Essential Tax Tips for Business Owners Facing Divorce
Divorce becomes more complicated when you are a business owner — especially when it comes to taxes. Your business may be part of marital property, and decisions made during the divorce can affect ownership, valuation, and taxable income. Here are the essential tax points every business owner should understand.
For expert guidance on business taxes during divorce, trust a reliable tax accountant in Chandler AZ with LBS Tax to protect your financial future.
1. Is Your Business Marital Property?
Depending on when and how your business was formed, it may be considered marital property.
If so, part of the business may need to be transferred or valued for the settlement.
Tax Note: Transfers made under a divorce agreement are generally non-taxable, but proper documentation is required.
2. Business Asset Division Has Tax Consequences
- Dividing or transferring:
- Shares
- Business cash
- Equipment or property
Businesses can affect depreciation, basis, or capital gains later.
Tip: Understand how each asset transfer affects your future taxes.
3. Your Taxable Income May Change
Divorce often affects business income and personal taxes:
- Alimony (not deductible for payer/post-2019)
- Changes in payroll or profit distributions
- New filing status (single or head of household)
Recalculate estimated taxes to avoid penalties.
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4. Ownership or Structure Changes Affect Tax Filings
Removing a spouse as a partner or shareholder may require updates to:
- Partnership agreements
- S-Corp shareholder records
- LLC operating agreements
These must match IRS and state documents to avoid filing issues.
5. Business Valuation Impacts Future Taxes
A divorce-related valuation determines the tax basis of your business.
This affects
- Future capital gains
- Buyout tax treatment
- Depreciation adjustments
A proper valuation helps avoid tax surprises later.
6. Clean Books are Essential During Divorce
Accurate financials help with
- Business valuation
- Settlement negotiations
- Tax reporting
Clean books reduce disputes and legal costs.
Divorce brings emotional stress, but for business owners, it also brings significant tax and financial decisions that can shape the future of your company.
By understanding how divorce affects business ownership, income, valuation, and tax obligations, you can minimize risk and make informed decisions.
Why LBS Tax is Your Trusted Partner for Comprehensive Financial and Tax Solutions
Choosing LBS Tax for your tax and financial needs ensures you have a team of experienced tax professionals and enrolled agents guiding you every step of the way. From accurate financial statements and financial reports to comprehensive tax preparation services and the resolution of complex tax problems, our CPA firm offers full-service accounting services tailored to your business or personal needs. We provide reliable payroll services and payroll solutions, manage accounts payable, and support you with a dedicated accounting team to help create a strong financial plan. With LBS Tax, you gain peace of mind knowing your finances are handled with precision, expertise, and care.
Are You Looking For a Trusted Tax Accountant?
Contact LBS Tax today for expert accounting, payroll, and financial solutions tailored to you.