2012-0696, In the Matter of Marcus J. Hampers and Kristin C. Hampers

information and tax return were available; and (2) ordering her to repay sums upon the husband’s 2009 income and tax return when his 2010 income wife asserts that the trial court erred by: (1) calculat ing child support based investment income to account for losses and expenses as well as gains. The support purposes under RSA chapter 458 - C b y using “net” figures for subsequent amendments; and (2) failing to calculate “gross income” for child the wife for any proceeding or matter related to the divorce decree and standing order requiring him to pay the reasonable attorney’s fees incurred by contempt. T he husband a sserts that the trial court erred by: (1) applying a modify his child support and alimony obligation s and on the wife’s petition for Court – Claremont Family Division (Yazinski, J.) on the husband’s motion to Kristin C. H ampers (wife) challenge a post - divorce decision of the 5th C ircuit CONBOY, J. In these cross - appeals, Marcus J. H ampers (husband) and

Connor on the brief and orally), for the wife. Prim m er, Piper, Eggleston & Cramer, P. C., of Manchester (Doreen F.

Fairclough on the brief, and Mr. Eggleton orally), for the husband. Orr & Reno, P.A., of Concord (Jeremy D. Eggleton and Judith A.

No. 2012 - 696 5th Circuit C ourt – Claremont 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

extent that the trial court awarded fees to the [wife], which were incurred unpublished order, w e vacat ed the trial court’s attorney’s fees award “[t]o the In p. 2 2007, the husband again challenged the attorney’s fees award. In an

did not demonstrate that he had preserved them for our review. Id. Id. We declined to address the husband’s constitutional arguments because he procedure would apply to any attorney’s fees the wife incur red in the future. N.H. 350, 353 - 54 (199 p. 2 2). Id. at 291. We further held that the Gosselin th os e fees pursuant to the procedure we set out in Gosselin v. Gosseli n, 136 yet paid, and remanded to the trial court to determine the reasonableness of award of attorney’s fees that the wife had incurred, but the husband had not and the husband had already paid. Id. at 2 90 - 91. However, we vacated the We left undisturbed the attorney’s fees that the wife had already incurred

this justice system.” Id. at p. 2 2 90 (quotation omitted). require the husband to pay the wife’s future attorney’s fees to “prevent abuse of be equitable for the wife to pay fees and costs, id., and that it was ne cessary to (brackets, ellipsis, and quotation omitted). The court found that it would not days of the husband’s receipt of the wife’s attorney ’ s fee statement. Id. amendment thereto or to the child in this matter in the future” within thirty proceeding or any other matter relating to any term of this decree a nd any ordered the husband to pay all of the wife’s “reasonable attorney ’ s fees for any Hampers & Hampe rs, 154 N.H. 275, 289 (2006) (Hampers I). The court further fees incurred in the case and in any appeal from its ruling. In the Matter of decree, the trial court ordered the husband to pay all of the wife’s attorney’ s our previous ruling s on the attorney’s fees award. In the parties’ 2004 divorce Evaluation of the parties’ procedural arguments requires an analysis of

agree with the wife that res judicata bars t his claim. jurisdiction to review ongoing child support, custody, and alimony issues. We of action is not at issue in this case, and because the trial court maintains as to the constitutionality of the attorney’s fees award, because the same cause inapplicable because the court has never issued a final decision on the merits collateral esto ppel. The husband counters that these preclusive doctrines are before this court, and, therefore, this challenge is barred by res judicata or husband has challenged the same attorney’s fees order on two prior occasions amends. V, XIV; N.H. CONST. pt. I, art. 14. The wife responds that the and due process under the State and Federal Constitutions. See U.S. CONST. vacated because, among other things, it violates his rights to equal protection The husband contends that the standing attorney ’ s fees order should be

I. Attorney’s Fees Order

part, vacate in part, and remand. that she had received in excess child support. We affirm in part, reverse in p. 3 3

Id. at 298; see also Shepherd v. Town of Westmoreland, 1 p. 3 30 N.H. 542, 544 recovery, even though the type of remedy or theory of relief may be different.” particular factual transaction, that party is barred from seeking further “Generally, once a party has exercised the right to recover b ased upon a transaction in question.” Radkay v. Confalone, 133 N.H. 294, 297 (1990). theories on which relief could be claimed arising out of the same factual “The term ‘ cause of action ’ means the right to recover and refers to all

whether the petition to modify at issue here involve s the same cause of action. merits for the purposes of res judicata analysis, we must determine only we consider our decision in Hampers I to constitute a final decision on the theories of the case not presented in the first action.” Id. at 455 - 56. Because the plaintiff is prepared in the second action to present evidence or grounds or Dartmouth College, 147 N.H. 44 p. 3 3, 454 (2002) (quotation omitted), “even though subsequent litigation involving the same cause of action,” Brzica v. Trustees of by a court of competent jurisdiction is conclusive upon the parties in a omitted). “The essence of the doctrine of res judicata is that a final judgment same cause of action.” McNair v. McNair, 151 N.H. 343, 353 (2004) (quotation “constitute res judicata with respect to a subsequent litigation involving the on the merits. We are not persuaded, since even a default judgment can arguments for vacating the attorney’ s fee s awar d does not constitute a decision the latter that our decision based upon his failure to preserve constitutional The husband contests both the second and third elements, arguing as to

and ( p. 3 3) the first action ended with a final judgment on the merits.” Id. another; (2) the same cause of action was before the court in both instances; three elements are met: (1) the parties are t he same or in privity with one Kelly, 161 N.H. 160, 164 (2010) (quotation omitted). The doctrine “applies if litigated and matters that could have been litigated in the first action.” Gray v. doctrine of res judicata prevents parties from relitigating matters actually de novo. Sleeper v. Hoban Family P’ship, 157 N.H. 530, 533 (2008). “The The applicability of res judicata presents a questi on of law that we review

(N.H. Jan. 2 p. 4 4, 2008). authority to award such fees in the instant case.” Hampers, No. 2007 - 519 second, that “we [had] already impliedly upheld the trial court’s inherent such an award is permissible, see Salito v. Salito, 107 N.H. 77, 78 (1966), and, effect, awarding the wife appellate attorney ’ s fees. Id. We explained, first, that However, we rejected the husband’s argument that the trial court erred by, in incurred in connection with the defense of the original case and appeal. Id. and, therefore, were required to be reviewed under Gosselin — i ncluding those of the final divorce decree could not have been part of the property settlement,” 2007 - 519 (N.H. Jan. 24, 2008). We explained that “fees incurred after the date fees to a Gosselin review.” In the Matter of Hampers and Hampers, No. between D ecember 2004 and September 2006, without first subjecting these 4

husband will continue to pay the wife’s attorney’s fees “for any proceeding or during the initial divorce action, from the award here, which provides that the related attorney’s fees awards, which address the attorney’s fees incurred support, custody, and alimony issues. He distinguishes “ordinary” divorce fees awards whe n the trial court maintains jurisdiction to review ongoing child The husband next argues that res judicata do es not apply to attorney’s

lacks preclusive effect. action” such that our earlier judgment on the standing attorney’s fees order demonstrated that his petition to modify constitutes a different “cause of the same attorney’s fees order at issue here, the husband has not because we reached a final judgment specifically addressing the propriety of the same cause of action,” Brzica, 1 p. 4 47 N.H. at 454 (quotation omitted), and jurisdiction is conclusive upon the parties in a subsequent litigation involving the doctrine of res judicata is that a final judgment by a court of competent trial court’s order. Hampers I, 154 N.H. at 289 - 91. Because “[t] he essence of Hampers I, it was one of the bases up on which the husband chall enged the Ass’n of Ap artment Owners, 312 P.3d 1247, 1253 (Haw. Ct. App. 2013), in Although attorney’s fees may be an ancillary issue, see, e.g., Vinson v.

regardless of the theory of recovery.”). transaction definition in the res judicata context, including the right to recover determination. See Brzica, 1 p. 4 47 N.H. at 455 (“‘Cause of action’ has a broad order is unconstitutional and contrary to law are therefore barred by that at 289 - 91. The husband’s current arguments that the standing attorney’s fees thereto or to [the child] in this matter in the future.” See Hampers I, 154 N.H. any other matter relating to any term of this decree and any amendment order awarding the wife her reasonable attorney’s fees for “any proceeding or enforceability of the standing attorney’s fees order, including the portion of the In our 2006 opinion on the divorce proc e eding, we upheld the

persuaded. each o f these rights, and, therefore, his claim is not barred. We are not (Supp. 2013). He maintains that the attorney’s fees award was ancillary to statutory ability to modify his child support payments under RSA p. 4 458 - C:7 equitable review. T he underlying right now at issue, he contends, is his bundle of issues connected with the dissoluti on of a marriage requiring omitted), and the underlying right at issue in the divorce proceeding was the underlying right that is preserv ed by bringing a suit or action” (quotation to modify ar e not the same “cause of action” because “a cause of action is the The husband argues that the divorce proceeding and the present petition

for a variance). claims that arose out of the same factual transaction as did her previous claim (1988) (finding barred plaintiff’s constitutional and inverse condemnation p. 5 5

capital gains, or other income to which he is legally entitled plus one - half of all interest, taxable or tax - e xempt, dividends, [the husband’s] income shall consist of his employment income For purposes of calculating child support under the guidelines,

deviat ed from the child support guidelines, explained: On the issue of child support, t he parties’ 2004 divorce decree, which

II. Investment Income

modification” is warranted. Id. should be disturbed, and has failed to demonstrate that “redress by husband alleges no reason why the “balance between burden and benefit” the standing attorney’s fees order is based upon an error of law. Thus, the warrant modifying the standing attorney’s fees order. R ather, he contends t hat The husband, however, does not argue that changed circumstances

appropriate.” Id. disturbance “assumes substantial proportion, redress by modification may be balance between burden and benefit can be disturbed,” and if such occurs between the judgment obligor and the surrounding circumstances, the control.” Id. at 199. Thus, w hen a n “unforeseen or u ncontrollable interaction obligor and some other conditions over which the judgment does not exercise is whether it contemplates an interaction between the activity of the judgment However, “the principal factor in whether a judgment is subject to modification provided.” Restatement (Second) of Judgments, supra § 73 comment b at 198. subject to modification even though the power of doing so is not expressly “[j] udgments that govern continuing or recurring courses of conduct may be We recognize that t he Restatement (Second) of Judgments provide s that

orders, not order s on attorney’s fees included in a divorce decree. RSA 4 p. 5 58 - C:2 (2004), :7, refer to the court’s authority to modify child support modification pursuant to statute. The statutory prov isions the husband cites, the standing order on attorney’s fees was not part of the judgment subject to § 73, at 197 - 200 (1982), here, unlike in Appeal of Carnahan, 160 N.H. at 77, judicata, see Restatement (Second) of Judgments § 13 comment c at 133 - 34, A lthough the modifiability of an orde r may affect the applicability o f res

(2010). That proposition does not apply here. power to correct a mistake of law. Appeal of Carnahan, 1 p. 6 60 N.H. 73, 77 - 78 res judicata will not apply to prevent th at body from exercising its statutory proposition that when a body exercises continu ing j urisdiction over a matter, at 289. He cites Appeal of Carnahan, a w orker s ’ c ompensation case, for the thereto or to [the child] in this mat ter in the future.” See Hampers I, 1 p. 5 54 N.H. any other matter relating to any term of this decree and any amendment 6

with discretion to lower any child support award it deems confiscatory.” provided an avenue to address the [husband’s] concern by providing the Court figure under the guidelines, the trial court explained that “the legislature rental income. Recognizing that its ruling would result in a large child support with the terms “gross” and “net” and suggesting its intent to limit “net” to net only in reference to rental income,” indicating the l egislature’s familiarity that RSA 458 - C:2 “includes a definition of gross income and contains the word is inapplicable to calculations of child support under New Hampshire law, and The trial court agreed with the wife’s expert. It noted that federa l tax law

itemized deductions, “[n]ot as a reduction of the [partnership] income.” explained that they are reported on the partner’s personal tax return as to averaging income over time. As for partnership investment expenses, Stone carrying forward capital losses to offset unrelated capital gains was tantamount available for child support purposes. He contended that the practice of purposes because it represent s a loss of principal, not a redu ction of income excess of a capital gain should not affect gross income for child support The wife’s expert, Dennis R. Stone, CPA, testified that a capital loss in

should be attributable to presen t income for the purposes of child support. that only the net income from the husband’s investments in partnerships to fully recognize the “economic reality” of the capital loss. He also testified should be carried forward to offset capital gains in subsequent year s, in order CPA, testified that capital losses of more than $3,000 in excess of capital gains the husband’s “present income.” The husband’s expert, Richard J. Maloney, gains.” Each party presented an expert witness to testify as to calculation of his “substantial unearned income from investments in partnerships and capital earned income for child support purposes, but disagreed as to how to calculate change of circumstances”). T he parties agreed to the amount of the husband’s the entry of the last order for support, without the need to show a substantial (permitting either party to move for “modification of such order 3 years after 2010 motion to modify the child support order. S ee RSA 458 - C:7, I(a) This appeal challenges the trial court’s ruling on the husband’s March 5,

us in this appeal. 283. The subsequent procedural challenges to that recalculation are not before his monthly gross income, we vacated the order and remanded. Id. at 277, we agreed that the record did not support the figure the trial court had used for alleged failure to apply it properly. See Hampers I, 154 N.H. at 283. Because definition of income for child support purposes, but rather the trial court ’ s On appeal from th e divorce decree, the husband did not challenge th is

requirements of RSA 458 - C: 2, IV. this tax return. The court makes this deviation from the whether he chooses to actually receive it annually as reported on p. 7 7

for child support purposes,” Albert, 155 N.H. at 264, and we have interpreted outset that “inc ome tax returns are an unreliable guide to the income available RSA 458 - C:2 is an issue of first impression for this court. We note at the at 263, t he meaning of “investment income” for child support purposes under wife’s assertion that we implicitly answered these questions in Albert, 155 N.H. before us as relating to the def inition of “investment income.” Contrary to the Cannon, 149 N.H. 194, 19 p. 7 7 (2003). The parties characterize both questions & Taylor, 153 N.H. 700, 703 (2006); see also In the Matter of Feddersen & considered to determine the parties ’ support obligati on. In the Matter of State the legislative scheme requires that all items includable as “gross income” be support award based upon special circumstances, see RSA 458 - C:4, II (2004), (Emphas e s added.). Although trial courts have discretion to adjust a child

veterans ’ benefits, unemployment benefits, and disability benefits. programs... including, but not limited to, workers ’ compensation, pensions, bonuses, and payments from other government rental income, self - employment income, alimony, business profits, gambling winnings, interest, dividends, investment income, net annuities, social security benefits, trust income, lottery or including, but not limited to, wages, salary, commissi ons, tips, all income from any source, whether earned or unearned,

C:2, IV defines gross income as: For purposes of calculating a parent ’ s child suppo rt obligation, RSA 458 -

the overall statuto ry scheme and not in isolation. Id. l egislature did not include. Id. at 524. We interpret statutes in the context of not consider what the l egislature might have said or add words that the (2003). We interpret legislative inten t from the statute as written, and we will considered as a whole. In the Matter of Plaisted & Plaisted, 149 N.H. 522, 523 arbiter of the l egislature ’ s intent as expressed in the words of the statute In the Matter of Albert & McRae, 155 N.H. 259, 262 (200 p. 7 7). W e are the final interpretation, and, thus, are questions of law, which we revi ew de novo. See income a s defined under RSA 458 - C:2, IV, are question s of statutory should have included the husband’s partnership expenses as part of his gross capital gains in calculating “investment income,” and whether the trial court However, whether capital losses may be carried over to offset future years’ support orders. In the Matter of Jerome & Jerome, 150 N.H. 626, 628 (2004). Trial courts have broad discretion in reviewing and modifying child

the revenues of the partnership investments. years’ capital gains, and by declin ing to deduct the partnerships’ expenses from allow hi m to carry over capital losses in excess of capital gains to offset future On appeal, the husband argues that the trial court erred by refusing to p. 8 8

support guidelines because it would artificially decrease income in the years (2001). Allo wing losses to carry over would violate the purposes of the child (2004); see also In the Matter of Dolan and Dolan, 147 N.H. 21 p. 8 8, 221 - 22 parent’s subsequent family.” Taylor, 153 N.H. at 703; see RSA 458 - C:1, II ensure that children enjoy a standard of living equal to that of the noncustodial guidelines are to reduce the economic consequences of divorce on children and (quotation, brackets, and ellipsis omitted). “The objectives of the child support objectives of the federal income taxation statutes.” Albert, 155 N.H. at 263 “This is so because the objectives of the child supp ort guidelines differ from the child support guidelines.” Taylor, 153 N.H. at 7 04; see Albert, 155 N.H. at 263. ‘income’ is of little relevance to our interpretation of gross income under the U.S.C. § 1212(b) (2012). “[H]ow federal income taxation statutes define carrying over to future years capital losses which exceed capital gains. See 26 should not be defined as consistent with the federal taxation approach of W e first c onclude that “investment income” for child support purposes

support purposes. We disagree and discuss each option in turn. “rational” because it does not accurately reflect the income available for child as the approach that Stone supported and the trial court ordered, is not argues in favor of option (1), and claims that option (3), which he characterizes not to account for capital losses when calculating gross income. The husband option, which neither party addresses, is to treat capital gains as income and by deducting capital losses only up to the point of capital gains. An other which the loss was incurred; or (3) to “ignore the economic reality of the loss” years; (2) to deduct the entire capital loss from gross income in the year in carried over to offset capital gain s (and up to $3,000 of other income) in future ($3,000) is deducted from other income, and the remainder of the loss is consistent with federal tax law, pursuant to which a portion of the excess loss address capital losses i n excess of capital gains: (1) to follow the method capital gains within a given year. Maloney testified to three potential ways to i.e., the treatment, for child support purposes, of capital losses that exce ed None of the husband’s arguments is persuasive as to the issue at hand:

sound public policy. persuasive authority recognizing the effect of capital losses; and (3) is against losses only up to the point of the gain, but no further; (2) conflict s with contends that this ruling: (1) is internally inconsistent because it recognizes to offset gains only to the extent of the capital gains for any given year. He The husband argues that the trial court erred by allowing capital losses

A. Capital L osses in E xcess of C apital G ains

available to the obligor parent for payin g child support. Id. the statute so that the concept of gross income encompasses the money p. 9 9

G iven the g uidelines’ focus up on the obligor’s actual ability to pay and the ability to pay child support necessitates determining an actual ability to pay”). Matter of W oolsey & Woolsey, 164 N.H. 301, 306 (2012) (“calculating a parent’s formula for calculation of child support based upon parents’ incomes); In the the parent’s net worth. See, e.g., RSA 458 - C:3 (Supp. 2013) (establishing guidelines turn on the obligor parent’s income available for support, and not on to the extent of any capital gains wi thin the same year. The child support definition of “investment income” limits the deduction of capital losses, at most, treatment is permitted under our statutory scheme. Second, we agree that the in the year that both are incurred. Thus, we need not decide here whether that note that neither party argues that capital losses should not offset capital gains only up to the amount of capital gain s realized during the same year. First, we Thus, we uphold the trial court’s decision to give effect to capital losses

to offset capital gain with capital losses). COA - R3 - CV, 2004 WL 626713, at *8 (Tenn. Ct. App. Mar. 2 p. 9 9, 2004) (declining child support purposes); c f. Abercrombie v. Abercrombie, No. E2003 - 01226 - 2013) (analyzing different courts’ approaches to capital gains as income for Guidelines: Interpretation and Application § 4.07 [H] at 4 - 47 to 4 - 48 (2d ed. income without regard to capital losses. S ee L. Morgan, Child Support decide whether to adopt the construction under which capital gains constitute Because neither party argues in favor of the fourth option, we need not

be against the best interest of the child. income available for child support. As the parties agree, that approach would parent with “negative” income, regardless of whether the parent has actual capital losses could exceed income generated from other sources, leaving a other categories of gross income in the year it is incurred. Under that option, purposes should not be defined to permit deducting a n excess capital loss from We likewise conclude that “investment income” for child support

over option to calculate investment income. Accordingly, we conclude that the trial court co rrectly rejected the loss carry gains that were realized in the curre nt period” against one another. because it nets “losses from prior periods that have nothing to do with the testified, allowing a carry - over of capital losses is a form of income averaging support should be determined on the basis of present income.” Id. A s Stone support obligations.” Rattee v. Rattee, 146 N.H. 44, 46 (2001). Instead, “child not employ income - averaging over a number of years to determine child (quotation omitted). Moreover, “[o]ur case law is clear that trial courts should that an obligor’s entire income be considered.” Jerome, 150 N.H. at 633 “The child support guidelines set forth in RSA chapter 458 - C mandate

support in those subsequent years would not have decreased. subsequent to the capital sale, even though the income available for child p. 10 10

expenses and as such sho uld not be accounted for as a reduction of total from income, reasoning “that such amounts are correctly categorized as Stone disagreed that “investment and portfolio expenses should be deducted”

be considered. the correct total income from a partnership, all these items must for ordinary business income or loss, etc.). In order to calculate Interest and Dividends, Schedule D for capital gains, Schedule E separate schedules (Schedule A for expenses, Schedule B for on his individual tax return. These items will be reported on business income (loss)’. Each partner reports these various items etc., with the remaining activity being summarized as ‘ordinary many items of income, deduction, capital gain, capital loss, credits, Schedule K - 1 of that return, the partnership separately identifies The partnerships must file an information return (Form p. 10 1065). On

are reported as itemized deductions. income are reported in determining gross income but the expenses against the income for reporting purposes. Rather, the items of related to the investment activity in the partnership are no t netted the requirements of the Internal Revenue Code, the expenses actual net income from a particular partnership. Solely because of sections of the tax return rather than combined to determine the specific category of income and expense is reported in differe nt expenses. Because these investments are partnerships, the These partnerships generate a variety of types of income as well as [The husband] is a limited partner in eight limited partnerships.

partnerships. M aloney explained in his report: dispute that his 2009 income included income from investments in eight expenses from the revenues of his partnership investments. There is no court erroneously declined to deduct reasonable and necessary investment The husband next argues that in determining his gross income, the trial

B. In come F rom I n vestments in P artnerships

fit. See Evans v. J Four Realty, 164 N.H. 570, 576 (2013). treatment of capital losses, it is of course free to amend the statute as it sees trial court did, we affirm that ruling. If the l egislature wishes to clarify the offset for capital losses to the extent of capital gains in the same year, as the because the purposes of RSA chapter 4 58 - C are better served by limiting the Accordingly, as between the two approaches advanced by the parties,

deduction of capital losses to the extent of any capital gains in one year. amount available for child support purposes, it is reasonable to limit a p. 11 11

C:2, IV to mean the gross receipts of a sole proprietorship when a portion of that the legislature i ntended the term ‘ self - employment income ’ in RSA 458 that income.” Woolsey, 164 N.H. at 306. We reasoned that it was “improbable income net of legitimate business expenses incurred for the purpose of earning 458 - C:2, IV that the term ‘ self - employment income ’ means self - employment l egislature also did not qualif y by the term “net,” and found “implicit in RSA 0 6. There, we considered the meaning of “self - employment income,” which the is not dispositive. We rejected a similar argument in Woolsey, 164 N.H. at 304 - We first note that the statute’s failure to refer to “net” investment income

dis agree with the wife’s arguments on this point. than a business expense directly related to the production of income. We personal expense incurred for management of an investment asset,” rather employ a third party that charges management fees,” and constitute “a that the partnerships’ expenses are the result of a “discretionary decision to standard of living commensurate with that of the husband. Finally, she argues goal of the child support guidelines to ensure that their son will enjoy a husband’s “investment income” in his gross income is more consistent with the gross, citing Alber t, 155 N.H. at 263. She also argues that including all of the C:2, IV, other than “net rental income,” is intended to refer to that source in The wife counters that each source of income enumerated in RSA 458 -

expenses. his child support obligation, or use the business to defray his personal shield income, manipulate the amount of money he received in order to reduc e decision - making authority over the partnerships, highlighting his in ability to the income produced by the partnership.” He further notes his lack of and untenable to determine precisely how every partnership expense related to production of that income. He asserts, however, that “it would be irrational incurred and expenses actually paid that were directly related to the by taking into account all of his income and deducting therefrom the losses N.H. at 307, he argues that an obligor’s support obligation should be measured on his or her tax ret urn. See Albert, 155 N.H. at 263 - 64. Citing Woolsey, 164 requiring each investor to repo rt the partnership’s gains, losses, and expense s Albert or an S - corporation, the partnerships are “pass through” entities, income.” He explains that, like the Limited Liability Company (LLC) at issue in realized from the partnerships to determine the correct amount of “investment and maintains that the se expenses must be deducted annually from the gains the natural, necessary, and ordinary cost of investing in such partnerships, The husband argues that the business expenses of the partnerships were

court accepted Stone’s opinion “as the appropriat e standard to apply.” gross income includes the word “net” only as applied to rental income, the trial income for child support purposes.” Noting that the statutory definition of p. 12 12

deductible for purposes of determining ‘self - employment income’ under RSA See Woolsey, 164 N.H. at 306; see also Albert, 155 N.H. at 264. “[T] o be involves more than simply applying the figures reported on income tax returns. business expenses incurred for the purpose of earning tha t income,” however, T he determination of a parent’s partnership income “net of legitimate

expenses.” Id. and, therefore, ... presupposes the deduction of legitimate business ability to pay child support necessitates determining an actual ability to pay, 164 N.H. at 306. We reached this conclusion because “calculating a parent’s business expenses incurred for the purpose of earning that income.” Woolsey, income” in RSA 4 58 - C:2, IV “means self - employment income net of legitimate income”). As noted above, w e have already determined that “self - employment such individuals is essentially the net profit derived from their businesses’ on the income of sole proprietors or partners, since the personal income of proposed tax on business income “might have the practical effect of be ing a tax p. 12 123 N.H. 296, 308 (1983) (understanding legislative concern to be that business, and joint ownership of a partnership. Cf. Opinion of the Justices, W e agree with the logic analogizing self - employment, proprietorship of a

amount of money actually available for child support purposes). defining “self - generated income” for child support purposes by focusing on 2013 WL 6858958, at *2 - 3 (Ohio Ct. App. Dec. 30, 2 013) (interpreting statute business expenses” (quotation omitted)); Roubanes v. Roubanes, No. 13AP - 369, su pport purposes, but only after deduction of all reasonable and necessary parent’s partnershi p earnings were “includable in gross income for child employment for purposes of calculating parent’s income, and concluding the (Conn. Super. Ct. Feb. 27, 20 p. 12 12) (analogizing family partnership to self such income.”); Rein v. Rein, No. FA 064021530S, 2012 WL 898774, at * 2 - 3 gross receipts minus ordinary and necessary expenses requ ired to produce ownership of a partnership or closely held corporation is calculated by taking royalties, income from proprietorship of a business, and income from joint Morgan, supra § 4.08, at 4 - 89 (“Income from self - employment, including rent, partnership income as in the nature of self - employment income. See, e.g., considered “investment income”; however, other states generally treat T he parties agree that the husband’s income from the partnerships should be partnership’s income, gain, loss, deduction, or credit. See 26 U.S.C. § 702. not pay tax, but its members are taxed on their distributive shares of the (Mo. Ct. App. 2000); 26 U.S.C. §§ 701 - 709 (2013). The partnership itself does an S - corporation or an LLC. See, e.g., Thill v. Thill, 26 S.W.3d 199, 202 n.1 be calculated. A partnership is subject to “pass through” taxation, similar to We turn now to how an obligor parent’s income from partnerships should

therefore unavailable for the payment of child sup port.” Id. at 305. that money is payable to others as legitimate business expenses, and is p. 13 13

expenses. However, this is a justifiable risk. As between a parent who chooses child support purposes, yet the parent may not receive any benefit from these production of income, and thu s not deductible from the parent’s income for partnership may incur expenses that are not reasonable and necessary for the is a limited partner with no control over the partnership’s expenses: The In so interpreting our statute, we admittedly place a risk on a parent who

legitimately reflect income available for child support. income must demonstrate why gross receipts from self - employment do not incom e from self - employment. Thus, the parent who seeks to reduce his gross necessary business expenses, however, that may reduce a parent’s gross (quotation, ellipses, and brackets omitted)). I t is only the reasonable and production of income be held in abeyance until the child support is paid.” could create t he untenable situation that the expenses associated with the obligation takes precedence over the self - employed obligor’s business expenses continue to function. Id. at 306 (“To embrace a rule that a child support expenses must be paid from the business’s receipts in order for the business to income to be less than the gross receipts of his business is that certain Woolsey, 164 N.H. at 304 - 07. The justification for considering a parent’s gross O ur reasoning in Woolsey does not support the husband’s position. See

reasonable and necessary for the production of inc ome does not apply. expenses, the rationale for limiting deductions to only those that are reduce his child support obligation or use the business to defray his personal shield income or manipulate the amount of money he received in order to decision - making authority over the partnerships, and therefore could not to avoid child support obligations. He contends that b ecause he lacked while characterizing his personal living expenses as business expenses in order interest in a closely held corporation makes minimal distributions to himself, that the “stereotypical case” would be one in which an obligor who owns an expense is merely a mask for the personal expense of the obligor,” asserting IV. The husband argues that the “relevant calculus is whether the partnership are reasonable and necessary for the production of income. See RSA 458 - C:2, partnership’s tax - reported expenses, without regard to whether those expenses partner should result in the blanket deductibility of his share of the T he statute does not suggest that an obligor parent’s status as a limited

at 305 (quotation omitted). guide to the income available for child support purposes.” Woolsey, 16 4 N.H. Abercrombie, 2004 WL 6267 p. 13 13, at *7, “income tax returns are an unreliable yield valuable data for a trial court’s use in setting child support, see whether claimed expenses meet those criter ia.” Id. Although a tax return may (quotations and citations omitted). “It is for the trial judge to determine reasonable and necessary for producing income.” Woolsey, 164 N.H. at 307 458 - C:2, IV, business expenses must be actually incurred and paid, and p. 14 14

for further proceedings consistent with this opinion. Accordingly, we reverse the trial court’s ruling on this issue and remand

determination. Id. expenses in this case, remand is necessary for the trial court to make that Woolsey, 164 N.H. at 307, and the trial court did not address the claimed judge to determine whether claimed expenses meet [our established] criteria,” reasonable and necessary for producing income.” Because “[i]t is for the trial knowledge as to whether the expenses were “actually incurred and paid, and appeared in the tax returns. Stone likewise expressly disclaimed any the figures as reported by the partnerships to the husband — that is, as they Malo n ey explained that he had generated the schedules for his report by taking however, and the record does not allow such a conclusion as a matter of law. were reasonabl e and necessary for the production of the partnerships’ income, testimony, disagrees. T he trial court did not determine whether the expenses nondeductible personal expenses; the husband, based upon Maloney ’s Here, t he wife character izes the contested partnership expenses as

shareholder - spouse’s amount of available income”). alimony, child support, or attorney’s fees obligations by reducing the retained for corporate purposes rather than impermissibly retained to avoid spouse to prove “that the undistributed ‘pass - through’ income was properly 2d 1222, 1233 (Fla. 2005) (placing burden on S - corporation shareholder to establish the propriety of the partnership’s actions. Cf. Zold v. Zold, 911 So. properly on the partner because he or she has the ability to obtain information v. Hornbeck, 63 A.3d 76, 103 n.11 (Md. Ct. Spec. App. 2013). The burden is demonstrating the deduct i bility of such expenses is on him. See, e.g., Reichert at 307 (quotations and citation omitted), we hold t ha t the burden of paid, and reasonable and necessary for producing income,” Woolsey, 164 N.H. the wife to establish that the charged expenses were not “actually incurred and S - corporation). To the extent t hat the husband suggests that the burden is on Brand, 44 P.3d 321, 330 (Kan. 2002) (discussing treatment of income from an support purposes is a highly fact - specific determination. See In re Marriage of business’s income distributions when calculating a parent’s income for child W hether to deduct reasonable and necessary expenses from the

See id. at 306 - 07. income are deductible therefrom for the purposes of calculating child support. only those expenses that are reasonable and necessary for the production of not carry the same risk; however, with respect to income from a partners hip, Other investment vehicles that are not in the nature of self - employment will expenses, and that parent’s children, it is the parent who should bear the risk. to participate in (or invest in) a partnership that might incur unnecessary p. 15 15

precedent to calculate child support under the guidelines. support payment.” Thus, the issue is whether the court properly applied this present income utilizing RSA 458 - C:2 to determine an appropriate child and to pay child support,” and “ruled that the C ourt is required to determi ne income that a party has available to it to utilize for itself or to benefit that party 46, and Fedders e n, 149 N.H. at 196, “indicate that present income is the actual court acknowledged that New Hampshire case s, including Rattee, 146 N.H. at 2009 income.” However, in its analysis of the capital gains issue, the trial years. Further, [the husband] filed for modification in 2010 based upon his analysis of [the husband’s] current income than th e testimony relating to other expert[s’] analysis, exhibits, and testimony were more beneficial to the Court’s explained: “The Court utilized the income of 2009 because it found that the setting a child support p ayment.” On reconsideration, the court further 2009 and the Court will utilize [the husband’s] 2009 income for purposes of In its October 2011 order, t he trial court stated: “[T] his case began in

reflect the obligor’s ability to pay as that ability changes over time. modification retroactive to the time of filing, reflects an intent to accura tely New Hampshire’s child support statutory scheme and case law, providing for commensurate with the party’ s need or ability to pay. He also contends that obviate that party’s right to an order setting child support at the amount to modification, since a change in income before the petition is heard would information from the date of filing is critical to preserving a moving party’s right vicissitudes of court scheduling; and second, that the decision to use financial leaving the figures (and thus the payment obligation) to depend upon the in a cycle of discovery, expert preparation, and potentially strategic trial delay, the court to consi der only the most current information available would result He supports this argument with two policy considerations: first, that to require from both experts concerning the husband’s income for both 2009 and 2010. income figures was within its discretion, after hearing substantial testimony The husband responds that the trial court’s decision to use his 20 09

the husband’s child support obligations on his 2009 income. therefore the trial court unsustainably exercised its discretion when it based 2009 income was abnormally low, compared to the years before and after, and court’s determination of “present income.” Here, she argues, the husband’s 218 (2002), th e most current figures available should provide the basis for the Fedd ers e n, 149 N.H. 194 (2003), and In the Matter of Crowe & Crowe, 148 N.H. contends that, unless the most recent figures are misleading, as they were in party questioned the reliability of the more current earnings data. She fact that his 2010 income figures and tax return were available and neither support based upon the husband’s 2009 income and tax return, despite the The wife asserts that the trial court erred when it calculated child

III. Use of 2009 Income Figures p. 16 16

I(a). need to show a substantial change of circumstances pursuant to RSA 458 - C:7, (2009); rather, he sought modification of the child support order without the c ircumstances, see In the Matter of Duquette & Duquette, 159 N.H. 81, 86 petition: He did not move to modify on the ground of a substantial change in figures was grounded in any concern raised in the husband’s modification Furthermore, nothing indicates that the court’s decision to use the 2009 an analysis of present income. Nor does the record support that conclusion. compared to the 2010 evidence, made the older information “more beneficial” to trial court did not explain what characteristics of the 2009 evidence, as husband] filed for modification in 2010 based upon his 2009 income.” The current income than the testimony relating to other years. Further, [the testimony were more beneficial to the Cou rt’s analysis of [the husband’s] income of 2009 because it found that the expert [s’] analysis, exhibits and analysis by experts for both sides. The court explained that it “utilized the financial data relating to the husband’s 2009 income and 2010 income, with T he trial court’s d ecision was based upon review of two full sets of

implicated here. current information is the best representation of “present income” is not information was misleading. Thus, this exception to the general rule that that information. T he trial court made no finding that the husband’s 2010 in his 2009 and 2010 tax returns, but disagree only as to the application of the parties do not dispute the veracity of the information the husband provided Id.; see Feddersen, 149 N.H. at 197; Crowe, 148 N.H. at 223. Here, however, father to submit the past tax returns to aid in establishing his present income.” about ‘his credibility and forthrightness,’” and therefore “prope rly ordered the income and expenses as well as his attitude and demeanor’ raised doubts affidavit he submitted, “the family division observed that the father’s ‘reported Gray, in which the only evidence of the ob ligor father’s current income was an information on the financial affidavit.” Id. (quotation omitted). For example, i n includes the use of past tax returns when the obligor provides ‘ misleading ’ noncustodial parent in disclosing income.” Id. (quotations omitted). “This presented at the hearing and the credibility and forthrightness of the trial court to decide what income figures should be used based upon the facts incom e.’” In the Matter of Gray & Gray, p. 16 160 N.H. 62, 67 (2010). “It is up to the support obligation, the court must first determine the parent ’ s ‘present present income.” Rattee, 146 N.H. at 46. “When calculating a parent’s child It is undisputed that “child support should be determined on the basis of

(quotation omitted). exercise of discretion was unsustainable.” Fedders e n, 149 N.H. at 196 modification order only if it clearly appears on the evidence that the court ’ s support orders.” Taylor, 153 N.H. at 702. “Accordingly, we will set aside a “Trial courts have broad discretion in revi ewing and modifying child p. 17 17

I ndeed, here, as the trial court noted in another context, “the legislature guidelines would result in a ‘ confiscatory support order. ’” (citation omitted)). courts may adjust an award when applying the uniform child support courts with the means to address income fluctuations. For instance, trial amount. See Feddersen, 149 N.H. at 198 (“The statutory scheme pr ovides then to explain what, if any, circumstances warrant deviation from that is to calculate the parties’ child support obligation under the guidelines, and In the case of a parent’s fluctuatin g income, the correct course of action

address issue). that RSA 458 - C:5’s special circumstances standard is sufficiently flexible to courts may consider impact of gifts on financi al condition of the parties and (holding that gifts are not included in definition of gross income, but that trial appropriate. See In the Matter of Fulton & Fulton, 154 N.H. 264, 268 (2006) award, by contributing to special circumstances that would make deviation income” may nonetheless be relevant to the computation of a child support Fedders e n, 149 N.H. at 19 7. However, an item not includable as “gross income’ must be used to determine the parties ’ total support obligation.” omitted). “Pursuant to the legislative scheme, all items includable as ‘gross Matter of Forcier & Mueller, 152 N.H. 463, 465 (2005) (qu otations and citations be unjust or inappropri ate. . . because of special circumstances.” In the by a prep onderance of the evidence that the application of the guidelines would overcome and the trial court may de viate from the guidelines when it is shown amount of child support.” Id. (quotation omitted). “The presumption may be that a child support award calculated under the guidelines is the correct N.H. at 86 (quotation and ellipsis omitted). “There is a rebuttable presumption support cases, including any order modifying a support order.” Duquette, 159 “New Hampshire’s child support guidelines shal l be applied in all child

would be inconsistent with the child support guidelines. order based upon financial figures that are not current; such a resolution made payments under an outdated support order cannot be a new support period while the case is pending. However, t he remedy for a parent who has case is actually heard, resulting in either overpayment or underpayment for the fluctuates between the time of a request for modification and the time that the We agree that fairness concerns may be implicated when a parent’s income that the figures at the time of filing are intended to govern the modification. support award is frequently retroactive to the date of the motion, indicating lost. He also points out that a court’s order granting modification of a child with his ability to pay during the year in which he moved for hearing will be the obligor’s right to modify his ch ild support obligation to that commensurate a modification when he moves for it, but change before the case is heard, then modification.” He asserts that if the obligor’s financial circumstances warrant from the date of filing is . . . critical to preserving a moving party’s rights to T he husband argues that “[t] he decision to use financial information p. 18 18

N.H. 55, 62 - 63 (2005). amendment to her is unlawful. See In the Matter of Donovan & Donovan, 152 argues, because her di vorce was finalized in 2006, application of the 2007 support resulting from a modification of a support order. T herefore, she directly reimburse the obligor” (emphasis added) for any overpayment of that “the court shall order, absent a showing of undue hardship, the obligee to amendment to RSA 458 - C:7, III, affects substantive rights because it provides the modificati on of the support order. She maintains that the 200 7 order her to reimburse the husband for overpayment of support resulting from The wife argues that the trial court lacked subject matter jurisdiction to

IV. Reimbursement of O verpaid C hild S upport

proceedings consistent with this opinion. Accordingly, we vacate the calculation of child support and remand for further the husband’s 2009 income for purposes of calculating his “present income.” We conclude that, on the record before us, the trial court erred by using

196. Hillebrand, 130 N.H. 520, 526 (1988); see also, e.g., Fedders e n, 149 N.H. at are to be based upon the obligor’s “present income.” See Hillebrand v. holding today merely reaffirms our longstanding rule that child support awards delayed to allow the calculation and review of ever - newer financial data. Our experts time to analyze that data. We do not hold that hearings must be require endless delays in order to obtain the latest financial data and allow Nor are we persuaded by the husband’s argument that our holding w ill

provision). guidelines a r e not limited to the special circumstances enumerated in the (“special circumstances” allowing adjustments in application of support “unjust or inappropriate.” RSA 458 - C:4, II; s ee RSA 458 - C:7; RSA 458 - C:5, I payments between the date of filing and the court’s final order — would be cases in which the application of the guidelines — to either future payments or courts to fashion a just modification and repayment order, as necessary, in N.H. 540, 546 ( p. 19 1992). The statutory scheme is sufficie ntly flexible to allow trial deny the reduction if the circumstances warranted denial.” Giles v. Giles, 136 a reduction mandated such a reduction, or limited the court’s discretion to would strain the bounds of logic... to hold that the court’s authority to order see RSA 458 - C:7; Maciejczyk v. Maciejczyk, 134 N.H. 343, 345 (1991), “[w] e may order modification effective as of the filing date of the petition to modify, RSA 458 - C:4, II (2004); RSA 458 - C:5 (Supp. 2013). Although the trial court with discretion to lower any child support award it deems confiscatory.” See provided an avenue to address the [husband’s] concern by providing the Court 19

DALIANIS, C.J.