TN Husband in Real Estate Has Income Imputed After Averaging Income

Tennessee child support law case law summary on underemployment and imputed income from the Court of Appeals.

Angela K. Thomas v. Jeffery K. Thomas – Tennessee divorce child support imputed income

The husband and wife were married in 1994 and were the parents of two children.  In 2009, the wife filed for legal separation.  She later modified the petition to request divorce.  After a trial in Rutherford County, Tennessee, the trial court named the wife the primary residential parent and adopted her proposed parenting plan.  The court found both spouses to be underemployed.  In particular, the trial court imputed an annual income of $60,000 to the husband.  Child support and alimony obligations were then based upon this amount, rather than his actual income.  The husband appealed to the Tennessee Court of Appeals.

The husband was a real estate agent, broker, and builder, and had been since 1997.  The trial court found that the husband had averaged about $100,000 per year in income during this period of time.  His 2010 income was only about $25,000, but the trial court found that he had the ability to earn much more than this amount.

The Court of Appeals first noted that such an imputation of income was proper if a spouse has been voluntarily unemployed or underemployed, if there is no reliable evidence of income, or if the spouse owns substantial non-income producing assets.  It noted that the trial court has considerable discretion in making this determination.

In this case, the husband’s income in 2010 was only about $2,000 per month.  But the wife had introduced into evidence his tax returns for a number of years during the marriage, and the income for those years ranged from $74,500 to $131,097.  The wife also introduced a credit card application from 2010 in which the husband reported his income as being $85,000 per year.  Given this evidence, the Court of Appeals held that the trial court had acted within its discretion in imputing an income of $60,000, despite the lower actual income.  Therefore, it affirmed the trial court’s order.

The husband also appealed the parenting plan that the trial court had adopted.  However, the Court of Appeals found that the evidence did not preponderate against that portion of the order, and also affirmed.

Finally, the husband appealed the disposition of his retirement account.  Once again, the Court of Appeals held that the trial court had acted within its discretion and affirmed.  The Court of Appeals taxed the costs of appeal against the husband.

No. M2011-00906-COA-R3-CV (Tenn. Ct. App. Mar. 26, 2013).

See original opinion for exact language.  Legal citations omitted.

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