Buffalo Law Review

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In Copyright


The tax code is designed to raise government revenue. Domestic support obligations (DSOs)—namely, child support and spousal support—are designed to ameliorate the financial burdens that arise upon divorce. To determine the amount of domestic support obligations, statutes often refer to commonly used taxation concepts, such as “income.”

Courts determining domestic support obligations have been confronted with the question of how to treat “phantom income”—that is, amounts that are includible as gross income under the federal tax code but that have not resulted in any actual current cash receipt. Individuals obligated to make domestic support payments have argued that phantom income should not be included when calculating or modifying such obligations because the individual’s ability to pay has not materially changed. This Article analyzes the intersection of federal tax law and domestic support obligations concerning phantom income.

This Article considers several solutions—judicial and legislative—to address the phantom income issue in the domestic support context. Notably, this Article evaluates the current judicial decisional framework to examine the potential tax and DSO asymmetries. Finally, this Article advances a legislative proposal for a charging-order type remedy specific to domestic support obligations—one that would resolve the phantom income issue in many situations.