5D05-2379 Haley v. Haley

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State: Florida

Court: Florida Fifth District Court

Docket No: 5D05-2379

Case Date: 08/07/2006

Preview:IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FIFTH DISTRICT JULY TERM 2006

MYRA HALEY, Appellant, v. JOHN HALEY, Appellee. ________________________________/ Opinion filed August 11, 2006. Appeal from the Circuit Court for Brevard County, Tonya Rainwater, Judge. Jack A. Kirschenbaum, of Gray Robinson, P. A., Melbourne, for Appellant. Douglas D. Marks, of Boyd & Marks, Melbourne, for Appellee. Case No. 5D05-2379

THOMPSON, J. Myra Haley appeals the equitable distribution of marital assets. Specifically, this appeal concerns equitable distribution of a joint tax refund and capital loss carry forwards ("CLCFs") resulting from capital losses incurred by S corporations, partnerships, and trusts owned by the former spouses. We affirm in part and reverse in part.

John and Myra Haley were married in 1988, and John petitioned for dissolution in 2004. In April 2004, the parties entered into a mediated marital settlement agreement ("Agreement") that determined the disposition of their interests in several entities created during their marriage and provided: "Any asset owned by a particular entity shall remain with that entity and any liabilities relating to an asset shall remain with the asset." The Agreement did not affect Myra's interest in another entity that figured

prominently in the trial: the Igo Family Partnership ("Igo"), which was formed by Myra's parents before the Haleys' marriage. It was undisputed John had no interest in Igo and that Myra's interest was nonmarital property. The court entered a final judgment of dissolution that incorporated the Agreement, but reserved jurisdiction to rule on John's motion for equal distribution of the refund and CLCFs. In June 2005, the court entered an order that found that the refund and CLCFs were intangible marital assets, subject to equitable distribution, and divided them equally. Myra timely appealed. CPA Charles Hoyman, Jr. prepared the parties' 2003 joint federal income tax return. He discovered that a Schedule K-1 for one of the entities created during the marriage was not included in their 2002 income tax return, so he prepared an amended 2002 return to pick up its loss. The amended return increased their net operating loss for 2002, so he prepared a carry back 1040X for 1997 to carry the net operating loss from 2002 back to 1997 in accordance with Internal Service Revenue ("IRS") regulations . Hoyman enumerated the entities, controlled by either or both parties,

considered to form the CLCFs. Most of the capital loss was attributable to Igo. The tax refund at issue resulted from the carry back.

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The $168,479 refund resulted from the spouses' amended 1997 joint return. Both parties earned income in 1997, and Myra conceded they were jointly responsible for their 1997 tax payment. The parties disputed the extent of intermingling of their accounts, but both agreed that Myra wrote the checks to the IRS. Both testified that John wrote checks to Myra to cover much of the tax arising from his income. Nevertheless, Myra argued that, because she cashed John's checks rather than depositing them into the account from which she paid the IRS, she was entitled to most of the refund. The court did not abuse its discretion with respect to the tax refund, which arose from a voluntarily filed joint return for a tax year in which the parties were married. See Wolfson v. Cary, 488 So. 2d 864, 870 (Fla. 3d DCA 1986). The recalculation of net operating losses for 2002 led to a refund for 1997; both were years in which the parties were married, filed jointly, and each earned income. Accordingly, the right to the joint tax refund was acquired during the marriage and should be equitably distributed. See Steinfeld v. Steinfeld, 553 So. 2d 774, 776 (Fla. 4th DCA 1989). The refund resulted from taxes paid on marital income for 1997.1 Myra conceded that she cashed checks from John for taxes and that she understood the taxes to be a joint liability. Her decision to put his checks in one pocket while paying the IRS from another did not transform the joint refund into nonmarital property. In addition, the parties were entitled to $350,853 in CLCFs from their joint returns, some of which they applied to their 2003 joint return. Myra contended the asset responsible for most of the CLCFs was her nonmarital asset. CPA Thomas Behan In testimony, the only entity that was expressly nonmarital was Igo. Myra presented no evidence that any 1997 income derived from Igo. See

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