Posted by Nydia Streets of Streets Law in Florida Divorce
“Double-dipping” occurs in a Florida divorce case when a party is awarded credit twice in matters concerning equitable distribution and support payments. This was an issue in the case Jorgensen v. Tagarelli, 5D19-2132 (Fla. 5th DCA July 2, 2020) in which the former wife appealed a final judgment of dissolution of marriage concerning imputation of income and deductions given to the former husband in calculating his business income.
During the parties marriage, the former wife was self-employed. However, in 2016, she earned $118,000 for full-time employment. After the parties’ separation, the former wife quit her full-time employment to return to being self-employed and earning $38,000 annually. Accordingly, the trial court found that she was voluntarily underemployed and imputed income to her solely by relying on her earning history. The parties entered a settlement agreement resolving equitable distribution and agreeing that the former husband would pay the former wife installments of equalizing payments to buy out her portion of a business jointly owned by the former couple. In calculating child support, the court allowed the former husband to deduct from his business income these equalizing payments so that they would not be considered in determining his net income.
The former wife appealed and on these issues, the appellate court reversed the trial court’s rulings. First, while the appellate court agreed there was competent and substantial evidence to support the finding that the former wife was voluntarily underemployed, the court disagreed that she should be imputed to the earning level she once experienced as a full-time employee. The court held “As the party seeking to impute income, Former Husband bears the burden to show ‘both employability and that jobs are available.’”
Turning to the issue of the former husband’s business income, the appellate court found the former husband was “double-dipping”. The court held “The record does not support the trial court's conclusion that the monthly installment payments are a business expense. Rather, they reflect an equalizing payment made over time pursuant to the parties' settlement. Former Husband's contrary argument is belied by the nature of the business interests at issue and the express terms of the parties' settlement agreement. The parties owned their interests in the mobile home park as tenants by the entirety. These interests were marital assets. [. . .] Former Husband offers no legal authority to support his contention that the monthly installment payments are a business expense. Section 61.30(2)(a)(3) excludes business expenses from business income because the funds ‘are expected to be used by the business to cover its expenses and therefore are not available to the shareholder-spouse to satisfy court-ordered financial obligations upon dissolution of marriage.’ [internal citations omitted] Although the funds at issue are not technically ‘available’ to pay child support, that is only because Former Husband is using the funds to satisfy the parties' equitable distribution settlement. [internal citations omitted] Former Husband should not be permitted to ‘double dip’ by receiving credit for the payments in both the property settlement and the child support calculation.”
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