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If my wife has a 100% percentage interest, but I am the CEO,

Customer Question
would I be obligated to...
If my wife has a 100% percentage interest, but I am the CEO, would I be obligated to claim her profit as income for me?
Submitted: 8 years ago.Category: Tax
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Answered in 1 hour by:
4/1/2009
Tax Professional: Lev, Tax Advisor replied 8 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,701
Experience: Taxes, Immigration, Labor Relations
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You are not obligated to claim her profit as your income - unless you are living in the community state. If you are domiciled in one of the following community property states:
Arizona,
California,
Idaho,
Louisiana,
Nevada,
New Mexico,
Texas,
Washington, or
Wisconsin.

Following rules apply:

Wages, earnings, and profits. A spouse's wages, earnings, and net profits from a sole proprietorship are community income and must be evenly split.

Dividends, interest, and rents. Dividends, interest, and rents from community property are community income and must be evenly split. Dividends, interest, and rents from separate property are characterized differently.

 

Let me know if you need any help.

 

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Customer reply replied 8 years ago
Even if I have the CEO title for her company?
Tax Professional: Lev, Tax Advisor replied 8 years ago

My assumption that you are living in the community state.

Your title doesn't matter - what does matter - the type of income you are receiving.

If as a CEO of the company - you are receiving wages or self-employment income - that income should be evenly split between you and your spouse.

 

The same is true if you spouse receives dividends from the company based on her ownership - they also should be evenly split between you and your spouse.

However if the company is your spouse's separate property - dividends are not splitted and belongs to your spouse only.

 

Lev
Lev, Tax Advisor
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