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How are support payments treated under federal income tax rules?

Support Payments Tax Spousal Support

How are support payments treated under federal income tax rules?

Child support payments are typically not deductible from the income of the payer and are not included as taxable income to the supported spouse. Alimony or spousal support payments are tax deductible by the payer and taxable income to the supported spouse.

According to the Federal Internal Revenue Code, ” … any payment which the terms of the divorce or separation instrument fix (in terms of an amount of money or a part of the payment) as a sum which is payable for the support of children of the payer spouse” is not considered alimony or a separate maintenance payment. Thus, such payments are a tax neutral event (they are non-taxable to the person receiving them and non-deductible to the person making them).

Federal Income Tax Regulations state:

“A payment is fixed as payable for the support of a child of the payer spouse if the divorce or separation instrument specifically designates some sum or portion (which sum or portion may fluctuate) as payable for the support of a child of the payer spouse. A payment will be treated as fixed … if the payment is reduced (a) on the happening of a contingency relating to a child of the payer, or (b) at a time which can clearly be associated with such contingency. … For this purpose, a contingency relates to a child of the payer if it depends on any event relating to that child, regardless of whether such event is certain or likely to occur. Events that relate to a child of the payer include the following: the child’s attaining a specified age or income level, dying, marrying, leaving school, leaving the spouse’s household, or gaining employment.”

Thus, under Federal income tax law, regardless of the label that is used, most child support payments are a tax neutral event, while most support payments provided to the other (former) spouse are deductible to the payer and included in the taxable income of the supported spouse.

How do stock options impact alimony, separate maintainance and child support?

Stock Options Income Support Spousal Support

How do stock options impact alimony, separate maintainance and child support?

Stock options do impact alimony, separate maintenance and child support, but as courts only recently began dealing with support cases involving stock options, and the law is still taking shape.

Employer granted stock options had been relatively rare as they were issued only to a relatively small number of senior executives in large, publicly held companies. Now, however, an estimated 10 million Americans have stock options granted by their employers. In fact, employee stock options are an important part of many employees’ total compensation package, and in some industries, the most important element.

Employer-granted qualified stock options are typically issued at the price of the company’s shares in the market on the date of grant. If the market price of the company’s shares later increases, then the options are “in the money” and have real value. Once the option “vests”, the option holder can purchase the shares and (in theory) sell them and realize a gain. The total value of all unexercised stock options was recently estimated at $1Trillion.

However, most stock options can not be exercised immediately on issue. They typically “vest” over a period of 3 to 5 years, or longer, and continued employment with the same company is nearly always a condition for vesting. In privately held companies there is always the question of who people can sell their shares to, as they are illiquid. In many publicly held companies, especially those that had a recent IPO, there also are restrictions on when persons with vested options can sell the shares they get on exercise of their options. Some employees have seen their options become worth many millions of dollars in trading after an IPO, only to watch the value of the shares fall significantly, going well below the IPO price, and even below the option exercise price (and thus “out of the money”) when the market ceases to value their company as highly. The truth is the market price of publicly held companies, or share value of privately held companies, and thus the value of stock options, can change dramatically.

The first issue a court faces is whether the stock options are purely property, or represent something more, such as a combination of property and income.

State laws and courts traditionally divide the property the couple has earned during the marriage in a divorce. It is 50-50 if the couple lives in a community property state or based on “equitable distribution” or comparable approaches in other states. If, for example, the husband was granted the stock options for 1,000 shares of his employer’s stock, and when the couple divorced the stock options were divided 500 to each, the husband would argue that he has given his wife half the property and she is not entitled to anything more based on his options.

The wife would argue that while that is the appropriate division of the property, the husband also has a duty to support his wife, and their children, separate from the division of property. She would also argue that the stock options also represent income, and as such their value, in his hands, even if not exercised, should be taken into account as he could realize the value simply by selling them. She would point out that many employers issue stock options as a form of compensation, and she and the children should benefit from that form of income as well. In addition, she would argue, not only the value of the old options he holds, but also the value from likely future grants of options should be taken into account in setting his support obligations, as the income of the person responsible for support is one of the key factors used in determining the amount of spousal and child support.

In the few courts that have decided cases involving options, most have decreed that where the appreciation in value of a spouse’s stock options represent a significant share of the spouse’s total income, to ignore that income would be unfair to the spouse and children entitled to support. In essence, they said that failing to take the increase in value of stock options into account would allow people to camouflage their income. One court has ruled that in it was proper when setting support obligations to average the father’s increase in income from exercising stock options and add it to his base salary. Another court has noted that if the value of the options feel, the change would be a potential ground to seek a reduction in support payments.

What are the main deal points in an agency agreement?

Agency Agreement Music Law Intellectual Property

What are the main deal points in an agency agreement?

Each union has its own pre-printed “form” agency agreement, providing all of that unions particular requirements. These form contracts are lengthy and complicated. They are basically a stack of union forms combined into one “agency agreement”. A union agency agreement is actually comprised of eight contracts incorporated into one; one from AF of M (for musicians); one from AFTRA (for vocalists and taped or live televisions actors and actresses); three SAG agreements (one each for TV, film, and commercials); one for Equity; and two catch-all agreements called “General Service” and “Packaging”.

Some tips on negotiating terms in an agency agreement include:

(1) General Terms: Before singing any agency agreement, be clear with the agent on what genre of music you play, what sorts of other music you can play in a pinch, and what styles of music you are unable or unwilling to play. You should clarify if you are willing to work in venues only at night due to bandmember commitments, and whether you are willing to travel and how far. You may also need to reach an agreement of the prices the band will charge.

(2) Exclusivity: Most agencies will want to be your only (exclusive) booking agent, at least in a specified territory.

(3) Term: The “term” means the length of the contract. Agents like to ask for three (3) or more years. If you are artist with sufficient bargaining power, try to get them to limit it to one (1) year. If you cannot get this, try to get a clause allowing you to terminate after each year if the Agent fails to generate certain minimum levels of earnings.

(4) Territory: Talent Agents usually require “worldwide” rights. As a new artist, you may not able to avoid this. Once you become a mid-level artist, you may ask to exclude territories outside the US.

(5) Fees: Never give your booking agent a percentage of your income from records, song writing, or publishing. The “form” agency agreements from AF of M and AFTRA have a place on the form where you can initial if the agency commissions your earnings from your records. Do not consent to this. Instead, give them 5% to 10% of the personal appearances, depending on the employment procured. Sometimes, agents will reduce their percentage from 10% to 5% for artists that also generate major revenues from concerts. For TV, films, and radio, agents usually do not accept less than 10%. Sometimes, a sliding scale fee can be negotiated, which means as your income goes up, their fee goes down.

(6) Scope: Despite the fact that agency agreements are usually on pre-printed forms, there are a number of exclusions from your earnings that an artist should try to negotiate. Try to exclude earnings from: record producing, records (mechanical royalties), song writing (performance, synchronization and print income), sound tracks (even if they got you work as an actor or actress), commercials (unless your under contract for them), book publishing, and costs of collection. Try to avoid the agency from being able to get you employment in these areas without your written consent.

(7) Key Person: In order to ensure that the Talent Agent you hired stays your agent, even if he or she leaves the agency company, it is advisable to insert a “key man” clause in your agency contract. This clause provides that the “key person” with whom you have a agency relationship must be living and be actively and personally involved as your agent and, if not, you can terminate your agency agreement.

(8) Termination: In your union agency “form” agreement, make sure it contains a provision allowing the artist to terminate the contract if a specified amount of work has not been obtained in a certain time period. Make sure you also insert a clause that says that if any of the eight union forms contracts are terminated, you have the right to terminate the rest. If this is not done, the Agency may be representing you in certain areas, but not in others. If you cannot negotiate this escape clause, then try to at least get the Agent to agree that if either the AF of M or AFTRA agreements can be terminated for failure to secure employment, then you have the right to terminate all other contracts (called a “co-terminus” clause). In case the artist/agency agreement terminates during a tour, the agency will try to get paid commissions for all tour dates procured, so try to insert a clause that indicates that no commissions are paid for non-appearances beyond your control.

(Reprinted with permission of Ruben Salazar, Esq.)

I suffered a back injury on the job. Is workers’ compensation the only remedy available for a work related back injury?

Back Injury On The Job Injury Law

I suffered a back injury on the job. Is workers’ compensation the only remedy available for a work related back injury?

When an employee suffers from a work-related injury, recovery of workers’ compensation benefits is many times the employee’s only remedy against the employer. However, when an employee is injured in the course and scope of employment as a result of a negligent third party (not the employee or the employer), the employee has the right to pursue a “third party claim” in addition to pursuing a workers’ compensation claim.

An example of a third party claim could be claim against a manufacturer who made a faulty piece of equipment that caused a work-related injury when it malfunctioned or did not work properly. For instance, if a defective ladder collapses when being used at work and it causes a back injury, the employee will probably have a claim against the manufacturer of the ladder in addition to a workers’ compensation claim.

You should contact an attorney in your state after you suffer any back injury at work, so that you can make sure your claim is pursued against all responsible parties.

What does a music agent do?

Music Agent Music Law Intellectual Property

What does a music agent do?

As any musician who regularly gigs knows, a “booking agent” (also known in California as a “talent agent”), arranges live performances for musicians and bands. In addition to booking live personal appearances, a Talent Agent may also obtain and negotiate contracts of employment in other areas of entertainment, such as getting TV or radio specials, TV commercials, and tour sponsorships. You can find a music agent in the yellow pages or by calling your local music unions that franchise them. If you decide to choose a union agent, it is best to join the union.

(Reprinted with permission of Ruben Salazar, Esq.)

What is domestic violence?

Domestic violence is a crime committed by a person against someone who is in an intimate relationship with the victim, has been in an intimate relationship with the victim, or lives in the same household as the victim. The exact definition of domestic violence varies somewhat from state to state. The term traditionally referred to violence by one spouse against another, usually by a husband against a wife. The meaning has been extended in many states to include children, parents, siblings, same-sex partners, and members of the same household.
The crimes committed in domestic violence include assault, battery, homicide, stalking, and rape. Domestic violence is sometimes defined as a pattern of intimidation that a present or former spouse, intimate partner, family member, member of the same household uses to control another. For example, if a domestic partner keeps track of all the activities of the other partner, follows the partner, repeatedly questions him/her about infidelity, and uses implied or direct threats to restrict when the other partner leaves the home, this might be enough to constitute domestic violence in some states. Most often domestic violence takes the form of actual battery of the victim, from mere pushing to slapping and punching, to kicking, cutting, and burning. The victim might be a child, an adult, or an elder.

(Reviewed 12-08)

is abuse between family members or related persons. Domestic violence may come in many forms: actual physical abuse, threats of physical abuse, emotional abuse, threatening telephone calls, disturbances at a place of employment, stalking, and other forms of dominance and control. Domestic violence is distinguished from other kinds of abuse because of the special relationship between the persons. Domestic violence cases may be treated differently than cases of civil harassment because of the interpersonal relationships involved. At least one of the following relationship tests typically must be met in order to qualify a matter as a domestic violence case:

the parties are married now or were formerly married to one another

the parties are related by blood, marriage or adoption

the parties are currently or were formerly living together

the parties have now or used to have a dating or engagement relationship

the parties have a minor child in common

In some states, there does not have to be actual physical violence between the parties; emotional abuse or fear of physical harm is sufficient to qualify as domestic violence.

What remedies are available to prevent further domestic violence?

Upon petition to the court, temporary or lengthy restraining orders (also referred to as “protective orders”) may be issued. Orders issued in a domestic violence case may include:

that the restrained person shall not contact, contact, attack, strike, threaten, batter, telephone or otherwise disturb the peace of the protected person

that the restrained person shall immediately move from the residence shared with the protected person

that the restrained person shall stay at least 100 yards away from the protected person, the protected person’s residence, and the protected person’s place of employment

that the restrained person is ordered to participate in batterer treatment counseling and to return to court with proof of completion of such a program

that the restrained person is prohibited from purchasing a firearm

Other people, such as children and other family members who reside in the same residence, may be included with the protected person so as to reduce the potential for harm by the restrained person.

Federal Bankruptcy Exemptions

federal-bankruptcy-exemptions bankruptcy-law

Federal Bankruptcy Exemptions

These exemptions are found in 11 U.S.C. §522 and can be used by anyone who is qualified to file bankruptcy in a state that allows its residents to use the federal exemptions, or by anyone who doesn’t qualify under residency requirements to use state exemptions. You have to live in a state for at least 91 days before you can file for bankruptcy there. The states that allow you to use the federal exemptions are: Arkansas, Connecticut, District of Columbia, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin.
Though federal law allows states to opt out of most federal exemptions, a few apply in all jurisdictions. The most important are the pensions exemptions listed below. Every state’s exemptions automatically include these.
The value allowed under each exemption is updated for inflation every 3 years, ending on April 1. Values were last adjusted in 2007. Federal Exemptions

AssetExemptionSubsection of 11 USC § 522
HomesteadReal property, mobile home, co-op, or burial plot: up to $20,200. Up to $10,125 of this amount may be used as a wildcard and applied to any kind of property.(d)(1); (d)(5)
InsuranceLife insurance contract (not matured): all except credit insurance policies.(d)(7)
Life insurance policy loan value and accrued dividends: up to $10, 755.(d)(8)
Unemployment, disability, and illness benefits: all.(d)(10)(C)
Life insurance payments from a policy taken out on someone the debtor depended on: all necessary for support.(d)(11)C)
MiscellaneousChild support and alimony: all necessary for support.(d)(10)(D)
PensionsTax exempt retirement accounts (which include 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans): all.(b)(3)(C)
IRAs and Roth IRAs: up to $1,095,000 per person.(b)(3)(C)
Personal PropertyMotor vehicle: up to $3,225.(d)(2)
Household goods, appliances, furnishings, clothing, books, musical instruments, animals, crops: up to $525 per item and up to $10,775 total.(d)(3)
Jewelry: up to $1,350.(d)(4)
Health aids: all.(d)(9)
Recovery for the wrongful death of a person on whom the debtor depended: all.(d)(11)(8)
Recoveries for personal injury (excluding amounts for pain and suffering and pecuniary loss): up to $20,200.(d)(11)(D)
Payments for lost earnings: all.(d)(11)(E)
Public BenefitsPublic assistance benefits: all.(d)(10)(A)
Social Security benefits: all.(d)(10)(A)
Unemployment compensation benefits: all.(d)(10)(A)
Veterans’ benefits: all.(d)(10)(A)
Crime victim compensation: all.(d)(11)(A)
Tools of Your TradeImplements, tools, and books: up to $2,025.(d)(6)
WagesNo exemption.
WildcardsAny property: up to $1,075.(d)(5)
Any property: up to $10,125 of the unused homestead exemption.(d)(5)

Click here to read an Introduction to Bankruptcy Exemptions.

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Federal Nonbankruptcy Exemptions

non-bankruptcy-exemptions bankruptcy-law

Federal Nonbankruptcy Exemptions

Although states can opt out of most federal exemptions, some are mandatory. These exemptions are available to everyone who is using his or her state’s exemptions. These exemptions are not available to anyone using the federal exemptions or the second California state option (which is very like the federal exemptions).
These exemptions are called “nonbankruptcy” exemptions, because they are found in areas of the United States Code other than the bankruptcy code. All of the exemptions are complete exemptions, not exemptions of a specified amount, except for the provision that at least 75% of wages will be exempt. If your state also specifies that a certain percentage of wages will be exempt, you don’t get to add the percentages together. You can choose whichever amount is higher. Nonbankrputcy Exemptions

AssetExemptionUS Code Section
Death and Disability Benefits for:Longshoreman and harbor workers33 § 916
Risk, hazard, death, or injury of War42 § 1717
Government employees5 § 8130
Retirement Benefits for:Civil service employees5 § 8346
Military service employees10 § 1440
Foreign Service employees22 § 4060
Veterans38 § 5301
Military Medal of Honor roll38 § 1562(c)
Railroad workers45 § 231m
Social Security recipients42 § 407
Survivor’s Benefits for:Military service10 § 1450
US judicial employees including judges, center directors, and administrative assistants to the US Supreme Court Chief Justice28 § 376
Lighthouse workers33 § 775
MiscellaneousMilitary deposits made in savings accounts while the debtor was on permanent duty outside the US.10 § 1035
A minimum of 75% of weekly disposable wages or 30 times the federal hourly wage, whichever is greater. The bankruptcy judge may allow more for a debtor with a low income.15 § 1673
Indian lands, or proceeds from the sale of a homestead or lease.25 § 410
Benefits for Klamath Indians residing in Oregon.25 §§ 543, 545
Military group life insurance.38 § 1970(g)
Unemployment insurance benefits for railroad workers.45 352(e)
Wages for a seaman made under a written contract while the debtor was on a voyage.46 § 11109
Clothing of a seaman.46 § 11110

Click here to read an Introduction to Bankruptcy Exemptions.

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Can a computer be copyrighted without giving it all away?

That depends on what you mean by “it”. A computer chip design, or a software program–the code for the electronic patterns that make the computer “compute”–can be the object of a copyright. Copyrights can only be made for original creations, not brute-force compilations or rote accumulations; and they will not prevent someone else from creating another, similar, expression (as long as they didn’t copy it from yours). So the idea for a great computer program is not something you can copyright, but no one else can duplicate your unique animation(s).

If you read “copyright” as two words, you immediately realize that the government has given the holder (and through him, anyone he licenses) the right to copy what has been protected. Unlike patents, copyrights do not cover the underlying idea. Instead, it covers a creative expression that can be fixed in a tangible medium of expression, that can then be copied many times over.

Copyrights last much longer than patents, generally, but are much, much narrower. Copyrights and patents, and copyrights and trademarks, work well together. Since you have to deposit with the US Copyright Office two copies of your creation, but may submit less than the whole or omit particularly sensitive portions (if the software program exceeds 50 pages), there is some public record; but you can “keep back” the particularly valuable parts of your code and still get a copyright. However, if you do, you may have trouble proving in court, later, that someone who duplicates those parts of your code actually copied them from you. Also (unlike patents) copyrights can be automatically transferred to your employer under the “work for hire” doctrine, where an implied condition of your employment is your employer’s ownership of your creative output.

If you are selling your creativity, this is one of the times it’s wise to check with an intellectual property lawyer and consider a contract explicitly addressing who owns what.

Since computers affect not only what you are doing, but how you may be recognized or contacted, other intellectual property rights are important, too.

One should look at what you are doing not only from the vantage point of computer hardware and software, other intellectual property rights may be involved with your computer and related activities.