Determination of whether undistributed earnings of an S corporation are attributable to the parent‑shareholder and, thus, may be deemed available income, for purposes of determining income available for child support, must be made based on the particular circumstances presented in each case, such as the shareholder’s level of control over corporate distributions, as measured by the shareholder’s ownership interest, legitimate business interests justifying retained corporate earnings, and evidence of attempt to shield income by means of retained earnings. Regardless of a parent‑shareholder’s ownership percentage in an S corporation, the parent‑shareholder has the burden to present evidence that he or she does not have access to retained income, in order to demonstrate that such income is not available for purposes of determining income available for child support.
Laura Morgan is a Family Law Consultant. Laura is available for consultation, brief writing and research on family law issues throughout the country. She can be reached through her website. www.famlawconsult.com