Amazon CEO Jeff Bezos' divorce subject to these tax changes

Amazon CEO Jeff Bezos and his ex-wife MacKenzie finalized their divorce, MacKenzie announced on Thursday, saying her husband would retain full voting control over her Amazon shares – in addition to retaining his full stake in Blue Origin and The Washington Post.

The pair announced their intention to split in January after 25 years – in what could be the highest-profile divorce under a set of new tax changes triggered by the Tax Cuts and Jobs Act.

The new rules took effect for all divorces finalized on, or after, Jan. 1 and dictate what payments can be deducted on tax filings.

Although specific details regarding the terms of the rest of the couple's divorce is not public, here's a look at the changes they face while undergoing the process.

Under the previous statute, the higher-earning spouse could deduct alimony payments on his or her tax filings. The recipient included the payments as part of his or her taxable gross income. For divorces finalized in 2019 and after, alimony payments will no longer be a deductible expense for the payer, which is expected to have financial ramifications.

Typically, in a divorce where children are involved – Jeff and MacKenzie Bezos have four children between the ages of 13 and 18 – the payer would also split support payments between alimony and child support, putting more into the former to claim the tax credit. Now, there is more incentive to allocate more money toward child support and less toward alimony.

“It’s possible that [MacKenzie Bezos] may not get a lot of alimony if she gets a lot of assets,” Emily Pollock, a partner specializing in matrimonial and family law at Kasowitz Benson Torres, told FOX Business.

Other new tax changes that have taken effect include the elimination of exemptions for dependents, which have been replaced – so to speak – with the child tax credit. That may prove to be a worse deal for parents because the exemption acts as a flat-out deduction while a credit goes up against the taxes you have to pay. Further, the threshold for the exemption was higher than what the credit provides.


However, the pair likely had a number of other pressing issues to be concerned about. MacKenzie will keep $35.6 billion worth of Amazon stock, giving her ex-husband control of 75 percent of their stake. She will hold on to about 4 percent of Amazon's outstanding common stock, making her the third largest shareholder.