Net Worth Method of Proof: Calculating Income in Divorce Cases

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In divorce cases, forensic accountants can use the “net worth method of proof” to calculate income. This is used to search for hidden or unreported income. Rather than simply taking a spouse’s word for it that his or her income is X, we can do an analysis like this to try to verify the claimed income.

This method of proof is one part of a lifestyle analysis, in which we are analyzing the party’s lifestyle and determining if that lifestyle matches the income that is being reported. This video explains the process of completing the net worth analysis.

Using Bank Statements in a Divorce Case

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When there are suspicions of hidden income or secret investments or bank accounts, an analysis of known bank accounts can reveal helpful details. Tracy Coenen explains how bank statements and credit card statements can be used by a forensic accountant in a divorce case.

Almost Everyone Loses Money in MLM

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Don’t let your Facebook friends fool you: They’re not making money in the multi-level marketing company they keep pitching to you. And you won’t either. Multi-level marketing is not a business.¬† More than 99% of participants in multi-level marketing (MLM) lose money. Companies like Mary Kay Cosmetics promote the “income opportunity,” but when the vast majority of MLM distributors say they lost money, the story changes to “they didn’t really want to make money,” or “they just did it for fun,” or “they didn’t try hard enough.”

The truth is that MLM is not a “business opportunity.” Almost everyone who participates is guaranteed to lose money. You can follow all the instructions, talk to everyone you know, invest money in the scam, and you will still lose money. Why? Because MLM is nothing but a pyramid scheme in which all the people at the bottom of the pyramid will lose money.

This video was published in 2016, but the information is still very relevant. It features victims of the Herbalife “business opportunity.” They put lots of money, time, and effort into their “businesses” and ended up losers.

The fact remains that all multi-level marketing companies are abusive systems which take money from the participants, offering them the (false) opportunity to earn money, knowing that they are virtually guaranteed to lose money.

Litigation Support Work for CPAs

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A CPA who focuses on traditional tax work or auditing services might be a great fit to branch out into litigation support work. Attorneys are always looking for expert witnesses with certain areas of expertise, and accountants doing general work might fit the bill.

What is your focus? Do you specialize in a certain industry or work frequently with certain accounting and tax rules? Litigation work is often interesting, but you have to be able to explain your work to non-accountants and testify in depositions or at trial.

The video below offers Tracy Coenen’s commentary on this topic.

Calculating Lost Profits in Litigation

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In the below video, Tracy Coenen talks about three common methods that are used to calculate lost profits in commercial litigation: the before and after approach, the yardstick approach, and hypothetical profits. In general, these methods are aimed at determining the profits a company would have realized if the incident giving rise to the litigation had not occurred.