Watch for "Double-Dipping" in Divorce Cases
Double‐dipping is a phenomenon that happens in many divorce types of valuations.
This typically happens when in the valuation, “normalizing adjustments” are made for salaries that have been drawn out of the company in order to reduce the profits for tax purposes. These adjustments typically will add back the salaries, which ultimately increases the profits and the value of the company in question.
However, in the calculation of spousal and child support, the salary that is typically used by many courts is the actual salary drawn out of the company on a historical basis.
As a result, the spousal support or child support is higher, and the value the company is higher and in fact, the out‐spouse is in effect compensated twice for portion of the salary.
Call one of our credentialed professionals to assist you in better understanding the impact of “double‐dipping” on value for the case at hand or any other valuation or litigation needs.
David F. Zarlenga, CPA\ABV, CVA, CFE Mr. Zarlenga is a Certified Public Accountant with over two decades of experience. Mr. Zarlenga is regularly sought after for a variety of valuation engagements including those involving litigation as well as the estate and gift tax arena. He also is experienced in mergers and acquisitions and fraud and forensic accounting.