Quick answer: The “double dip” happens when one stream of business income is used twice — once to set the value of the business that gets divided in equitable distribution, and again to set the alimony paid out of that same income. Because an income-based valuation converts a stream of earnings into a lump-sum asset, distributing that asset and ordering support from the very same earnings can make the owner pay for the same dollars twice. Whether the law permits or limits this is a contested legal question that varies and belongs to counsel and the court; my job as the forensic CPA is to separate the streams so the overlap is visible and the court can decide on clear numbers rather than a tangle.
This is a spoke of the hub on business valuation in a Florida divorce, and it connects directly to normalizing the owner’s compensation and the personal vs. enterprise goodwill split.
What the double dip actually is
An income approach to valuation takes a normalized stream of business earnings and capitalizes it into a single present value — that value becomes the marital asset that gets divided under §61.075. Alimony, separately, is paid out of the owner’s available income. The conflict: if the same earnings are both (a) capitalized into the asset that the non-owner spouse receives a share of, and (b) tapped again to fund a support award, the paying spouse is effectively charged twice for one income stream. That is the “dip” into the same dollars a second time.
The issue is well recognized in valuation and matrimonial practice, and courts in different states handle it differently — some permit it on the theory that property division and support serve distinct purposes, others limit it. Florida’s treatment is a legal question for the attorneys and the court; I do not opine on it. What I can do is make the double count measurable.
How I separate the streams
The key is distinguishing two different kinds of income the owner draws from the business:
- The owner’s reasonable compensation — a labor stream. This is what the market would pay someone to do the owner’s job (see normalizing the owner’s compensation). It is earned by working, and it is the income most naturally available to fund support.
- The return on the business itself — an investment stream. Earnings above reasonable compensation are a return on the enterprise. The income approach capitalizes this stream into the business’s value — the asset that gets divided.
The double-dip risk lives in the second stream. If the investment earnings are capitalized into the divided asset and then counted again as income available for alimony, that is the overlap. The labor stream (reasonable compensation) generally does not create the same problem, because it was not capitalized into the asset’s value. Drawing the line cleanly between the two is the heart of the analysis.
Illustrative example (hypothetical, no client data): An owner draws $400,000 a year of total economic benefit from the business. A sourced reasonable-compensation analysis puts the market salary for the owner’s role at $180,000 — the labor stream. The remaining $220,000 is a return on the business, and the income approach capitalizes that $220,000 into the company’s value, which is then divided in equitable distribution. If a support award is later set using the full $400,000 — including the $220,000 already built into the divided asset — the owner funds that $220,000 twice: once by handing over a share of the business’s value, and again by paying support out of it. By isolating the $180,000 labor stream from the $220,000 investment stream, I let the court see exactly which dollars, if any, are at risk of being counted twice.
The goodwill connection
This ties back to the personal vs. enterprise goodwill split. Personal goodwill — already excluded from the marital estate — represents the owner’s own future earning capacity, which is the stream that funds support. Excluding personal goodwill from the asset side while drawing support from the owner’s personal-effort income is internally consistent; the same dollar is not divided and then taxed for support. The double-dip pressure point is on the enterprise side, where earnings can be capitalized into a divided value. Keeping the goodwill allocation and the income-stream analysis aligned is part of presenting a coherent number.
Why I present it as a separable adjustment
Rather than bury the issue, I quantify the analysis both ways — with and without the contested earnings treated as available for support — and disclose the basis for each. That gives counsel a clean platform to argue the legal question and gives the court a defensible figure under either ruling. A valuation that silently double-counts (or silently assumes the issue away) invites attack; one that isolates the overlap and lets the court decide holds up.
If you are an attorney handling a Florida divorce where one spouse owns a business and alimony is in play, Joey Friedman, CPA, P.A. prepares valuations and income analyses that separate the streams and surface any double-count, statewide.
Related resources
- Hub: How a Forensic CPA Values a Business in a Florida Divorce
- Alimony & Income Reconstruction in Florida Support Cases
- Income Normalization in a Florida Divorce
Frequently asked questions
What is double dipping in a divorce?
It is using the same business income twice — once to set the value of the business that is divided as property, and again to set alimony paid from that same income. The paying spouse can end up charged twice for one stream of earnings.
Is double dipping allowed in Florida?
That is a contested legal question that varies by jurisdiction and is decided by the court on the facts; it is for the attorneys, not the forensic accountant. My role is to separate the income streams so the potential overlap is visible and the court can rule on clear figures.
How does a forensic accountant prevent double counting?
By distinguishing the owner’s reasonable compensation (a labor stream, generally available for support) from the return on the business (an investment stream that the income approach capitalizes into the divided asset), and by presenting the analysis with and without the contested earnings treated as available for support.
Does the goodwill analysis affect the double dip?
Yes. Personal goodwill is the owner’s future earning capacity and is excluded from the divided estate, so drawing support from that personal-effort income is consistent. The double-dip risk concentrates on enterprise earnings that can be capitalized into a divided value.
By Joey N. Friedman, CPA, ABV, M.Acc, MIB — President, Joey Friedman, CPA, P.A.