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I am in the beginning of a divorce. My husband owned a

Second opinion] I am...

Second opinion] I am in the beginning of a divorce. My husband owned a company which was our sole support. He didn't file taxes for the company for several years while we were married. Am I equally liable for all the taxes, penalties, etc?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

The company is a California C-Corp

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Customer reply replied 4 months ago
Neither of us has filed taxes for the years 2000 - 2009. I am interested in knowing if it changes my liability for the C-Corps taxes if I file "Married filing separately"
Answered in 1 hour by:
3/14/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,115
Experience: Taxes, Immigration, Labor Relations
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Am I equally liable for all the taxes, penalties, etc?

In general yes - and not only whether you file jointly or separately - but mainly because California is a community property state.

Another issue - the business is operating as C-corportaion - and as a shareholder (you may be considered as indirect shareholder) - you personally are NOT liable for not filing business tax return and any business tax liability.

But when business money were used for personal expenses - that may damage legal protection - and the court may assign you some liability.

.

Under some consideration you might be eligible for relief disregard community property laws by denying the benefits of income splitting between the spouses.

See here

https://www.law.cornell.edu/uscode/text/26/66

Community property laws may not apply to an item of community income that you received but did not treat as community income. You are responsible for reporting all of that income item if:
1. You treat the item as if only you are entitled to the income, and
2. You do not notify your spouse of the nature and amount of the income by the due date for filing the return (including extensions).

.

If you are married at any time during the calendar year, special rules apply for re-porting certain community income. You must meet all the following conditions for these special rules to apply.
1.You and your spouse lived apart all year.
2.You and your spouse did not file a joint return for a tax year beginning or ending in the calendar year.
3.You and/or your spouse had earned income for the calendar year that is community income.
4.You and your spouse have not transferred, directly or indirectly, any of the earned income in condition (3) above between yourselves before the end of the year.

.

There are three types of relief from the joint and several liability of a joint return:

  1. Innocent Spouse Relief provides you relief from additional tax you owe if your spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits.
  2. Separation of Liability Relief provides for the separate allocation of additional tax owed between you and your former spouse or your current spouse you're legally separated from or not living with, when an item wasn't reported properly on a joint return. You're then responsible for the amount of tax allocated to you.
  3. Equitable Relief may apply when you don't qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return and generally attributable to your spouse. You may also qualify for equitable relief if the amount of tax reported is correct on your joint return but the tax wasn't paid with the return.

To seek innocent spouse relief, separation of liability relief, or equitable relief, you should submit to the IRS a completed Form 8857.pdf, Request for Innocent Spouse Relief, or a written statement containing the same information required on Form 8857, which you sign under penalties of perjury.

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Lev
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Customer reply replied 4 months ago
Thank you. Also do you have any idea why I would be listed twice in the same identical way on the corporation's 1120 Schedule G? Both lines contain the same identical info - my name, ss#, country and the percent of my stock that is "voting"

That might be based on your software...

But looks odd for me.

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Customer reply replied 4 months ago
ok thanks
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