Costs of sale and taxes to be considered in equitable distribution of a business
In Carney v. Carney, a recent decision by the Superior Court of Pennsylvania, the Court held that costs associated with the sale of a business and related tax effects were relevant to an equitable distribution order.
The trial court entered an equitable distribution order, which gave Husband the couple’s trucking business. Husband was required to make monthly payments to Wife for 10 years to offset the value of the business with the remaining marital assets, all of which were awarded to Wife. The monthly payment was calculated without accounting for costs associated with a potential future sale of the business and possible tax effects.
Under Pennsylvania law, costs of sale and related tax effects are relevant to equitable distribution regardless of the likelihood of the sale. Therefore, the value given to a marital asset for purposes of equitable distribution should be the value after deducting any expense required to liquidize the asset.