Expert: Mark J. Markus- California Bankruptcy Attorney - 2/10/2010

Question
QUESTION: I am probably (though not guaranteed) to receive a bonus in mid March.  According to my company website, all employees who are employed as of the end of the year are eligible to receive a bonus.  We are filing pro se before the end of February.  Should I include the estimated sum in the filing or is it "not earned" until I receive it?  Also, we received a refund of state taxes last week.  How should this be treated in filing?  Thank you in advance.

ANSWER: It would not be included in the income received on Form 22A but should be disclosed, at least as an explanation, on Schedule "I" (in the portion that asks if your income is expected to change more than 10% in the next 12 months).   You really need to have an attorney evaluate this because you need to ascertain whether averaging the bonus and including it in your income is going to affect your eligibility, and that depends on a number of factors, including how the courts in your jurisdiction handle such things.   That doesn't change whether you need to include the bonus or not, but it could affect HOW you present it.

Also, if the bonus is already earned (and that's a probability given the facts), then that amount is an asset which you must also list in Schedule "B" and, hopefully, exempt in Schedule "C" assuming applicable exemptions laws to your case allow for that.

http://www.bklaw.com/

---------- FOLLOW-UP ----------

QUESTION: Mr. Markus,

Thank you very much for your fast and cogent reply.  It is much appreciated.  As a follow up...my wife has lived in California for over two years and I have been a resident for 20 months.  Prior to moving to CA I was a resident of Illinois.  My reading of the federal domicile requirements leads me to believe that we are entitled to use the federal exemptions, as we are precluded from using the state laws because joint filers are not permitted to use different systems.  Is this a correct interpretation?

I would then be able to exempt my bonus under 11 U.S.C. § 522 (d)(5).

Thank you again.

Answer
California's wildcard exemption under CCP 703.140(b)(5) is more than the Federal.  I would use that.  I honestly haven't researched what happens when each spouse has a different State's exemption.  It's possible that the Federal would apply, but I would use California in your situation until a Judge rules otherwise.