An out-of-state father partially succeeded in convincing the Indiana Court of Appeals that his income was significantly overvalued when his weekly child support amount was re-calculated at hundreds of dollars more than it was previously.
Shane Wierks and Heather (Corey) Mazellan have one child together, with Mazellan having primary custody of the child in Indiana while Wierks resides in New Jersey.
Wierks, who exercises regular parenting time that requires travel between Indiana and New Jersey, has always lived on the east coast, where he works as a commercial real estate broker specializing in retail real estate. Pursuant to a 2010 child support order, Wierks is required to pay $94 in weekly child support to Mazellan.
But a modification from the Grant Superior Court that raised his weekly child support obligation to $672.08 prompted Wierks to appeal, arguing that the trial court significantly overvalued his income when calculating the new support amount.
Specifically, he argued that the trial court erred by not deducting from his income one-half of the FICA taxes that he paid. Further, he asserted the court abused its discretion by adding back to the adjusted gross income reflected on his tax returns all of his depreciation deductions and his retirement contributions and by failing to make downward adjustments based on his higher cost of living in New Jersey and on the income tax rate that he pays, which exceeds the rate assumed by the Indiana Child Support Guidelines.
The Indiana Court of Appeals partially affirmed and partially reversed the decision, finding that the trial court erred in failing to deduct part of the FICA tax payment from his income from self-employment when calculating his weekly gross income, pursuant to Indiana Child Support Guideline 3(A)(2).
On the issue of depreciation, the appellate court noted that Wierks did not argue to the trial court that any or all of the deductions constituted “reasonable out-of-pocket expenditures necessary to produce income” or were “reasonable yearly deduction[s] for necessary capital expenditures.”
“Further, as Father testified that he owned these properties for the purpose of long-term investments rather than income, it is reasonable to assume that much of the depreciation listed in his lengthy tax schedules contributed to his net worth and did not necessarily constitute ordinary and necessary expenses to produce rental income,” Judge Robert Altice wrote, concluding that the trial court’s decision to add back the deductions for depreciation was not clearly erroneous.
As to Wierks’ argument regarding the higher tax rates he pays, the appellate panel concluded that rather than exercise discretion, the trial court overlooked the issue, “which Father had put squarely before the court and of which the court made no mention in its order.”
It therefore ordered the trial court on remand to consider the evidence of his actual tax rates relative to the assumed rate and expressly determine what, if any, adjustment should be made to his weekly gross income.
Additionally, it did not find that the trial court’s treatment of Wierks’ voluntary retirement contributions amounted to clear error and concluded that the trial court followed the law when it issues the income withholding order pursuant to Indiana Code § 31-16-15-0.5(a).
Turning to the cost of living, however, the appellate court found that the trial court’s decision to deny any adjustment for the differences in the cost of living between Indiana and New Jersey was clearly erroneous. It therefore ordered on remand for the lower court to determine and apply an appropriate adjustment in light of the economic realities of the parents.
It therefore affirmed in part, reversed in part and remanded in the case of Shane Wierks v. Heather Corey, et al. , 20A-DR-01944.