Q:

Kerry,

 

I found your site very helpful. Thanks.

I am trying to plan my 2005 tax year.  I have a pavement marking business which is a C Corp with it's year ending in March.  I am trying to get the income below the magic $50,000 income level taxed at 15%.  Anyways I have been considering changing to a S Corp since this coming year 2005 I will have a substantial bottom line after 350,000- 400,000 maybe higher.  The problem for me is I am also the guy with a ex-wife which is receiving 29% and she does not have a clue that my business has expanded since we split.  My lawyer tells me a C Corp is better and my account tells me a S Corp is better if it has a lot of cash left. 

 

Anyways, I am trying to plan for the future modification of child support (even though it settled very well for her) I know it will never be enough if she looks in the corporation- which I think she has the right to in a discovery.  It has been a little over a year since the divorce was final. 

 

Currently I am engaged and will be married in Sept of this year.  Is it possible to maybe form a S Corp in her name and assign the large contract to my new wives company and keep the income lower in my C Corp to help us get the out without opening me up to the above problem.  Any thought would help,  I appreciate it very much. 

A:

Check out what I have here on my website and you will see a case very similar to yours regarding child support:

From what you are saying, it seems that using an S corp would make matters worse for you.

Good luck.

Kerry Kerstetter

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/31/2005 05:44:00 PM Send this post: