TN Dad Must Prove Business Expenses Were Reasonable
Tennessee law case summary on child support laws on income determination in Tennessee divorce and family law from the Tennessee Court of Appeals.
Howard v. Howard, 1999 WL 427596 (Tenn. Ct. App., 1999) – Tennessee child support law
The Howards were divorced on March 22, 1990, and child support was awarded for their two minor children. At trial, Mr. Howard testified extensively that his adjusted gross income for 1997, as reflected by his federal income tax return, was $57,304. That amount included his earnings from Allstate Insurance Company of $89,0000, taxable interest of $417, rental income of $62, and assigned risk income of $222, minus a business loss of $32,700 his sole proprietorship J.C.H. Enterprises (a sports card business). The gross receipts for that business were $1,140,866, and the cost of goods sold was $1,092.556, which left a gross profit of $48,310. Mr. Howard deducted expenses of $81,072 from the gross income, which resulted in a loss of $32,762.
Mr. Howard testified that his ex-wife was an employee of J.C.H., and that the business expense item of $29,713. was a portion of her salary. He further testified that he ran his sports card business out of the same office with his insurance business, and that Mrs. Howard worked for both businesses (Mrs. Howard did not testify, and there was no testimony about the wife’s work for the sports card business). Mr. Howard testified in detail about what his wife did on his behalf for Allstate, and that she had been fulfilling this role for the past seven years, although she was not paid until 1997.
The trial judge refused to deduct the business loss from Mr. Howard’s net income, and ordered child support obligations for the adult child terminated. The judge then determined that the guideline amount for the minor child from the income as found by the court would be $1,159 per month. However, the court found criteria for upward deviation, in that Mr. Howard was not exercising standard visitation with the child, so it ordered an upward deviation from the child support guidelines to $255 per month, for a total support obligation of about $1,400.
The trial judge determined that Mr. Howard’s gross income from Allstate to be $94,000, as reflected on his W-2. This amount added to Mr. Howard’s other taxable income, brought the total to nearly $94,000. The judge subsequently found that he realized no income as a self-employed individual, because his claimed expenses exceeded his income from the business. The court of appeals agreed with the trial judge that the father had not carried that burden as to the reasonableness of the expenses that he claimed. It stated that once the gross income is determined, the trial court must then determine net income and any reasons for deviation. At that point it can set the child support.
Mr. Howard claimed that there was a substantial, significant, and material change in his income, more than 15%. This fact, he said, justified a decrease in guideline child support pursuant to the statutes. Mr. Howard wanted the court of appeals to modify his obligations for guideline child support so as to comport with his then present level of income.
The court of appeals held that determining the proper amount of support under the guidelines required examination of the criteria for deviation from the guidelines—one of which includes less than average visitation. Mr. Howard asked the appellate court to determine the proper amount of support under the guidelines based on his current income, but his request required the court to also look at the criteria for deviation to determine the proper amount of support. As a result, Mr. Howard’s appeal failed.
Howard v. Howard, 1999 WL 427596 (Tenn. Ct. App., 1999).
See original opinion for exact language. Legal citations omitted.
Memphis divorce attorney, Miles Mason, Sr., JD, CPA, practices family law exclusively with the Miles Mason Family Law Group, PLC. To learn more about Tennessee child support laws and guidelines, read and view:
