Most business owners and professionals take advantage of being able to deduct from income certain so-called “perks” of business ownership: car expenses, business travel, entertainment expenses, health insurance, and the like. Some enterprising owners or professionals may expense all their personal bills through their business.
The California appellate courts have held that the trial court can disallow some, if not all, of these perks, in effect increasing profit for support or business valuation purposes. Retained earnings and depreciation expenses can also significantly affect “earnings” as interpreted by the trial and appellate courts.
Unless you have an attorney and forensic accountant who specialize in representing business owners and professionals, and who can prepare your case to meet these difficult and complex accounting issues, you can count on a settlement or judgment that will not be favorable to you.