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Ok Chad - Based on liability there is case law that whatever…

Ok Chad -Based on liability...
Ok Chad -Based on liability there is case law that whatever entity comes in first is the one that gets paid first ...So I've had court orders for child supp since 2013.
The $3M tax deficiencies are not hard numbers yet since there isn't an order or negotiated amount yet . So no matter what the IRS is in second position to the child supp.Bc the investment has equity the IRS could seize it to help pay the tax liability once it goes to collection after trial.I need to protect it and somehow get it as the form of child support payments.What can I do or how can I protect this investment for my 4 boys against the IRS ?My soon to be ex would rather lose the prop to IRS than ever pay me a dime or see me get it especially if I get innocent spouse relief. He is furious that I'm even trying but he took all the money and destroyed me financially .
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Answered in 3 minutes by:
8/7/2017
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,648
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Hi Justine,

Are you concerned about your equity in the investment property?

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Customer reply replied 11 months ago
How can I protect it ?

As you know CA is a community property state....

The debt and property that a couple acquires during the marriage belongs to the community debt. or asset

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If the issue is with back taxes then you could propose an Offer in compromise to the IRS

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Property taxes are very difficult in California. Generally each county will have different regulations.

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Customer reply replied 11 months ago
I understand that ....
But if I get the innocent spouse relief then he can do that -
I just don't want the investment to be taken as his form of payment . So somehow I need to ensure that the investment is protected under the form of back and current child support payments etc...Do u understand what I'm getting at ?
Customer reply replied 11 months ago
No Chad .... this has nothing to do with property taxes

Ok, so we are only talking about federal taxes ?

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In my opinion, the investment property would have to cash flow positively, to the satisfaction of the IRS in order for the IRS to accept an offer in compromise.

Alternatively, the property may have to be liquidated to satisfy tax lines, child support and any other debt.

Child support may come first in the line of creditors, but most likely a sale could be forced on the property.

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Customer reply replied 11 months ago
if I get full 8857 then he becomes liable for all the tax debt once it's been ruled on or the number was come to by an offer and compromise .
Either way a firm number will be owed soon enough .I don't want the property to seized by IRS as a form of payment .
Bc then it doesn't really matter whether I get 8857 or not they will be taking my 50% of the community asset too!So how do I protect it from being taken ???I think the answer lies somewhere in connecting it to child support payments

If you are approved for innocent spouse relief then you would be relieved of the tax debt. He would have to apply for an offer and compromise.

The IRS would immediately place a lien on the building and he would be required to make payments. The IRS wouldn't take the building, but they would require timely payments.

The installment agreement requires a lot of paperwork and you often have to resubmit every couple of years.

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Even if you weren't approved for innocent spouse relief, the IRS would merely place a lien on the building as long as you submitted an offer and compromise.

The IRS is willing to work with you as long as the believe the debt is collectible.

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Given the ownership titling, I don't know if child support would be enough to stop the IRS if the thought the debt was not collectible.

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Customer reply replied 11 months ago
he could be paying additional child support payments for arrearages for years to come , perhaps even beyond the time that my youngest who's 13 passes 18.I'd like to allocate the investment property to be that form of back ( arrears ) payment.
So it would show in the line of creditors that .... child supp is to be paid over the IRS payments - from this investment .

In New York they would probably put him in jail for a week

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I understand you want to protect the property which would ensure your arrears payments, but if an agreement isn't worked out with the IRS they would move to liquidate the property and pay any taxes before child support, in my opinion, but you do have an argument to make.

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You can't escape from child support arrears. He would have to pay for years to come if he is behind on payments.

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Customer reply replied 11 months ago
it's just a thought - not Like I think he would do this but what if I was approved for innocent spouseAnd in our marriage settlement he owed me monies that could be paid to me with this asset ( the property )
Could he sigh it over to me or I could be awarded the prop in divorce decree and the child supp come from this form or payment to me ?

He could agree to give you the property in a divorcee decree. You can make almost any deal you would like in a divorce decree as long as you two agreed.

The issue with physical property is that if you don't come to a mutual agreement the property tends to lose value through poor management, and items go unpaid. That has been my experience.

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Customer reply replied 11 months ago
I have case law that actually says child supp comes before tax payments bc if it didn't - moms all over the country in need of taking care of their children would be flooding the local and federal system for assistance ...
It's easier to make dad's pay their child supp payments bc kids eventually age out . And then the IRS can move fwd collecting .

The other side of the coin is, that you don't come up with a mutual agreement, taxes aren't paid, nobody responds to the IRS and you both lose the cash flow of the property and any equity.

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That is a sound argument. If you have case law then all you need is to convince the judge.

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Customer reply replied 11 months ago
I don't want to lose this property .
It would not be mis-managedI could even request that a 3rd party manage the property until all arrearages are paid and then the property go into a trust for the kids

From the perspective of the IRS, if the property isn't cash flowing then the debt cold be deemed uncollected and if taxes still weren't being paid a tax auction could occur. You may receive the proceeds due to past child support.

There are a lot of scenarios that could play out.

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I would strongly suggest a third party management company run the building. Then you would at least know the cost.

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Customer reply replied 11 months ago
I think it's best to get this property ruled on by a dept of child support judge not an all purpose judge in the divorce sector .

Yes, the child support judge would be looking at how to derive income from your spouse.

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If he isn't paying the taxes how do you know for sure he is keeping up on other payments. ie the loan payments?

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Customer reply replied 11 months ago
Also .... he owns another primary residence but he put his parents trust and his gfs trust on title
As to show that he doesn't own any more props.

I would expect that any property sold, gifted or exchanged in the last five years would be available for litigation.

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Customer reply replied 11 months ago
Well he has not paid the federal taxes yet bc we don't know what the compromised amount is OR we haven't gone to trial yet to determine a firm number .

The IRS expects you to pay the taxes first and then compromise later. Taxes and penalties keep accruing.

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Customer reply replied 11 months ago
I think you may think he's not paying property taxes on the investment... but I'm only referring to income taxes that we have a deficiency of

I am assuming you owe back federal income tax and the main source of income is coming from the commercial property

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Customer reply replied 11 months ago
many penalties are accruing for us both - bc as of right now , I'm still liable until or if I get approved for 8857

I would think that the next step would be to apply for innocent spousal relief and see what happens with your request.

Also if he is in arrears with child support, I personally would mention this every time you are in court.

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Customer reply replied 11 months ago
we owe past federal income taxes , the assessed deficiencies are about 3 million .But I'm sure an offer and compromise will get that number down greatly .
What would you say (%) that it could possibly be negotiated down to? Just a guess or possibility ?

The IRS doesn't, if ever take off any of the actual tax owed and then very little of the penalty

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Customer reply replied 11 months ago
Good idea on the mentioning the arrears in court .

basically, the offer in compromise just allows you to make payments, they really don't discount interest and penalties.

Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,648
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Chad EA, CDFA®, CFP® and 87 other Tax Specialists are ready to help you
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Customer reply replied 11 months ago
Really ? What is all this offer and compromise or the commercials about "pay pennies on the dollar"
Customer reply replied 11 months ago
Hmmm
That's quite interesting .
Customer reply replied 11 months ago
Ok that brings me to another question ...
I'll open a new window
Thanks .

from the irs web site

"We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone. If you hire a tax professional to help you file an offer, be sure to check his or her qualifications."

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The IRS will try to get as much as they think is recoverable.

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Customer reply replied 11 months ago
Good to know .

Thank you for accepting the answer!

I have to take off for the night. My nephew is begging me to go to the gym.

have a great night. I will be back on tomorrow. We (the experts) are independent.

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Customer reply replied 11 months ago
This is odd but I've become good friends with the prosecutor for IRS on our tax trial .
Customer reply replied 11 months ago
Ok - I'll post the question to you .
And u can answer at your leisure .
Thank you Chad !!
Customer reply replied 11 months ago
Have a good night .
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