Income for Purposes of Support – Stock and Business Income

Are you involved in a divorce or child custody case involving income for support purposes? An experienced divorce and child custody lawyer and team can guide you through the legal process to assist in exploring your options. You have one bite at the apple in the court system so make it count.

In order to calculate support, courts first must determine income. Income is broadly defined in both C.R.S. §14-10-114(8)(c)(I) and C.R.S §14-10- 115(5)(a)(I). Parties often focus on W-2 income, however many people often have other sources of income or they are self-employed which requires a more detailed analysis. Following is information on other common income sources:

Stock and stock options are other source of income. Many stock and stock options are subject to a vesting period with the requirement of employment during the vesting period. Some, however, are subject to an acceleration clause that guarantees receipt even if employment ends. It is important to determine whether there is a present, exercisable right, as opposed to just a future interest. Potential income from the future exercise of stock options is not income for support, however stock options that are actually exercised is considered to be income. In re Marriage of Davis, 252 P.3d 530, 535 (Colo. App. 2011).

Some parties are self employed or own businesses. “Income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, “gross income” equals gross receipts minus ordinary and necessary expenses” is income. C.R.S. §14-10-114(8)(c)(III)(A), C.R.S. §14-10-115(5)(a)(III)(A). Ordinary and necessary Expenses do not include accelerated depreciation or investment tax credits. It also does not include costs that offset personal costs, such as medical insurance for the business owner.

Colorado courts have discretion to determine what constitutes income from self-employment or business income for purposes of calculating support obligations. The courts may look beyond income tax reporting to consider issues like excessive deductions or retained earnings. Courts may find that a party is attempting to protect income to avoid a support obligation through business or investment strategies. However, there must be a factual basis for determining that additional funds are actually available for support.

A knowledgeable and experienced divorce and family lawyer and legal team can guide you through Colorado Springs divorce and family law matters by negotiating, mediating and litigating on your behalf. You can focus on moving on to a better future instead of spending your time attempting to navigate complex legal rules and procedures.

Sabra Janko from Janko Family Law has more than 20 years of legal experience and has written “the book” on Colorado divorce and family law – “Colorado Family Law With Forms”, published by LexisNexis, which you can find at https://store.lexisnexis.com/products/colorado-family-law-with-forms-skuSKU02903. Contact us at 719-344-5523 or complete our online scheduling request for a free 30-minute informational consultation.