Until Tax Deduction Do Us Part

• Author: Kate Rockwood
• Pages: 10-11

PHOTOS COURTESY OF LUKE COOLEY/IU KELLEY SCHOOL OF BUSINESS INDIANAPOLIS AND BAKER & HOSTETLER; BARCLAY LAW GROUP

importa nt the media is,” says

Bauer. “The Indianapolis

Star never quit. That kind of

commitment to investigative

journalism on issues of sig-

nifi cant public importance

needs to be commended and

acknowledged so our media

will continue to do it.”

Bauer hopes the impact

of this case demonstrat es

how journalism and the law

can work together for the

public good.

“Our job is harder on a

day-to-day basis for the

media,” Bauer says. “A case

like this helps us re-e stab-

lish the importance of a n

independent free press to

our way of life and improve

outcomes for the public’s

right to know in case s that

may not have quite the same

public signifi cance as t he

... USA Gymnastic s case,

but are nonetheless still

vital to our cons titutional

democracy.”

Kwiatkowski says she’s

humbled by how the story

turned out. “I think a bout

the justice; about all the

survivors who have tr usted

us with their stor ies.”

Cornwell’s lawsuit against

USA Gymnastic s ended in

a confi dential sett lement in

April. “Nassar ’s jus t the tip

of the iceberg,” he says. “If

people think Nassar ’s ba d,

they need to understand the

scope of the problem with

USA Gymnastic s coaches.”

—Caroline Rothste in

Opening Statements

10 || ABA JOURNAL JUNE 2018

Until Tax Deduction

Do Us Part

IRS overhaul throws divorce calculations

into turmoil

IN THE OFTEN MESSY FI NANCIAL negotiations that

are part of d ivorce, one rule has always been cle ar

across state l ines for 75 years: Alimony was deduct-

ible for the payer, and the recipient paid income tax

on it. Now, President Donald Trump’s tax code over-

haul has throw n that relied-upon calculation into

turmoil, causing c onfusion for matrimonial lawyer s,

mediators and, most i mportant, divorcing couples

tr y i n g t o r e a c h fi n a n c i a l s e t t l em e n t s.

Divorce law yers say uncertainty ab out the new

law, which takes e ec t Dec. 31, 2018, as part of the

Tax Cuts and Jobs Act, i s causing an uptick in some

unhappy couples scrambling to spl it before the

year-end deadl ine, while others may decide it’s

better to dra g their feet.

“Both lawyers and l itigants are aware of the

deadline and ar e gearing up,” says Lester Barclay,

principal of the Barcl ay Law Group in Chicago.

“There’s going to be a lot more litigation and a lot

more fi ght ing.”

The inability to deduct alimony payments

will make negotiations more contentious, he says,

because the higher- earning spouse will be less

willing to a gree to bigger payments. Previously, both

sides benefi ted: The provider wa s able to reduce his

or her taxable income, whi le the recipient, of course,

gained more support.

“I’ve never seen anyone

walk out of court thrilled

to pay, but the deduction

was a spoonfu l of sugar,”

says Rhonda de Freitas , a

clinical as sociate professor at

Chicago-Kent C ollege of Law.

But while high-earning

spouses have reason to

hustle through divorce

proceedings thi s year,

dependent spouses may

have reason to dra g out the

process. That’s because the

tax overhaul al so ends the

requirement that recipients

pay taxes on the al imony

as though it were

regula r income.

Proponents say

the changes wi ll

be easier for the

IRS to monitor.

Current tax data

shows that one

“A CASE LIKE THIS HELP S US

RE-ESTABLISH THE I MPORTANCE

OF AN INDEPEN DENT FREE

PRESS.” —S. DEREK B AUER

“THERE’S GOING TO

BE A LOT MORE LITI-

GATION AND A LOT

MORE FIGHTING.”

—LESTER BARCLAY

“FOR OUR INVESTIGATIONS,

WE RELY ON DOCUMENTATION

AND EVIDENCE, SO COURT

RECORDS CAN BE A REALLY

IMPORTANT PART

OF THAT PROCESS.”

—MARISA KWIATKOWSKI