Partnership

Subscribe to Partnership

K-1-cropped-wideIn its May 11, 2016 decision in Eifert v. Eifert, the Appellate Division, Second Department, appears to discuss the interrelationship between the calculation of child support and the “income” shown on a partnership K-1 tax form. In truth, it does not.

In their divorce settlement agreement, the parties agreed that the father would pay child support consisting of two components. The first component required the father to pay $4,400 per month. As summarized by the Second Department in its opinion, the second component required the father to pay “25% of the income he derived from his ownership of stock in Eifert French & Co.”

Years later, the mother sought to recover child support arrears in the sum of $63,283.25 arising from the second component of the father’s child support obligation. The mother arrived at this sum by performing calculations based on K-1 statements received by the father from Eifert French & Co.

In opposition, the father contended that the second component of his child support obligation should be calculated based only on distribution checks he received from Eifert French & Co, rather than the income reflected on his K-1 statements. Based on that limitation, the father calculated that the correct amount of arrears he owed for this second component of his child support obligation was $21,137.49.

Supreme Court, Westchester County Justice Colleen D. Duffy agreed with the father and found arrears to be $21,137.49. The mother appealed.Continue Reading K-1 Income and the Calculation of Child Support

“Estoppel” is the principle that precludes a person from asserting something contrary to that inconsistent with a previous statement, position or ruling. Two decisions last month bringing the principal and to focus.

First, the June 4, 2014 decision  of Kings County Supreme Court Justice Jeffrey S. Sunshine in Zito v. Zito primarily resolved the wife’s motion for temporary relief in a divorce action commenced by the husband on June 7, 2011. The parties had been married 10 years before that, and had a daughter (then 5) and a son (then 3).

The husband works in the family-owned Smiling Pizzeria. The wife, although a licensed pharmacist, alleged that she had been a full-time homemaker since the children were born. Those children attend private school and participate in a number of organized activities.

However, in addition to the wife’s motion for temporary relief, Smiling Pizzeria, itself, had moved to be allowed to intervene in the divorce action. The pizzeria wanted to establish that it was owned only by the husband’s father; that the husband had no ownership interest. Without an ownership interest of the husband, it was argued, it could not be subject to equitable distribution.Continue Reading Being Bound by Statements in Tax Returns and Court Papers

A non-written agreement for cohabitants to share retirement benefits can be enforceable under a breach of contract claim, but will not support claims to impose a constructive trust, or for unjust enrichment or an accounting. Such was the holding of the Appellate Division, Second Department, in its November 13, 2013 decision in Dee v. Rakower.

In the majority opinion written by Justice Leonard B. Austin, the appellate court relied heavily on the facts as pleaded in the complaint. The parties had lived together in a committed, same-sex relationship for nearly 18 years. Two children were born of this relationship; each party being the biological parent of one child, legally adopted by the other.

After the relationship ended in 2007 (before the passage of New York’s Marriage Equality Act [see, Domestic Relations Law §§ 10-a, 10-b]), Ms. Dee commenced this action seeking to enforce the alleged oral “joint venture/partnership” agreement. Under that agreement, Ms. Dee was to share in assets, including Ms. Rakower’s retirement contributions and earnings, in exchange for Ms. Dee leaving her full-time job to care for the parties’ children.

Before they had children, each party was employed full-time, earning a salary and retirement benefits. The parties pooled their respective salaries to meet their shared expenses. The parties purchased a house as joint tenants with rights of survivorship.

After the parties’ first child was born, the parties agreed, it was alleged, that given the cost of child care, Ms. Dee would eschew her full-time employment and work part-time so that she could be home with the children and perform other non-financial services for the benefit of the family and for the parties’ partnership and/or joint venture while Ms Rakower would continue to work full-time. Ms. Dee alleged that her decision to leave her full-time employment was based upon the parties’ specific agreement that Ms. Dee would be entitled to one half of Ms. Rakower’s retirement contributions and earnings for the period.

Ms. Rakower moved to dismiss Ms. Dee’s complaint. Kings County Supreme Court Justice Yvonne Lewis granted that motion, determining that the facts did not support causes of action for breach of contract, to impose a constructive trust, for unjust enrichment or for an accounting.Continue Reading Oral Cohabitation Contract Claim Withstands Motion To Dismiss