our Federal tax return, although expenses were very high so no profits and low owners' income as a result.

If 2009 tax returns were ready, I'd be able to demonstrate easily the roughly 50% reduction in income and resultant layoff of 5 positions with salary cuts for everyone else. This same scenario occurred in 2000 and a 730 expert CPA was appointed to review my income. He confirmed everything I claimed.

I realize that if she really wants the disclosure, she'll get it via court order. I think that I was hoping that she'd be rational for once as I've stated in my motion that I'm willing to stipulate to the existing perks imputed by the court after the last business evaluation, just to keep costs down even though most of those perks no longer exist, and the affect on support = ~ $50/month. (copies of my expense reports submitted under oath as evidence)

My error is to assume that for once she might take a rational approach. Anger seems to drive her, so possibly better to draft a confidentiality agreement based on the last version used, give her the documents, provide some sort of documentation on YTD income for 2009 to demonstrate the reduction, (Quickbooks report?) and try to head off appointment of another 730 expert CPA. (I've got nothing to hide...it's just the unnecessary expense that bothers me, plus the burden on co-owners to produce documents which are located at another home office 400 miles from me)

Yesterday I asked our company CPA to email 2007 and 2008 tax returns, which I've received. I'll look them over and consider providing them ahead of the hearing date, on calendar for 2/24/10. I'm undecided at this point.

If you can get a Quickbooks, YTD P&L statement for 2009, I would do it.

 

[ProPerDoper]

If you can get a Quickbooks, YTD P&L statement for 2009, I would do it.

I'm pursuing both from our CPA.

I've also emailed a proposed protective order by stipulation in connection with disclosure of the corporate financial information to any third party. I don't expect her to sign and have it notarized, then return to me for processing/filing with the court as requested, but at least I can demonstrate a willingness to provide those documents under protective order, which will hopefully keep her from delaying the motion by objection for non-disclosure.

If she does sign it, I'll give her the docs.

 

[LdiJ]

I'm pursuing both from our CPA.

I've also emailed a proposed protective order by stipulation in connection with disclosure of the corporate financial information to any third party. I don't expect her to sign and have it notarized, then return to me for processing/filing with the court as requested, but at least I can demonstrate a willingness to provide those documents under protective order, which will hopefully keep her from delaying the motion by objection for non-disclosure.

If she does sign it, I'll give her the docs.

Just make sure that you have the docs available when you go to court. You want to be able to give them to the judge if asked to do so by the judge.

 

[ProPerDoper]

Just make sure that you have the docs available when you go to court. You want to be able to give them to the judge if asked to do so by the judge.

Will do...