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Allen v. Allen
Texas Court of Appeals
704 S.W.2d 600 (1986)
May Marlene Allen (defendant) had sole proprietorship of a beauty salon as her separate property before she married Robert Wood Allen (plaintiff). May operated this beauty salon for 17 years. During the marriage, May converted the sole proprietorship into a corporation so she would not have to purchase malpractice insurance. After May and Robert divorced, the trial court considered whether the corporation was community or separate property. Although the corporation required an initial capitalization of $1,000, May did not present evidence of whether the capitalization used separate- or community-property funds. In addition, although the corporation used the goodwill from the prior sole proprietorship, May did not present evidence of the value of this goodwill. The trial court therefore determined that the corporation was worth between $131,789 and $263,578 at the time of divorce and was community property. May appealed and argued that the corporation’s inception of title occurred when the sole proprietorship was created.
Rule of Law
Holding and Reasoning (Spurlock, J.)
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