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Notional and contingent tax liabilities can have serious, unintended effects on the calculation of Net Family Property (NFP) and equalization calculations. Failure to identify a potential tax liability may:
- Reduce equalization payment; and
- Improperly result in increased tax liability when tax liability is crystallized (i.e., after equalization is determined).
Therefore, it is critical for family law practitioners to conduct a thorough analysis to identify clients’ potential tax liabilities.
Tax Issues in Family Law
In a new Grapple Law video series, Counter Tax Lawyers principal, Peter Aprile, explains how family law practitioners can take these and other tax matters into account when advising clients.
Potential tax liabilities, if crystallized, can reduce NFP. As such, potential tax liabilities are notional and contingent tax liabilities, and should be taken into account when calculating NFP.
The video series outlines common examples of notional and contingent tax liabilities, potential consequences, and how to safely crystallize tax non-compliance:
- Section 1: Overview & Introduction
- Section 2: Notional and Contingent Liabilities
- Section 3: High Risk Tax Filing Positions
- Section 4: Dispositions of Property & Different Tax Consequences
- Section 5: Disentitlement to Tax Credits
- Section 6: Transferee Tax Liabilities
- Section 7: Unreported Foreign Assets & Income
- Section 8: Joining a Former Spouse to a Tax Dispute
- Section 9: Safely Crystallizing Tax Non-Compliance
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