Dad’s Advertising Income To Be Averaged for TN Child Support
Tennessee law case summary on income averaging from the Court of Appeals.
Melissa L. Blackshear (Thompson) v. Stephen D. Blackshear – Tennessee child support income determination and income averaging
Melissa L. Blackshear (Thompson) and Stephen D. Blackshear were divorced in 2005, after negotiating a permanent parenting plan. The father agreed to pay $2,000 per month child support for the two minor daughters. He also agreed to pay $500 per month alimony for 60 months.
The father owned two companies which built, owned, and rented outdoor advertising. In 2011, he filed a petition asserting that his income had substantially decreased while the mother’s had increased. While he had no income in 2010, the father had opened a money market account with an opening deposit of $200,000. The mother reported that the father made most of his income in the form of capital gains when he sold a billboard. Since little had changed since the original agreement, she argued that no change was warranted.
The father offered the testimony of expert witness Angela Dowis, a CPA. She had prepared her tax returns since 2003. She testified that the company had no income in 2011 since the company owed the father money that year. Her opinion was that the bad economy had greatly decreased the father’s business.
The trial court noted that the years with capital gains had to be averaged over the life of the asset, rather than being taken into account the year they were received.
Based upon this reasoning, the trial court held that the father had overpaid support in the amount of $21,124, and granted the father a judgment in this amount. The trial court also awarded attorney’s fees in the amount of $10,000. The ongoing support obligation was reduced to $73 per month. The mother then appealed to the Tennessee Court of Appeals.
The mother first argued that the father had agreed to a support obligation in excess of the guidelines. Therefore, the fact that his income now called for a lower amount should not be considered. However, there was no evidence to indicate that there had been a proper departure from the guidelines originally, so the appeals court did not consider this argument. The issue was whether there was currently a variance from the guidelines.
The trial court had set the father’s income at $2,500 per month, which the CPA had testified was the “cash flow” of the business. Even though some years showed different amounts of income or loss, the trial court had held that this was the proper value to use, since these funds are under the control of the father.
The appeals court, however, agreed with the mother that for a more accurate determination, the lower court should have averaged the father’s actual income. To carry out this process, the appeals court suggested that the use of a special master might be appropriate. In any event, the court held that the father had not met his burden, and that the case would need to be remanded for a determination. The court also held that the mother’s attorney fees would need to be recalculated.
For this reason, the Court of Appeals reversed the case and remanded it back to the Hamilton County Circuit Court.
No. E2012-02499-COA-R3-JV (Tenn. Ct. App. Mar. 19, 2014).
See original opinion for exact language. Legal citations omitted.
To learn more, see Averaging Income in Tennessee Child Support Law.
