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DIVORCE 74: Tax debt generated by the sale of business would be divided equally between the parties.

The parties were married for 22 years before plaintiff filed for divorce. They had previously owned a McDonald’s franchise in Michigan and enjoyed a high standard of living. In 2015, they sold the franchise. Attempts at starting new businesses in Florida failed, and eventually the couple moved back to Michigan and filed for bankruptcy. At the time of trial, no significant marital assets remained, and the parties had each obtained employment. The parties had nine children together. Only the four youngest children remained minors when judgment was entered, and those children resided with plaintiff.

Custody of Children

The trial court concluded that the parties could not agree on anything related to parenting and that plaintiff would have sole legal custody of the minor children. The trial court also awarded plaintiff primary physical custody of the children. Defendant was granted limited unsupervised parenting time, mainly eight daytime hours every other Sunday. The trial court found that both parties were employed, and that spousal support was not warranted.

Tax Debt

The court additionally determined that a tax debt generated by the sale of the McDonald’s franchise would be divided equally between the parties.

This debt was incurred from the sale of the McDonald’s restaurant and the parties chose to invest the proceeds in a failed business venture rather than paying the taxes due on the sales proceeds. Plaintiff claims that this debt should be Defendant’s debt alone since he controlled the finances and she had little input on what happened with the money gained from the sale. The court disagrees and finds that she cannot enjoy the fruits of the marital business decisions for 17 years and then disavow herself the debt that comes from those same business decisions. The court would find that each party is equally responsible for the tax debt.

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