How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Lucy, Esq. Your Own Question
Lucy, Esq.
Lucy, Esq., Lawyer
Category: Family Law
Satisfied Customers: 30384
Experience:  Attorney with experience in family law.
Type Your Family Law Question Here...
Lucy, Esq. is online now
A new question is answered every 9 seconds

I have an s corp, I am divorcing, it is my separate

Customer Question

I have an s corp , I am divorcing, it is my separate property .
JA: Thanks. Can you give me any more details about your issue?
Customer: How much if any of the K1 profit could be construed as community , if I pay myself a reasonable sal;early?
JA: OK got it. Last thing — Tax Professionals generally expect a deposit of about $32 to help with your type of question (you only pay if satisfied). Now I'm going to take you to a page to place a secure deposit with JustAnswer. Don't worry, this chat is saved. After that, we will finish helping you.
Submitted: 1 year ago.
Category: Family Law
Expert:  Lucy, Esq. replied 1 year ago.


I'm Lucy, and I'd be happy to answer your questions today.

All income earned during the marriage is community property, and that includes the full salary you pay yourself (just as it includes your spouse's full wages, if your spouse works). If the S Corp pays for things like your personal cell phone, car, car insurance, and other expenses, the amount of those payments is ALSO community property, because those are amounts you'd have to pay yourself if the company wasn't paying them. That means your spouse unfortunately has a right to half of the salary you've been paying yourself - but keep in mind that it would look suspicious to the judge if you suddenly stopped paying yourself a salary or drastically reduced it during the divorce. That could open the door to your spouse nosing around in the S Corporation's finances.

If you have any questions or concerns about my response, please reply WITHOUT RATING. It's important that you are 100% satisfied with my courtesy and professionalism. Otherwise, please rate my service positively so I am paid for the time I spend answering questions. If you are on a mobile device, you may need to scroll to the right. There is no charge for follow-up questions. Thank you.

Customer: replied 1 year ago.
What if you earn a salary? How does profit get distributed to the shareholder ? Is it considered wages?Thx
Expert:  Lucy, Esq. replied 1 year ago.

Salary is wages, and that's community property. Shareholder dividends are community property if they are deposited into a joint bank account, because then they've been commingled with marital assets. Dividends that are kept 100% separate are your separate property, as long as you're not using shareholder dividends to get around paying yourself wages and therefore deprive your spouse of money he or she would have been entitled to.

I have to sign off for a bit for an appointment. This unfortunately happens sometimes because experts have no way of knowing when customers will return to ask follow-ups. If you have any more questions, I'm happy to answer them when I return. I apologize for the inconvenience.