I would like to preface the response with a word of caution - It is not unusual for a successful business man or woman to deal with home issues in the same manner as they are accustomed to dealing with work issues - that is, take control, make decisions, and not necessarily consult with anyone else. So I would recommend that, before taking any action described later, you make very sure that the situation is as it appears to be. If it is, there is action that is better taken sooner than later BUT if some of these feelings are based on misinterpretaton or lack of understanding, taking action will surely lead to unpleasant consequences. Proceed with caution.
Back to the first question first - Generally, if the stock is community property (i.e. the corp was formed during the marriage and not with separate funds), an S election would need to be signed by both spouses to be valid. If the corp is his separate property, your signature would not be required in order to have a valid S election.
Now on to the heart of the issue(s) - IF (that is a big IF) things are truly as you describe, I would suggest that you contact a lawyer immediately. There are significant legal issues aside from any tax issues. Having said that, here are a few items that, in my opinion, should be discussed.
1. The CPA may not be able to discuss the corporate returns/finances with you if the corp is separate property. However, you have every right to know and understand EVERYTHING that is on a joint return. In fact, you could potentially be held liable for understated taxes and related penalties - not likely, but possible. You should refuse to sign ANY further tax returns until you have received explanations that are satisfactory to you (and your counsel) of each and every item of income and expense reported.
2. It should not be possible for one spouse to put joint assets into a trust that the other spouse does not have access to. If that is what has been represented to you, you need to have the trust documents examined, among other things.
3. If the business is making enough profit that you have that kind of tax liability, it should be generating sufficient cash to pay the related taxes. If joint assets have been used to pay taxes related to separate property, the marital estate, generally, has a right to reimbursement. There are also numerous theories of "separate property enrichment" that many times are used to get some of the value of the separate property reclassified to marital value.
4. Generally, any retirement account that is earned during the marriage is community property. As such, you would normally be entitled to half (at least) if the marriage were to terminate.
5. There are legitimate reasons to reduce salary in favor of distributions. In general, distributions would only be separate if they were considered a return of capital. Normally, interest and dividends earned are community property even if the underlying asset is separate property.
6. It seems, based on the information provided, that something is amiss. If the business is passing through losses,you should not be having large balances of tax due. If the business is passing through income, it should, in general, have enough cash flow to pay the related taxes.
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I would be happy to discuss the situation further with you and/or your attorney. I also have some CPA contacts in ABQ that are experienced in dealing with these types of matters if that becomes necessary or desirable.[email protected]