Alaska Supreme Court sends divorce capital gains tax split back for more findings

The Alaska Supreme Court on Friday, July 17, sent part of a divorce judgment back to a superior court judge, leaving unsettled how much each spouse ultimately keeps. The justices ordered additional findings on how capital gains taxes from the sale of marital property should be divided between Jonathan Cline and Melinda Duckett, who were married long-term and have four children.

The rest of the judgment stood. That includes child support, with Cline paying $640 a month for the couple's disabled adult daughter. It also includes the characterization of a $100,000 inheritance as marital property, the 55% share of the estate awarded to Duckett, and the denial of a Ramsey credit, which Cline sought for claimed post-separation spending on the marital estate. The court also rejected Cline's claims of judicial bias.

"We AFFIRM the superior court's orders regarding child support, as well as its characterization of property, award of 55% of the marital estate to Duckett, and denial of a Ramsey credit, but REMAND for additional findings regarding its division of the capital gains taxes," the court said.

The superior court had ordered the tax liability to follow the 55/45 split. The justices found no explanation for why that unequal division was equitable, because the tax allocation changes each spouse's net share.

The court treated the unpaid capital gains taxes from pre-division sales of marital property as marital debt. Such debt must be allocated under the Merrill factors, the equitable-distribution considerations Alaska courts use when dividing marital property and debt. The order requires findings sufficient to justify the allocation under those factors. It does not require the taxes to be split equally.