Valuation Strategy for the Business Owner in a Divorce
The spouse that owns a business during the divorce will benefit if the business value is low. Please keep in mind that hiding or destroying business value is a fraudulent activity and will be severely punished by the court. But you are still allowed to run the business in a normal manner during the divorce and your decisions are valid if they have legitimate business purposes.
Here are some basic strategies for the business owners to minimize valuation:
- Accelerate taxable activities to the current year or the prior year. Do not defer taxes.
- Section 179 large asset purchases this year instead of depreciating assets.
- Make long term business investments that will pay off in the future but absorb cash flow and profits in the short term.
- Hire adequate or ample amounts of staff.
- Do not compensate for short staffing by working huge amounts of uncompensated overtime.
- Compensate family members at industry rates.
- Do not defer maintenance on your facility or large assets.
- Catch up on any deferred maintenance now, even if it hurts profitability.
- Do not roll out any new ideas or services that have large profit potential.
Bottom Line: Decisions that minimize present value are legitimate as long as that are done for future profit and growth. Now is the time to make those kinds of decisions.
The Divorce Center can provide an experienced divorce attorney for your entire case or any individual part. Tampa, Pinellas, Pasco, Hernando County Divorce Attorney Howard Iken will give you personal attention, fast answers, and the loyal aggressive representation you need. We also offer a forms preparation service with lawyer review and consultation for reasonable prices. Check out our easysavr legal service. CONTACT US NOW or call 888-469-3486