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In California, marital standard of living is usually determined by the actual income and expenditures of both parties. However, in some cases, calculations may turn out exceptionally high because both parties lived beyond their means or one of the individuals continually worked excessive hours. When it is clear that the couple lived above its means,…
DetailsIn case you are not aware, during July 2011, the Internal Revenue Service issued Notice 2011-70, which made a significant change to stipulations for individuals looking for spousal relief under IRC 6015(f). This notice may help you protect your clients from liability for either underpayment or nonpayment of taxes caused by dishonesty by their spouses. …
DetailsThe California Supreme Court defines earning capacity as “the income the spouse is reasonably capable of earning based upon the spouse’s age, health, education, marketable skills, employment history and the availability of employment opportunities.” Marriageof Simpson, (1992) C.4th 225, 14 Cal. Rptr. 2d 411. Due in part to the current economy, there exists a notable…
DetailsIn 1979, the landmark California Supreme Court case, “In Re Marriage of Epstein,” established guidelines for reimbursements of separate property payments (normally from post-separation earnings) on community property debt. As a customary rule, courts may reimburse a spouse if that spouse used post-separation earnings or other separate funds subsequent to separation to pay for pre-existing…
DetailsOver the previous four issues of Forensic Accounting Today, I have provided an overview of how law practices account for revenue and expenses, and introduced the background of an actual case study concerning income reporting. In this issue, I am providing the final portion of the case study. If you would like to review part…
DetailsOver the previous three issues of Forensic Accounting Today, I have provided an overview of how law practices account for revenue and expenses, and introduced the background of an actual case study concerning income reporting. In this issue, I am providing the continuation of the case study, focusing on calculation of unreported income. If you…
DetailsIn the last two issues of Forensic Accounting Today, I provided an overview of how law practices account for income and expenses, and introduced the background of an actual case study concerning income reporting. In this issue, I am providing the continuation of the case study. If you would like to review the initial Part…
DetailsIn the last issue of Forensic Accounting Today, I provided an overview of how law practices account for income and expenses, including insight into how an attorney can possibly underreport his or her income. In this issue, I am presenting you with an actual case study concerning income reporting. The basis for this book chapter…
DetailsThe following is an excerpt from “Income Reconstruction: A Guide to Discovering Unreported Income,” published by the American Institute of Certified Public Accountants. It provides insight into how a Forensic Accountant would trace nondisclosed income in one particular type of business. Overview of Law Practices:Reporting Income It is important to understand how law practices account…
DetailsIn some cases, it can be difficult to determine which expenses should be considered as personal or business. There are business owners who are particularly sophisticated in their understanding of financial accounting methods and who may intentionally conceal personal expenses while claiming them as ordinary and necessary business expenses. For example, in a recent case…
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