Are Reverse Stock Splits, Gifts and Loans Considered Income for Support?

When it comes to evaluating income for support in Illinois family law cases, questions about money received from reverse stock splits, gifts and loans can be answered by looking at what case law has dictated.

Illinois Case Marriage of Anderson Defines Income for Support

In the Anderson case, the former wife, in a post-judgment support modification case, claimed that the trial court erred by ignoring three sources of income:

  1. The proceeds from the sale of the stock owned by her husband in a closely held family corporation;
  2. Bonus and commission income from his new employer; and
  3. Gifts and loans that her husband may have received from his parents.

Reverse Stock Split Do Not Qualify as “Net Income”

In reaching our conclusion, we note that the distribution of stock may constitute income for child support purposes if the stock is sold pursuant to an employment bonus-based option. See Colangelo, 355 Ill.App.3d 383, 290 Ill.Dec. 986, 822 N.E.2d 71. Here, however, the sale of [her husband’s] stock was necessitated by the company’s decision to implement a reverse stock split of minority shareholders, a decision over which [her husband] had no control. He then used the proceeds to purchase other investment assets. Under these circumstances, the proceeds do not qualify as “net income” under section 505(a)(3) [of the IMDMA]. 938 N.E.2d at 2013.

Monetary Gifts and “Loans” Considered Income

In re Marriage of Rogers case, the noncustodial father received yearly gifts and loans from his parents totaling more than $46,000, which he had never been required to repay. The court concluded that the annual gifts were income for purposes of determining child support because they represented a valuable benefit to the father that enhanced his wealth and facilitated his ability to support his son. Id.

Bonuses or Commission Included as Income


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