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  • May 13, 2020 05:08:20 PM
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3 Tricks to Terminate a Student Lease at UCR due to Coronavirus Force Majeure [UC Riverside]

How to Terminate Your Lease at University Village Towers, GrandMarc At University Village, University Riverside Gardens, The Palms on University, & Highlander At North Campus at UC Riverside As the official, volunteer landlord-tenant lawyers for the Associated Students of UC Riverside Legal Clinic, we have been inundated with questions from UCR students who signed leases...

Coronavirus Lease Termination Letter Sample Form Contract Breach

How to Terminate Your Lease at University Village Towers, GrandMarc At University Village, University Riverside Gardens, The Palms on University, & Highlander At North Campus at UC Riverside

As the official, volunteer landlord-tenant lawyers for the Associated Students of UC Riverside Legal Clinic, we have been inundated with questions from UCR students who signed leases near the UCR campus where no classes are being held in Fall 2020 due to the Coronavirus pandemic. We have numerous strategies to provide to these students during this unusual, global event.

First, this post is primarily directed at students who signed their leases prior to the State of Emergency that was declared nationally on March 13, 2020. Those who signed their leases after this date will have a more difficult time alleging that the pandemic is an unforeseen circumstance. Nonetheless, it may still be unforseen that an entire college campus is now closed.

1) Offer the Landlord a Lump Sum for Termination

The most common technique to terminate a lease is to offer the landlord a lump sum of money in exchange for termination. Commonly, this involves the rental deposit plus two or perhaps more months of rent. This allows the landlord to re-let the property to hopefully mitigate their damages or even double collect if they can find a new tenant in a short period of time. However, it seems doubtful right now that the landlord will find a new tenant, at least while the campus remains closed and they require tenants to be students.

We have a letter online that you can use to draft your request for lease termination.

2) Don’t Pay Your Rent

Another common strategy is to not pay the rent that you believe should be paid given the frustration of purpose under California law resulting from the Coronavirus pandemic. Often times, creditors who understand that the debtor/tenant knows their rights and is not afraid to withhold payment will offer a better deal.

One downside is that the landlord may try to ding your credit report. However, it may be years until your credit score makes any difference, e.g. if you try to buy a home.

They may also try to obtain a civil money judgment against you. However, landlords are probably hesitant to file a civil suit given the obvious Coronavirus defenses to breach of contract that may be raised as well as the public relations issues related to suing students under these circumstances.

The bottom line is that you should not pay a creditor if you don’t have the money. You  you may want to prioritize your basic living expenses first.

Note that landlords are prohibited from filing an unlawful detainer right now due to the emergency Rules or Court in California absent showing a health and safety violation. This means they cannot change your locks or otherwise kick you out until the Rules of Court are changed.

3) Turnover the Keys

If you’re not coming back, it may be wise to turnover the keys. This creates a defense that the landlord must take reasonable steps to mitigate their damages. This defense may make the landlord hesitant to file suit given the expense of this defense.

With regard to Grandmark, Highlander at North Campus, UV Towers, and the Palms, students are welcome to try these strategies to obtain a better result than paying the full rate for a room they don’t need.

This post is written by real estate attorney in Riverside Scott Talkov as part of Talkov Law’s commitment to pro bono service.

Thanks to Riverside City Councilman Andy Melendrez and students at UCR for inspiring this post.


In re Brace: Is Your House Community or Separate Property in California Divorce and Bankruptcy Court?

Will the Court Find that Your House is Community Property or Separate Property Based on the Presumptions from In re Brace (California Bankruptcy and Family Law Court)? In re Brace (2020) California Supreme Court, July 23, 2020 – Case No. S252473 The California Supreme Court in In re Brace (Speier v. Brace) has come down...

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Will the Court Find that Your House is Community Property or Separate Property Based on the Presumptions from In re Brace (California Bankruptcy and Family Law Court)?

In re Brace (2020) California Supreme Court, July 23, 2020 – Case No. S252473

The California Supreme Court in In re Brace (Speier v. Brace) has come down with a new published opinion purporting to help family law litigants and bankruptcy litigants alike, answer the question: is the house community or separate property?

Many married couples in California use community property funds to acquire real estate and take title in joint tenancy. Does that property presumptively belong to the community because the couple acquired the property during marriage with community funds? Or is the property presumptively the separate property of each spouse because they took title in joint tenancy? This issue can arise when parties seek a property division attorney in California or after one spouse uses a bankruptcy attorney to discharge their debts, which is followed by the bankruptcy trustee trying to sell the house of the debtor or non-debtor spouse.

Unfortunately, “California’s treatment of joint tenancies has a long and tortuous history and is still the subject of considerable legal concern and disagreement.” (Blumberg, Community Property in California (1987) p. 157.). The Legislature enacted a presumption that characterizes this property as community in a divorce (Family Code § 760); however, the presumption established by Evidence Code § 662-the owner of the legal title to property is presumed to be the owner of the full beneficial title-seems to be directly at odds with Family Code § 760. This dichotomy in the law has been the source of much debate in the family law and bankruptcy communities, as a “snarl of conflicting presumptions.” (Estate of Luke (1987) 194 Cal.App.3d 1006).

In this particular case, husband filed a Chapter 7 Bankruptcy in 2011. Husband and wife married in 1972, and during their marriage, the couple acquired a residence in Redlands and a rental property in San Bernardino. The Braces acquired both properties with community funds and took title to each property as “husband and wife as joint tenants.”

A Chapter 7 bankruptcy petition creates an estate to satisfy creditors’ claims. The estate generally includes “[a]ll interests of the debtor and the debtor’s spouse in community property” at the time the bankruptcy case is filed. (11 U.S.C. § 541(a)(2).) The Bankruptcy Code specifies that community property is part of the estate and bankruptcy courts look to state law to determine what property is considered community. (See Butner v. United States (1979) 440 U.S. 48, 54, 99).

The bankruptcy trustee sought a declaration that the Redlands and San Bernardino properties were community property under Family Code § 760. The distinction between community and separate property matters in this case because wife did not join in her husband’s bankruptcy petition.

property division lawyer california bankruptcy divorce riverside family law attorneyIf the properties are community, then the entirety of the Braces’ interests in the properties becomes part of husband’s bankruptcy estate. If the properties are separate, then only husband’s one-half property interest becomes part of the estate. (In re Reed (9th Cir. 1991) 940 F.2d 1317, 1332; see Code Civ. Proc. § 704.820). The bankruptcy court found that “the properties were acquired by the couple during the marriage with community assets and they presumptively constitute community property under applicable law. The Braces failed to establish that the… [p]ropert[ies] were not community in nature and, therefore, they constitute property of the Estate…” (In re Brace (Bankr. 9th Cir. 2017) 566 B.R. 13, 17.) The Ninth Circuit Bankruptcy Appellate Panel affirmed the finding reasoning that, pursuant to In re Marriage of Valli (2014) 58 Cal.4th 1396, which held that property acquired during marriage from a third party with community funds is community property upon divorce unless the statutory transmutation requirements have been met, the public policy and statutory construction support the extension of Valli’s holding to the bankruptcy context. The Braces appealed to the Ninth Circuit, which certified the question to the California Supreme Court (Case No. S252473).

On July 23, 2020, the California Supreme Court published its opinion in answer to the question above, as well as the following question: “When a married couple uses community funds to acquire property as joint tenants, is the joint tenancy deed alone sufficient to transmute the community character of the property into the separate property of the spouses?”

Family Code Section 852 provides that for property acquired on or after January 1, 1985, a transmutation “is not valid unless made in writing by an express declaration that is made, joined in, consented to, or accepted by the spouse whose interest in the property is adversely affected.” We hold that under this rule, joint tenancy titling of property acquired by spouses using community funds on or after January 1, 1985 is not sufficient by itself to transmute community property into separate property. For joint tenancy property acquired between January 1, 1975 and December 31, 1984, the act of taking title as joint tenants is, in itself, insufficient to prove a transmutation; however, a court may consider the manner of taking title in determining whether the spouses had an oral agreement or common understanding. Finally, as noted, joint tenancy property acquired with community funds before January 1, 1975 is presumptively separate property.

Evidence Code § 662 Does Not Apply to Property Acquired During Marriage When it Conflicts with Family Code § 760

…we hold that the community property presumption in Family Code § 760 applies not only to dissolution actions but also to a dispute between one or both spouses and a bankruptcy trustee, and that Evidence Code § 662 does not apply when it conflicts with the Family Code § 760 presumption. In re Brace (July 23, 2020) Case No. S252473 (citation forthcoming).

This finding provides clarity on the battle of presumptions under the particular circumstances enumerated above, but the holding does nothing to prevent spouses from holding separate property as joint tenants or from transmuting community property into separate property held in joint tenancy as long as the applicable transmutation requirements are met. Further, the holding has no affect on the operation of the right of survivorship that typically accompanies joint tenancy title at death.

For joint tenancy property acquired with community funds on or after January 1, 1985, a valid transmutation under California law from community property to separate property requires a written declaration that expressly states that the character or ownership of the property is being changed pursuant to Family Code § 852 (a). A deed declaring that property is held in joint tenancy, by itself, does not suffice to transmute the property into separate property held in joint tenancy.

Consult an Experienced Divorce and Bankruptcy Attorney to Obtain the Best Result

The principles discussed in the article are inherently complex, involving large sums of money and oftentimes, the roof over your head. Whether you are dealing with the possibility of the sale of real property in family court, dividing assets and debts, or if you just have questions for a divorce attorney or a bankruptcy attorney, contact a skilled California family law attorney to help guide you through the process. Our attorneys have litigated support cases throughout the State of California, including Riverside, Los Angeles, Orange and San Bernardino counties. Call the experienced bankruptcy and family law attorneys at Talkov Law at (951) 888-3300 or contact us online for a free consultation about your case.


Has Thomas P. Riley Filed More Boxing Piracy Lawsuits Than Any Other Attorney?

If you just received a letter in the mail from Thomas P. Riley, you may be wondering: Who is this guy, and why is he exaggerating or making false allegations that my business illegally displayed a boxing match?

Thomas P Riley Attorney California Boxing Piracy Lawsuit Complaint Letter

Have You Received a Letter From Attorney Thomas P. Riley?

If you just received a letter in the mail from Thomas P. Riley, you may be wondering: Who is this guy, and why is he exaggerating or making false allegations that my business illegally displayed a boxing match available on pay-per-view or a streaming service?

Well, you’re not alone! In just the Central District of California, covering Los Angeles County, Orange County, Riverside County, San Bernardino County, Ventura County, Santa Barbara County and San Luis Obispo County, Mr. Riley has filed a staggering 2,834 cases, all on behalf of boxing promoters claiming illegal showings of their boxing matches.

DAZN App – Boxing Piracy

Nationwide, the number is a staggering 5,227 as of the writing of this blog post, and probably even more by the time you read this! We conducted some statistics on this mind-boggling number of federal cases relating to alleged piracy of boxing events, generally pay-per-view or modern streaming services, such as the DAZN and FITE app.

Thomas P. Riley Only Litigates the Issue of Boxing Piracy

For starters, virtually every case filed by Thomas P. Riley relates to the same issue of piracy.

Type of Lawsuit Number of Cases filed by Thomas P. Riley
Cable/Sat TV 3033
Other Statutory Actions 2150
Copyrights 23
Consumer Credit 5
Other Civil Rights 4
Other Personal Property Damage 2
Bankruptcy Case 2
Unknown 1
Recovery of Overpayment & Enforcement of Judgment 1
Other Contract 1
Racketeer Influenced and Corrupt Organization 1
Constitutionality of State Statutes 1
Bankruptcy Adversary 1
Grand Total 5222

Thomas P. Riley Boxing PiracyThomas P. Riley’s Clients Are Almost Entirely Boxing Promoters with Pay-Per-View or Streaming Apps

Client/Plaintiff Number of Cases Filed by Thomas P. Riley
J & J Sports Productions, Inc. 2957
Joe Hand Promotions, Inc. 886
Kingvision Pay-Per-View, Ltd. 420
G & G Closed Circuit Events, LLC 319
Garden City Boxing Club, Inc. 190
Event Entertainment, Inc. 151
Innovative Sports Management, Inc. 127
Top Rank, Inc. 46
Integrated Sports Media, Inc. 37
DirecTV, Inc 30
New Contenders, Inc. 28
National Satellite, Inc. 13
Circuito Cerrado, Inc. 9
Main Events/Monitor Productions 7
Traffic Sports USA 2
Prostar, Inc. 2
Don King Productions, Inc. 2
GoBox Promotions, Inc. 1
Grand Total 5227

Thomas P. Riley Has Been Filing These Lawsuits since 1994, and Shows No Sign of Stopping

Year Cases Filed by Thomas P. Riley
1994 2
1995 5
1996 75
1997 6
1998 195
1999 375
2000 144
2001 23
2002 72
2003 118
2004 81
2005 57
2006 36
2007 49
2008 200
2009 381
2010 745
2011 507
2012 589
2013 515
2014 382
2015 227
2016 112
2017 101
2018 82
2019 73
2020 75
Grand Total 5227

Thomas P. Riley Files Federal Lawsuits Mostly in California, Arizona, and Pennsylvania, as well as Texas, Arkansas, New York and Elsewhere

Federal Court Cases Filed by Thomas P. Riley
cacdc 2840
candc 602
caedc 480
azdc 446
casdc 328
paedc 275
txsdc 59
aredc 46
arwdc 26
pamdc 22
nyedc 21
insdc 17
pawdc 15
nedc 8
moedc 7
inndc 6
nysdc 4
nywdc 4
wiedc 3
akdc 2
almdc 2
alndc 2
alsdc 2
cacbk 2
tnwdc 2
casbk 1
ilndc 1
nvdc 1
okwdc 1
paebk 1
tnmdc 1
Grand Total 5227

Every Lawsuit Thomas P. Riley Has Filed

In case you’re curious, we’re releasing our full data set obtained through the Federal court system (PACER) for your review. Suffice to say, Thomas P. Riley is prolific in his litigation efforts.

To access Riley’s full data set as a Microsoft Excel file, please click here: Thomas P Riley Cases.

If you’ve received a letter or lawsuit from Thomas P. Riley, contact an experienced business attorney to advise you of your rights.


3 Secrets to Proving Self-Employed Income for Child or Spousal Support in California – In re Marriage of Deluca & Hein

The Tricks and Tips to Proving Self-Employed Income for Spousal Support (Alimony) and Child Support That Your Ex Doesn’t Want You To Know Walking into a family law courtroom and swearing up and down that your ex-spouse or parent of your child makes more money than he/she claims is easy enough; but I have yet...

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The Tricks and Tips to Proving Self-Employed Income for Spousal Support (Alimony) and Child Support That Your Ex Doesn’t Want You To Know

Walking into a family law courtroom and swearing up and down that your ex-spouse or parent of your child makes more money than he/she claims is easy enough; but I have yet to see a court order that reads: “Party A shall pay Amount X to Party B as and for support each month because Party B is 100% sure Party A makes a lot of money, and Party B seems pretty cool, so I’m just going to go with it.”

Family court in California may get a bad reputation for being loose with the rules as a court of equity, but if you plan to contest the opposing party’s claims regarding his/her income, you will quickly learn that even family court still requires a little thing called evidence.

How Do I Prove the Opposing Party’s Income When They Own Their Own Business?

This issue is highly litigated in California family courts, and the laws relating to the issue are continually changing. So far in the year 2020, two (2) major cases have come down affecting how income from self-employment is treated in California family courts in the context of spousal and child support: In re Marriage of Deluca (2020) 45 Cal.App.5th 184 and In re Marriage of Hein (Jul. 21, 2020) Case No. F076581 (citation forthcoming).

Whether these cases have made it easier for litigants, courts, and attorneys to calculate support is an issue for another day. The fact remains, these new cases (along with other landmark cases decided in recent years), provide the current landscape of the law in this area.

Three Common Points of Contention When One Party is Self-Employed in Family Law

family-law-attorney-lawyer-california-inland-empire-divorce-riverside_1) Depreciation Deductions on Income Tax Returns

To start, Asfaw v. Woldberhan (2007) 147 Cal.App.4th 1407 provided a rather lengthy analysis of the issue of whether depreciation of rental property is deductible in calculating child support. That court began its analysis with the underlying premise that the amount of child support to be paid is determined by a formula, the components of which require the computation of each parent’s annual gross income and annual net disposable income. (Mejia v. Reed (2003) 31 Cal.4th 657, 669).  Annual gross income is generally defined in Section 4058 as “income from whatever source derived.” (In re Marriage of Henry (2005) 126 Cal.App.4th 111, 118). Net disposable income, in turn, is computed by deducting from annual gross income amounts actually attributable to certain specified expenses. (Cal. Fam. Code § 4059).

The Asfaw court went on to identify various indicators the Legislature has placed in the Family Code which provide insight into the underlying principles of child support in California. In its broadest formulation, “California has a strong public policy in favor of adequate child support.” (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 282-283) More specifically:

  • “The guideline seeks to place the interests of children as the state’s top priority.” (Cal. Fam. Code § 4053 (e))
  • “A parent’s first and principal obligation is to support his or her minor children according to the parent’s circumstances and station in life.” (Cal. Fam. Code § 4053 (a))
  • “Each parent should pay for the support of the children according to his or her ability.” (Cal. Fam. Code § 4053 (d))
  • “Children should share in the standard of living of both parents. Child support may therefore appropriately improve the standard of living of the custodial household to improve the lives of the children.” (Cal. Fam. Code § 4053 (f))

Family Code Section 4058 & 4059 – Calculating Gross and Net Income in Family Court for Depreciation Deduction

Whether depreciation is deductible in calculating net disposable income implicates essentially an income statute (§ 4058), and an expense statute (§ 4059).

The inquiry begins with Section 4059 since its “net disposable income” is an element of the actual child support formula. Section 4059 lists a number of items that are to be deducted from annual gross income in determining net disposable income: tax payments, FICA contributions, union dues and retirement benefits, health insurance premiums, other child support, job-related expenses, and hardship deductions. Depreciation does not fall within any of these categories, thus, if statutory support for the deduction of depreciation is to be found, it must come from that part of section 4059 which refers to “annual gross income.” The inquiry thus turns to Section 4058, for it is there that “annual gross income” is given meaning.

With one exception, Section 4058 defines “annual gross income” as “income from whatever source derived.” It identifies “rents” as one of 16 examples of income (§ 4058 (a)(1)).  Also relevant is subdivision (a)(2) which states that income includes: “Income from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business.” There is no mention of depreciation.

From this scheme, it is clear that depreciation is not a “[j]ob-related expense” (§ 4059 (f)). This category appears to be reserved for those expenses actually incurred by an employee (Stewart v. Gomez (1996) 47 Cal.App.4th 1748, 1755 [tools, uniforms, on-the-job parking expenses, transportation and mileage for commuting to and from work, and other un-reimbursed costs that would not be incurred but for employment]).

Since rental income is expressly included as “annual gross income” under Section 4058 (a)(1), and business operating expenditures are deductible under Section 4058 (a)(2), the final question is: Does depreciation of rental property constitute an “expenditure required for the operation of this business?”

Although “income” is broadly defined in the statutory child support scheme, deduction provisions are specific and narrowly construed. The Legislature’s choice of the words “expenditure,” “required,” and “operation of the business” in Section 4058 are words of limitation. “Expenditure” suggests an actual outlay of cash or other consideration. Depreciating an asset does not involve a reduction of cash available for child support. Nor is depreciation “required” for the operation of a business. A proprietor cannot operate a business without inventory, without employees, without paying taxes, and so forth. A business can be conducted without a deduction for depreciation. Therefore, the Asfaw court concluded that “operation of the business” means ordinary and necessary business expenditures directly related to or associated with the active, day-to-day conduct of a business.

Following the Asfaw case, in 2018 the California Appellate Court rocked the family law community with In re Marriage of Rodriguez (2018) 23 Cal.App.5th 625, 635. In the decision, the Rodriguez court held that a self-employed parent’s depreciation deductions for motor vehicles did not constitute “expenditures required for the operation of the business” for purposes of Cal. Fam. Code § 4058 (a)(2). The Rodriguez court affirmed the order by the Superior Court of Stanislaus County directing the husband to pay wife child support for their three children. The Rodriguez court held that the trial court properly followed the Asfaw case by disallowing husband’s deduction of depreciation because depreciating an asset did not reduce available cash for child support, and asset depreciation was not among specific deductions permitted by statute (Cal. Fam. Code §§ 4058, 4059).

What was the factual analysis provided by the Rodriguez court? Good question. So what in the world does the Rodriguez decision mean? Are all business depreciation deductions disallowed? Is the decision limited to auto depreciation deductions? Or is the finding specific to disallowing this depreciation deduction for Mr. Rodriguez?

It is with the Asfaw and Rodriguez decisions in mind that the California Appellate Court made its recent findings in the Hein case.

In re Marriage of Hein (2020) – Business Depreciation Deductions May be Disallowed

In this case, the Fifth District clarified some of the questions that the Rodriguez case created regarding a self-employed parent’s depreciation deductions.

On appeal, the wife contends that the trial court did not properly determine the husband’s annual gross income under Family Code Section 4058 and thus erred in calculating the amount of child support owed. After the trial court issued its decision, the Court of Appeal decided the question of statutory construction involving depreciation in the Rodriguez case. In Rodriguez, the court held that a self-employed parent’s depreciation deductions for motor vehicles did not constitute expenditures required for the operation of the business for purposes of section 4058, subdivision (a)(2).

The Hein court extended the statutory interpretation for motor vehicles to depreciation deductions for equipment and other assets used in the self-employed parent’s businesses. The court explained that the term “expenditures required for the operation of the business” for purposes of Section 4058 (a)(2) describes an actual outlay of cash. The court held that claiming a depreciation deduction on an income tax return does not require an outlay of cash and, thus, does not reduce the funds available for child support.

This appeal raises issues about a self-employed parent’s annual gross income for purposes of determining child support under the statewide guideline. The mother contends the trial court did not properly determine the father’s annual gross income under Family Code section 4058(1) and, thus, erred in calculating the amount of child support owed. First, the trial court allowed the depreciation deductions claimed on the federal income tax returns of the father and his corporations to reduce his income available for child support. Second, the court presumed the income and expenses reported on the father’s individual and corporate tax returns were correct and, thus, assigned the mother the burden of proving the reported amounts were incorrect.

Stated from another perspective, we do not conflate (1) the outlay of money used to purchase a capital asset with (2) the accounting entries, such as depreciation, that occur after the acquisition of the asset and do not involve the actual outlay of funds in future years.

What this court is saying is that, especially beginning in year two and moving forward, the depreciation is artificial and is not deductible for purposes of calculating support because the items were acquired previously. It is an artificial paper deduction, not funded in cash outlay.

Note: The Hein decision did not address the issue of a Section 179 depreciation deduction (26 U.S.C. § 179). Section 179 allows a massive $1,000,000.00 depreciation deduction for one year as an income tax incentive to buy equipment. It is a tax deduction for actual expenditures in the year of claiming, and not based on economic reality (See Imputing Income to a Parent or Spouse via California Family Code 4058).

The Hein court further recognized the limited application of its decision in footnote 11: “Should the Legislature attempt to clarify a parent’s income from the proprietorship of a business, greater clarity would be achieved if, in addition to address the treatment of depreciation, the subjects of (1) capital expenditure and (2) principal payments on third party debt used to acquire a capital asset were addressed.”

The Hein decision went on to make a largely agreeable decision regarding another hotly contested issue when calculating support in family court when one party is self-employed.

2) To Establish the Burden of Proof, There May be No Rebuttable Presumption That Tax Returns Are Correct

The misnomer that a rebuttable presumption that the gross income on most recent tax returns is correct was found in the case, In re Marriage of Loh (2001) 93 Cal.App.4th 325, which found that: “A parent’s gross income, as stated under penalty of perjury on recent tax returns, should be presumptively correct. (See In re Marriage of Scheppers (2001) 86 Cal.App.4th 646, 650, 103 Cal.Rptr.2d 529 [‘Although federal law is not conclusive on the interpretation of section 4058, it is persuasive….’].) Returns are, after all, ultimately enforced by federal and state criminal penalties. Hence it is not surprising that tax returns are the core component of determinations under the guideline formula.”

However, the Hein court clarified this misnomer as follows: “In Loh, the court’s statement that ‘[a] parent’s gross income, as stated under penalty of perjury on recent tax returns, should be presumptively correct’ (Loh, supra, 93 Cal.App.4th at p. 332) was dicta because none of the father’s post-separation income tax returns were part of the record. As a result, Loh is not authority for the principle that gross income declared on an individual income tax return is correct, much less that the corporate income tax returns of a C corporation and an S corporation owned entirely by a self-employed parent are presumed correct. (See Riverside County Sheriff’s Dept. v. Stiglitz (2014) 60 Cal.4th 624, 641 [it is axiomatic that cases are not authority for propositions not considered].) ”

On the question of the burden of proof and the rebuttable presumption that the gross income stated on a parent’s tax returns is correct, the Hein court concluded such a presumption, if it exists, does not extend to the tax returns in this particular case. Here, the self-employed father’s businesses are organized into two wholly owned corporations (one taxpaying entity and one flow-through entity), the corporations’ operations are intertwined, and their total assets exceed $5 million. In such circumstances, the burden of proving that the expenses claimed on the tax returns constitute “expenditures required for the operation of the business[es]” is properly allocated to the self-employed parent who controls the corporations.

The Hein court concluded,

…the policy that seeks to advance children’s interest and considerations of fairness to the parents who are litigating the issue weigh in favor of giving Martin the burden of proof on the question of his business income and expenditure under section 4058 subdivision (a)(2). This conclusion recognizes that ‘a spouse who is the owner of a successful business and who has control of his or her income can structure income and the payment of expenses to depress income.’ (In re Marriage of Chakko (2004) 115 Cal.App.4th 104, 109.)… We conclude that considerations of public policy and fairness, informed by the judicial system’s experience in the cases involving the income and business expenses of a self-employed party, weigh in favor of assigning Martin the burden of proof on the factual questions that must be resolved to determine his business income and expenditures under section 4058 subdivision (a)(2).

3) Deductions for Principal Payments on Business Debt Are Sometimes Allowed

The relevant issue raised in In re Marriage of Deluca (2020) 45 Cal.App.5th 184, is the husband’s contention that the trial court erred by failing to reduce his income available for spousal support by the amount of monthly loan principal payments he is required to make on his income-producing properties. He argues the court abused its discretion by “imputing” the amount of his monthly loan payments to him as “phantom income” and awarding wife monthly spousal support of $7,500, despite finding that the maximum monthly income available to him to support the children after making his loan payments was $7,281.

The applicable question raised on appeal is whether a trial court should deduct principal payments a spouse makes on business loans—including loans secured by income producing property—from income available for spousal support.
In the published portion of the opinion, the Deluca court reversed the spousal support award and directed the trial court to reconsider the amount of support after determining the extent to which husband’s loan principal payments reasonably and legitimately reduce his income for purposes of support. The Deluca court found that the trial court committed reversible error when it failed to consider the statutory spousal support factor pertaining to obligations and assets, including the separate property, of each party; this factor was particularly important because husband’s net worth was vastly greater than wife’s, due largely to his real property assets (Cal. Fam. Code § 4320 (e)).

Consult an Experienced Child and Spousal Support Attorney to Obtain the Best Result

The principles discussed in the article are often complex, involving large sums of money. If you have questions for a child support attorney or a spousal support attorney, contact a skilled California family law attorney to help guide you through the process. Our attorneys have litigated support cases throughout the State of California, including Riverside, Los Angeles, Orange and San Bernardino counties. Call the experienced family law attorneys at Talkov Law at (951) 888-3300 or contact us online for a free consultation about your case.


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Free Calculator to Determine the Bankruptcy Trustee's Fee in a Chapter 7 and Chapter 11 Bankruptcy

Bankruptcy Trustee Compensation Fee Calculator

Free Calculator to Determine the Bankruptcy Trustee’s Commission in a Chapter 7 and Chapter 11 Bankruptcy

Bankruptcy trustee compensation in Chapter 7 & 11 is fixed by many courts according to a specific statutory formula. The way that the formulate works is that the more the bankruptcy trustee distributes to creditors, the more money the trustee generally makes.

Specifically, the compensation of a trustee in a Chapter 7 bankruptcy or Chapter 11 bankruptcy is defined by statute under Section 326(a) of the Bankruptcy Code (11 U.S.C. Section 326(a)) as follows:

In a case under chapter 7 or 11, other than a case under subchapter V of chapter 11, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustee’s services, payable after the trustee renders such services, not to exceed 25 percent on the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of $50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000, and reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000, upon all moneys disbursed or turned over in the case by the trustee to parties in interest, excluding the debtor, but including holders of secured claims.

Use the free bankruptcy trustee compensation calculator to determine the trustee’s fee that the bankruptcy court is able to award.

 

 

If you have questions about bankruptcy, trustee’s rights and how to properly negotiate with a bankruptcy trustee, contact an experienced bankruptcy attorney who represents trustees, creditors, debtors, and interested parties in bankruptcy to consider your rights.


Imputing Income to a Parent or Spouse via California Family Code 4058

Can California Family Courts Impute Income to a Parent or Spouse in Calculating Support? California courts have long asserted the power to impute income to supporting spouses and parents based on ability to earn income, as distinct from actual income. The first mention of the idea in the California reported decisions appeared at the very...

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Can California Family Courts Impute Income to a Parent or Spouse in Calculating Support?

California courts have long asserted the power to impute income to supporting spouses and parents based on ability to earn income, as distinct from actual income. The first mention of the idea in the California reported decisions appeared at the very beginning of the Grant administration. (See Eidenmuller v. Eidenmuller (1869) 37 Cal. 364, 366).

Modernly, courts allow family law attorneys to apply standards and rules for imputing income to litigants. The reason behind the limitations California courts have placed on their own power to impute income lies in the simple fact that without evidence of ability or opportunity to earn, the power to impute income would easily devolve into a trial judge’s power to arbitrarily establish a support order at any given level, plucked from mid-air, just as long as it is over the level otherwise required by the payor’s actual, taxable income (See 3 Secrets to Proving Self-Employed Income for Child or Spousal Support in California – In re Marriage of Deluca & Hein).

The “Regnery rule” emerged from these self-imposed judicial limitations on imputation of income, and the rule is essentially a judicial gloss on the words “earning capacity” as they appear in Family Code Section 4058, subdivision (b). Citing from a digest of words and phrases and a workers’ compensation case, the Regnery court announced a “three-prong test before the capacity to earn standard may be applied.” The three tests are: “ability to work,” “willingness to work,” and “opportunity to work which means an employer who is willing to hire.” (In re Marriage of Regnery (1989) 214 Cal.App.3d 1367).

Family Code Section 4058(b) reads as follows:

The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent with the best interests of the children, taking into consideration the overall welfare and developmental needs of the children, and the time that parent spends with the children.

Proving Ability, Willingness, and Opportunity to Work

The best way to present evidence of a spouse or parent’s ability, willingness, and opportunity to work is by serving a Request for Judicial Notice, pursuant to Evidence Code §453; Marriage of LaBass & Munsee (1997) 56 Cal.App.4th 1331, 1339 (trial court may take judicial notice of classified advertisements for job offers, which “want ads” may be admitted to establish available jobs in order to impute full-time income to an underemployed spouse). Pursuant to California Rules of Court, Rule 3.1306(c), a true and correct copy of the job opening must be attached to said Request.

Consult an Experienced Child and Spousal Support Attorney to Obtain the Best Result

The principles discussed in the article are often complex, involving large sums of money. If you have questions for a child support attorney or a spousal support attorney, contact a skilled California family law attorney to help guide you through the process. Our attorneys have litigated support cases throughout the State of California, including Riverside, Los Angeles, Orange and San Bernardino counties. Call the experienced family law attorneys at Talkov Law at (951) 888-3300 or contact us online for a free consultation about your case.


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