Corporate Income Imputed for Child Support and Maintenance – Divorce Lawyer in Manhasset

A Long Island Family Law Attorney said this case concerned the calculation of child support and maintenance, and a money judgment for arrears owed from 2007 through 2012. The Supreme Court of Westchester County specified that the issue was whether the income of a corporation for which the Defendant was the sole shareholder, should be imputed to the Defendant for purposes of calculating child support and maintenance owed by the Defendant. The Plaintiff was seeking a recalculation of child support and maintenance, and money judgment. A hearing was held and the Court found the Defendant’s personal income and that of that of the corporation to be higher than reported. The Court noted that “Defendant’s testimony evidenced that he kept his salary at an artificially low level and also that certain ‘so called’ corporate expenses were, in fact, his personal expenses paid for by the corporation.”

The standard outlined by the Court was the Court has broad discretion to add an amount imputed as income based on a party’s former income, if the court determines that such party has reduced such income to reduce or avoid child support obligations. The Plaintiff showed that the Defendant was the sole shareholder, board member, and officer of a corporate entity, and Defendant made all decisions relating to the Corporation, including what purchases should be made and what he should pay himself as salary. Because of this the Court found the Plaintiff successfully “pierced the corporate veil” of the corporation, thereby certain income was imputed to Defendant for purpose of calculating child support and maintenance.

Such occurrences that allowed the Plaintiff to pierce the corporate veil are that the corporation paid the Defendant’s legal fees for the divorce ($20,000), the Defendant provided certain expenditures to his sons for various jobs performed for the corporation (modeling clothes, helping with videos, editing copy for advertising, and testing the gear manufactured by one of the corporation’s clients) and only submitted checks as evidence, Defendant regularly charged restaurant meals with his children as a business expense to the corporation, paid monthly charges for his children’s cell phones with corporate funds, and expensed for the use of Zip cars despite the fact that he used the cars to pick up and drop off his children. The Defendant would also set his salary artificially low when the corporation’s gross receipts were exceptionally high.

The Court found the Plaintiff was entitled to $282,244.89 for maintenance and child support. Pursuant to the Settlement Agreement, the Plaintiff is entitled to 66% of the Defendant’s post tax income. The Court set out the calculations for the years of 2008, 2009, and 2010, as well as 2011 and 2012 taking into account the Plaintiff’s remarriage and one son’s emancipation.

There are many variables that go into determining a spouse’s income for purposes of child support and maintenance. This process can sometimes be complicated. If you have children and are thinking about divorce seek out the advice of Long Island’s Best divorce lawyers at Simonetti & Associates.