If one of the divorcing spouses owns a business, that spouse may balk at the idea of turning over the business’ bank statements and check registers as part of the divorce process. The stated reasons for not producing the documents generally range from client confidentiality concerns, to undue burden, to claims that the disclosure will reveal operational secrets to the business’ competitors. For example, the owner of a medical practice may express concerns related to the Health Insurance Portability and Accountability Act (HIPAA), which has strict patient confidentiality provisions. This claim can be rebuffed by pointing out that bank statements and check registers do not normally include any patient information. A claim of undue burden is countered by the fact that most businesses of any size have automated bookkeeping systems. Production of the check register usually entails no more than pushing a button. Finally, while it is true that a vindictive spouse could damage a business by revealing operational secrets, the check register and bank statements do not usually contain information that could be used in this manner. If the business owner can demonstrate that secrets could be revealed, the lawyer (or investigator) requesting the information can take steps to ensure that the opposing spouse not be allowed access to the information. The stated reason for not providing the documentation requested often has very little to do with the real reason the business-owner-spouse does not want to disclose the records. It may be that the owner has claimed personal expenses as business expenses or has unreported income. This puts the business owner in a position of revealing questionable tax reporting. If this is the case, assurances of confidentiality may go a long way towards obtaining the records. Another reason for stonewalling on the production of records might be that the owner has expenditures or income that he or she does not want to reveal to the soon-to-be-ex spouse. In that case, assurances of any confidentiality, or any other type, are unlikely to sway the business owner. The fact that the business owner is resisting, in and of itself, can be a clue that something is amiss in either the disclosed income or the assets of the business owner. Further pressure can be exerted by use of a basic computation: + Net Business Income – Personal Expenditures = Missing Income The net business income comes from the tax return. The personal expenditures are determined by a review of the couple’s personal checking account. The difference is missing income, which may exist in the form of assets. The amount of income is known, the amount that was spent is known. The difference between the two amounts has to be explained by the business owner. The depreciation of business assets also can be used to call into question the books and records of a company. Depreciation is a non-cash expenditure. That is, it is an expense the Internal Revenue Service recognizes that does not require a cash expenditure. The expense is allowed because most businesses must have assets to operate, and the expense allows them a means of recognizing the cost. If, however, a business owner does not replace assets, then the cash is available to be spent. The depreciation expense claimed by the owner is taken from the tax return. The formula used to indicate that the owner has this cash available (and that the cash may be missing) is: + Net Business Income + Depreciation – Personal Expenditures = Missing Income (Assets) It is important to recognize that during the course of normal business operations, an owner will replace assets and that, over time, the cost of buying assets and the associated depreciation will be similar. In addition, if a business owner delays replacing assets so that he or she can keep the cash, there is a basic assumption that he or she will pay for it later. With this in mind, it is possible that there will be no supportable adjustment to income or assets by presentation of this formula. However, the point is to force the business owner-spouse to disclose the operations of the business, which may lead to those adjustments. Another means of forcing the hand of the business owner-spouse is to apply a certain amount of logic to the situation, in combination with the personal knowledge of the other spouse. For example, assume the husband owns the business. The wife knows that she and her husband went on a vacation two years ago. The wife also knows that the cost of the vacation was not paid for through the couple’s personal account. Therefore, the business must have paid for the vacation. Thus, the owner is forced to show that the amount was assigned to him as compensation, or that the cost was recorded in the travel expenses of the business. Either way, the wife’s divorce lawyer or investigator has learned something. Either the husband has considerable control over the amount of income he receives from the business, or personal expenses are being claimed for tax reporting purposes. Both can be used to adjust the income the husband has available for child support or alimony and can also provide a source for assets that have been hidden.