0

What constitute as income when calculating child support? Does it include unrealized capital gains (stocks)? So does a person who has a lot of stocks but very little income only be required to pay child support proportional to his income or can the court force the individual to sell some shares? How does the court determine how much to sell and how much should be paid in child support? Assume this is in the U.S. and in the state of California.

2
  • You should put the country/state in the tags as it will help make what you are asking clearer.
    – Joe W
    Jul 8 at 0:53
  • Don't know California, but what does your common sense say?
    – user253751
    Jul 9 at 8:54
5

In California, everything that counts as taxable income for federal purposes, and then some. The form is here, the corresponding explanation is here starting p. 18. It includes things that are income but not taxable (see p. 24), such as tax-exempt interest. Potential profit i.e. unrealized capital gains coming from increased value in a home or increased share values is not income in the relevant sense. FAM §4058 is the statutes that lists some of what counts as income, but it says "includes, but is not limited to, the following". The courts' use of IRS tax forms as defining "income" is not mandated by the legislature, so if unrealized capital gains become taxable income at the federal level, the courts will have to decide how such "income" is to be treated.

1
  • Splitting hairs a bit, but the definition of income for child support purposes in California is closer to "gross income" for tax purposes than it is to either "adjusted gross income" or "taxable income" for tax purposes. Neither above the line nor below the line tax deductions from the main Form 1040 are allowed to be considered with rare exceptions for extraordinary expenses. But Schedule C deductions generally are allowed.
    – ohwilleke
    Jul 8 at 21:45

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.