2013-0171, In the Matter of Janice E. Maves and David L. Moore

support obligation was increased to $950 per month. In addition, the order, the respondent paid $650 per month for the son ’s support. In 2008, his parenting time, alternating on a weekly basis. Under the initial child support support. The son has a “solid relationship” with both parents, who share years old at the time of the hearing on the petitioner’s motion to modify child parties, who were divorced in 2004, are the parents of a son, who was fourteen The trial court found, or the record supports, the following facts. The

remand. (Rappa, J.) modifying the respondent’s child support obligation. We vacate and respondent, David L. Moore, cross - appeals, the decision of the Circuit Court DALIANIS, C.J. The petitioner, Janice E. Maves, appeals, and the

orally), for the respondent. Martin, Lord & Osman, P A, of Laconia (Judith L. Homan on the brief and

orally), for the petitioner. O’Shaughnessy, and Sandra H. Kenney on the brief, and Ms. McNamara Upton & Hatfield, LLP, of Concord (Marilyn B. McNamara, James A.

No. 2013 - 171 2d Circuit Cou rt - Plymouth Family Division

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh. us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E - mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concor d, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

the condominium units were “irregular” income that should be considered as The trial court determined that the capital gains generated by the sale of

$ p. 2 2, 750 monthly housing benefit for his residence in Holderness. respondent’s “income” in 2011 should be limited to his $39,000 salary and the form,” they were not available to the responden t. Rather, he testifi ed that the sales were not transferred from SLF to the respondent “in any way, shape or tax returns, testified that because the capital gains from the condominium the respondent and SLF, including preparing the individual and S - corporation Buck, a certified public accountant who performs various financial services for respondent’s “gross income” for the purpose of determining child support. Paul At the hearing, the parties disagreed about what comprised the

p. 2 2012. miscellaneous expenses. A final hearing on all motions was held on Augus t 10, to modify orders regarding health insurance and medical expenses and See RSA 458 - C:7 (Supp. 2013). In addition, t he respondent filed two motions that circumstances had materially chang ed, warranting a new support order. asserting that three years had passed since the previous support order and In November 2011, the petitioner moved to modify child support,

interest. responden t has never made any payments toward the outstanding principal or hearing, the respondent had borrowed $887,754 against the line of credit. The for various expenses, both personal and business - related. At the time of the converting it to a line of credit. Since that time, he has used the line of credit In p. 2 2011, the respondent restructured a loan that he owed to SLF,

p. 2 2011 personal tax return. condominiums, the respondent reported capital gains of $1,000,389 on his rather than as seasonal rentals. B ased upon the sale of many of the permits from the State, began marketing the camp sites as condominiums, almost $400,000 in legal bills and surveying costs and obtaining the necessary In 2010, the respondent altered his business plan and, after expending

personal federa l income tax returns of the respondent, as shareholder. shareholder. SLF’s profits, losses, and capital gains are reported on the Subchapter S corporation (S - corporation); the respondent is the sole 119 sites with trailer hook - ups for water, electricity, and sewer. SLF is a was awarded Squam Lakeside Farm, Inc. (SLF), a campg round consisting of As part of the property settlement in the parties’ divorce, the respondent

the ski pass, clothing, and equipment for the son ’s ski racing. medical expen ses, pays for sports and academic summer camps, and furnishes respondent provides the son ’s health insurance and covers all uninsured p. 3 3

calculating the respondent ’s child support obligation. The statute provides: condominium units should be included in “gross income” for the purpose of We must first determine whether capital gains from the sale of the

interpretation de novo. Id. at p. 3 303. by the entire statutory sch eme. Id. We review the trial court’s statutory understand the statutory language in light of the policy sought to be advanced are better able to discern the legislature’s intent, and therefore better able to the Matt er of Woolsey & Woolsey, 164 N.H. 301, 304 (2012). In so doing, we isolated words or phrases, but instead we consider the statute as a whole. In this chapter. As we examine the statutory language, we do not merely look at and, accordingly, resolution of the issues on appeal requires us to interpret Child support is governed by RSA chapter 458 - C (2004 & Supp. 2013),

income. “grossly excessive” child support obligation based upon his 2011 capital gains gross in come figure to determine his income for 2011; and ( p. 3 3) arriving at a him, were not actually distributed to him individually; (2) using his adjusted that the capital gains were received by the corporation and, though taxable to given that the asset was awarded exclusively to him in the divorce decree and that the trial court erred in: (1) considering capital gains incom e from SLF, to determine his 2011 income. In his cross - appeal, the respondent maintains income figure, rather than gross income minus legitimate business expenses, week period at the end of 2011; and (4) us ing the respondent’s adjusted gross income and calculating the associated arrearage as applicable only to a four and th e respondent’s capital gains; (3) treating the capital gains as “irregular” impute substantial “regu lar” income to the respondent as a result of that loan to the respondent as income for the purpose of child support; (2) failing to argues that the trial court erred in: (1) failing to characterize a loan from SLF Both parties appealed the support order. In her appeal, t he petitioner

pending the outcome of this appeal. abeyance further calculation of the respondent’s on - going child support irregular income from capital gains for 2012. The trial court has held in r espondent’s 2012 federal income tax return to calculate the amount of in monthly installments. The court also concluded that it needed to review the Upon reconsideration, however, the court amended its order to permit payment the request for modification, November 29, 2011, through the end of 2011. within sixty days, to pay $9,6 p. 4 44 for the four weeks from the date of service of amount of $2,411 per week. Accordingly, the court ordered the respondent, the respondent’s 2011 federal income tax return, resulting in a support child support obligation, t he court used the adjusted gross income figure from support obligation. See RSA 458 - C:2, IV(c) (2004). To calculate the weekly part of the respondent’s gross income for the purpose of establishing his child 4

construe statute to lead to absurd result). See Bank of N.Y. Mellon v. Cataldo, 161 N.H. 135, 138 (2010) (refusing to child support. T he l egislature c ould not have intended such an absurd result. person deriving substantial income exclusively from capital gains would pay no Furthermore, were we to exclude capital gains from “gross income,” a

analysis. definition of “gross income” in other states’ statutes does not control our task here is to interpret our child support statute, RSA chapter p. 4 458 - C; the Hampshire does not, our legislature specifically intended to exclude them. Our states include capital gains in the definition of “gross income” but New We are not persuaded by the respondent’s argument that, because some

support. gains from SLF are “gross income” for the purpose of determining child (Okla. Ct. App. 2013) (collecting cases). Accordingly, we conclude that capital computation.” In re Children of Knight v. Lincoln, 317 P.3d 210, 21 p. 4 4, 214 n.4 classify realized capital gains as income for the purpose of child support (quotation omitted). Moreover, “[m]ost states that have considered the question considered.” In the Matter of Jerome & Jerome, 150 N.H. 626, 633 (2004) in domestic relations cases by “mandat[ing] that an obligor’s entire income be “minimize the economic consequences to children,” RSA 458 - C:1 (Supp. 2013), (2007). Th e statute’s broad language evinces t he legislature’s intent to listed in the statute.” In the Matter of Albert & McRae, 155 N.H. 259, 263 allows the trial court to count as gross income items that are not specifically and, therefore, it “includes, bu t is not limited to, the items listed therein, which income” means “all income from any source, whether earned or unearned,” id., We agree with the petitioner. The statute expressly states that “gross

when calculating child support. does not, the legislature intended to e xclude capital gains from “gross income” include capital gains in the definition of “gross income,” but New Hampshire support. The respondent counters that, because several neighboring s tates SLF condom inium units are “gross income” for purposes of calculating child RSA p. 4 458 - C:2, IV. The petitioner asserts that the net profits from the sales of

. . .. other government programs [ ] except public assistance programs alimony, business profits, pensions, bonuses, and payments from investment income, net rental inco me, self - employment income, income, lottery or gambling winnings, interest, dividends, commissions, tips, annuities, social security benefits, trust or unearned, including, but not limited to, wages, salary, “Gross income” means a ll income from any source, whether earned p. 5 5

losses -- expenses that were not necessary for producing income. Accordingly, respondent and his current wife, and nonbusiness - related rental property such things as depreciation, discretionary retirement contributions for the “gross income” for child support purposes because it includes deductions for respondent’s adjusted gross income for fed eral tax purposes does not reflect his Taylor, 1 p. 5 53 N.H. 700, 704 (2006). Moreover, as t he petitioner observes, the gross income under the child support guidelines.” In the Matter of State & taxation statutes defin e ‘income’ is of little relevance to [the] interpretation of Albert, 155 N.H. at 264 (quotation omitted). Indeed, “how federal income the amount of income available for purposes of calculating child support.” we agree. “Few courts rely solely on personal income tax returns to determine respondent’s 2011 tax return. The petitioner contends that this was error, and income,” the trial court used the adjusted gross income figure from the income” generated by the sales of the condominium units. To determine “gross We next address whether the trial court co rrectly calculat ed the “gross

be included in gross income for child support purposes. from the sale of a personal residence and reinvested in a new residence must have no occasion to consider whether, for example, capital gains generated here we are dealing with capital gains generated in a business context, so w e level of child support.” Rattee v. Rattee, 146 N.H. 44, 49 (2001). We note that to [the petitioner], and then use the income from the asset to determine the corporation] as marital property, award it to [the responden t], offset the award omitted). Accordingly, “it is not necessarily ‘double - counting’ to treat the [S nothing from the property division.” Jerome, 1 p. 5 50 N.H. at 633 (quotation governed by different requirements. . . . [T]he child of divorced parents receives “[P]roperty division and child support serve different functions and are

sell or otherwise manage the property as his or her own for life.” property [as part of the d ivision of marital assets] is entitled to develop, invest, calculating child support. He maintains that “[t]he party who is awarded the condominium units should not constitute “gross income” for the purpose of prope rty settlement in the parties’ divorce, the capital gains on the sales of the The respondent asserts that because he was awarded SLF as part of the

obtained through the line of credit, in determining “gross income.” at 30 p. 6 6, we find no error in including the capital gains, but excluding the funds support necessitates determining an actual ability t o pay,” Woolsey, 164 N.H. support. Because “[w]e believe that calculating a parent’s ability to pay child double - counting the funds available to the respondent for the purpose of child down as a line of credit. Including both in “gross income,” therefore, would be capital gains were treated as SLF funds, which, in turn, the respondent drew of credit should be included in “gross income.” We reject this assertion. The condominium uni ts and the money available to the respondent through the line The petitioner asserts that both the capital gains from the sales of the 6

HICKS, CONBOY, L YNN, and BASSETT, JJ., concurred.

parties’ remaining arguments. of special circumstances). In light of our decision, we need not address the is raised by either party, to make written findings “relative to the applicability” guidelines. See RSA 458 - C:5, I (Supp. 2013) (req uiring court, where the issue circumstances warrant deviation from the application of the support trial court shall include written findings addressing whether special Because the respondent has raised the issue on appeal, on remand the

actions). partner has ability to obtain information to establish propriety of partnership’s burden of demonstrating deductibility of partnership’s expenses because (Kan. 2002); cf. Hampers, 1 p. 6 66 N.H. at ___ (holding that limited partner has maintain or preserve the business.” In re Marriage of Brand, 44 P.3d 321, 327 she will bear the burden of proving that such actions were necessary to control the retention and disbursement of funds by the [S - corporation], he or that “[i]n situations where the individual with the support obligation is able to parent.” Merrill v. Merrill, 587 N.E.2d 188, 190 (Ind. Ct. App. 1992). We note expenditure which the court in its discretion finds will personally benefit the financial situation closely, and . . . exclude as a business expense any Consequently, the trial court should “scrutinize the self - employed parent’s trial judge to determine whether claimed expenses meet those criteria.” Id. from self - employment income. Id. at 307 (quotation s omitted). “It is for the “reasonable and necessary for producing income” in order to be deductible We explained that business expenses must be “actually incurred and paid” and gross receip ts net of legitimate business expenses. Woolsey, 164 N.H. at 306. self - employment income includable for the calculation of child support was corporation, is subject to “pass through” taxation). In Woolsey, we held that (analogizing self - employment to joint ownership of partnership, which, like S - Matter of Hampers and Hampers, 166 N.H. ___, ___ (decided Jun e 24, 2014) (Ind. 1999); Gase v. Gase, 671 N.W.2d 223, 231 (Neb. 2003); see also In the considered to be self - employed. See Glass v. Oeder, 716 N.E.2d 413, 415, 4 16 jurisdictions have decided that a sole shareholder of a n S - corporation is an S - corporation; the respondent is the sole shareholder. Courts in other deduct legitimate business expenses from business profits. We agree. S LF is Th e petitioner contends that the proper measure of “gross income” is to

obligation. income, we vacate and remand for a redetermination of his child support because the trial court erroneously relied upon the respondent’s adjusted gross