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  • Advise on Corporation

    I have a profession corp which has pre tax savings of 900k to be split my with ex . If i liquidate the corp then I am on hook for taxes at highest bracket.
    Does my ex get full value of the corp (450k) or the after tax value .

  • #2
    After tax value.

    Probably a few ways to play this...

    Set up a new corp and move half of the retained earnings into that corp. Then you can slowly pay out of your corp without paying the highest bracket.

    Sign over ownership of the first corp to her and then she can do whatever she wants.

    Also if you liquidate your Line 150 goes way up ... this could have issues later on when dealing with spousal and child support... you never know...

    Comment


    • #3
      Thank You ,
      Another question
      What if the current value of those investments have gone to 5million.I was extremely lucky to have bought Alberta Oil company stocks with those investments in June 2020 and it has grown to 5million from 900k . Fingers crossed that she doesnt come after the increased value post seperation .

      Comment


      • #4
        But aren't half the investments hers?

        Why wouldn't she be entitled to the gain?

        Comment


        • #5
          Originally posted by arbortrail22 View Post
          But aren't half the investments hers?

          Why wouldn't she be entitled to the gain?

          This.

          Any lawyer worth their salt is going to argue the shares were held in trust and any increase in value would be considered owned by their client. The stocks should have either been frozen or the financial value held in a separate account.

          You need a lawyer as well as an accountant.

          Comment


          • #6
            If your going down a path where she currently doesn't know about the gain as she no longer has access to the accounts... that's a short path and will look very unfavourably on you.

            Comment


            • #7
              It really depends on the corp and your business

              If you are a dentist, your business has a value, medical doctor does not

              The value of the corp is day of separation and it would be based on liquidated amount

              This will simply go as part of equalization

              Do not pay her anything from the corp, salary, wage from here on out

              Comment


              • #8
                Thank You
                The professional corp is owned by me and was sitting on cash when I bought the stocks with the funds and borrowed on LoCs to fund the purchase. I have a business valuation being done to value the corp investments on the date of seperation . She is unlicensed to be allowed to own shares in a prof corp .I assume then its a business and corporate law would apply here ,where I have full control of the corp through voting shares . The courts cannot order a corp to be sold/liquidated except in extreme circumstances .

                As i understand from a lawyers office website
                Professional corporations (“PC”) are a helpful tool for many professionals, including dentists, doctors and lawyers, for dividing income with their spouse and/or deferment of taxes on income. New Brunswick courts have stated that if the spouse mainly utilizes the PC for tax deferral purposes or investment or savings, it is subject to a marital property division as a family asset. In one decision, the court held that the PC was a “cousin of the RRSP”. In contrast, if the spouse uses the PC principally in business or for an entrepreneurial purpose, a court may determine that it is exempt from division on the breakdown of the marriage. How the parties used the PC will primarily inform this analysis.

                Originally posted by rockscan View Post
                This.

                Any lawyer worth their salt is going to argue the shares were held in trust and any increase in value would be considered owned by their client. The stocks should have either been frozen or the financial value held in a separate account.

                You need a lawyer as well as an accountant.

                Comment


                • #9
                  Well above my pay grade
                  I hope with 5mill u can get a good lawyer

                  Comment


                  • #10
                    Originally posted by Kkc View Post
                    It really depends on the corp and your business

                    If you are a dentist, your business has a value, medical doctor does not

                    The value of the corp is day of separation and it would be based on liquidated amount

                    This will simply go as part of equalization

                    Do not pay her anything from the corp, salary, wage from here on out
                    Thank You ,This is very helpful .Appreciate your help as to valuation =liquidation value on day of seperation . Can they ask for details of all financial investments of the corp .I spent 5k to get an official valuation of the business from BDO Canada including a professional valuator to present in courts if they argue . Similarly My RRSP and TFSA are up 5x since date of seperation . Fingers crossed they dont come asking for it as well .

                    Comment


                    • #11
                      Hmm

                      That’s a good question

                      I made investments after the separation and they shot up
                      The source of that was me deferring salary

                      I think I read somewhere that when it goes up like that it can be an issue
                      You should note that if she gets a million dollars one can argue that she can live off that and won’t need support

                      Comment


                      • #12
                        Originally posted by Kkc View Post
                        Well above my pay grade
                        I hope with 5mill u can get a good lawyer
                        Absolutely have a great laywer , best one in town . I was one of the lucky ones who came out on top after a divorce . My net assets have grown 5x post seperation including RRSP and TFSA . I started trading stock markets ,in my parents names so the income is not attributable to me . Atleast this money will be kept for my childrens education than leaving it to my ex who would blow it away .
                        Lets see what the courts have to say

                        Comment


                        • #13
                          Family court may not see it as simply corporation and she has nothing in it. It could be argued unjust enrichment with borrowed money. Its not like a house or car etc. This is shares that were partially hers due to valuation. You had that money and were able to invest it. Not to mention a family court judge wont get into the nitty gritty of corporate law. The judge will see it as an unfair advantage due to marital assets. You should speak to a family lawyer on it and as kkc said, if you make her an offer that saves you spousal in the long run (or legal fees) it may be worth your while.

                          Comment


                          • #14
                            I’m glad
                            I will likely as well mines taken a long ass time

                            I wouldn’t write about parent stocks on this forum
                            Shits public and while I have no clue if anything can come of it…I know it would be a headache

                            Comment


                            • #15
                              Originally posted by Kkc View Post
                              Hmm

                              That’s a good question

                              I made investments after the separation and they shot up
                              The source of that was me deferring salary

                              I think I read somewhere that when it goes up like that it can be an issue
                              You should note that if she gets a million dollars one can argue that she can live off that and won’t need support
                              Good point ,very valid point ,there will be income imputed to the million$ which she gets

                              Comment

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