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Old 11-23-2008, 08:56 PM
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Question Divorce Tax Quaqmire of Many Questions

Whew, what a tax quagmire, I'd really appreciate your help!

In 2007, we filed married separate. In May 2008 while still married, my spouse had the IRS deposit a $10,000.00 federal tax refund for my spouse’s 2007 married filing separate return directly into my individual bank account. Is my ex-spouse required to report that refund on this year's return, regardless of the refund being deposited directly into my account?

Second question: In early 2008, before the May 2008 deposit of my ex-spouse's $10,000 refund into my individual account, and before we divorced, I paid $5,000 out of my individual bank account (from my sole income) to my ex-spouse's creditors for 2007 bills owed by my ex-spouse's sole proprietorship. The expenses arose from workers’ compensation insurance bills for employee income reported by my ex-spouse on a Schedule C filed with our 2005 & 2006 joint tax returns.
a) Is the $5,000 payment of a marital debt and I can't deduct anything because I didn’t participate in that business? Can my ex-spouse deduct the $5,000?

Third question: In early 2008 before we divorced, our attorney issued us a refund check for $1,500 for our unused retainer. The only legal advice we got related to filing amended 2005 & 2006 joint tax returns (no advice about divorce matters or filing married separate in 2007). I deposited the check into my individual bank account and used all of it towards my ex-spouse's $6,500 2007 business debt ($6,500 debt - $1,500 retainer refund= $5,000 debt mentioned in Second question). Our 2007 tax married filing separate returns had the $1,500 as: $750 reported by my spouse as business expense for the sole proprietorship, $750 I reported $750 as a miscellaneous expense since I paid the entire original retainer.
a) Must I enter a reverse misc. expense for $750, and must my ex-spouse enter a reverse $750 for the sole proprietorship?

Fourth question: The court fees I paid to purchase a court index number for the divorce summons and to obtain a copy of the recorded judgment so I could (as required by law) serve my ex-spouse with the divorce judgment- are not deductible, correct? However, is the county transfer fee I paid to transfer the residence from both of our names into my name alone as part of our divorce settlement deductible? Is so, where?

Getting divorced, filing joint, then separate one year, single another! THANK YOU for being my tax savior!



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