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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

2d Circuit Court - Plymouth Family Division

No. 2013-171

IN THE MATTER OF JANICE E. MAVES AND DAVID L. MOORE

Argued: April 3, 2014

Opinion Issued: August 13, 2014

Upton & Hatfield, LLP, of Concord (Marilyn B. McNamara, James A. 

O’Shaughnessy, and Sandra H. Kenney on the brief, and Ms. McNamara

orally), for the petitioner.

Martin, Lord & Osman, PA, of Laconia (Judith L. Homan on the brief and 

orally), for the respondent.

DALIANIS, C.J. The petitioner, Janice E. Maves, appeals, and the 

respondent, David L. Moore, cross-appeals, the decision of the Circuit Court 

(Rappa, J.) modifying the respondent’s child support obligation. We vacate and 

remand.

The trial court found, or the record supports, the following facts. The 

parties, who were divorced in 2004, are the parents of a son, who was fourteen 

years old at the time of the hearing on the petitioner’s motion to modify child 

support. The son has a “solid relationship” with both parents, who share 

parenting time, alternating on a weekly basis. Under the initial child support 

order, the respondent paid $650 per month for the son’s support. In 2008, his 

support obligation was increased to $950 per month. In addition, the 
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respondent provides the son’s health insurance and covers all uninsured 

medical expenses, pays for sports and academic summer camps, and furnishes 

the ski pass, clothing, and equipment for the son’s ski racing. 

As part of the property settlement in the parties’ divorce, the respondent 

was awarded Squam Lakeside Farm, Inc. (SLF), a campground consisting of 

119 sites with trailer hook-ups for water, electricity, and sewer. SLF is a 

Subchapter S corporation (S-corporation); the respondent is the sole 

shareholder. SLF’s profits, losses, and capital gains are reported on the 

personal federal income tax returns of the respondent, as shareholder. 

In 2010, the respondent altered his business plan and, after expending 

almost $400,000 in legal bills and surveying costs and obtaining the necessary 

permits from the State, began marketing the campsites as condominiums, 

rather than as seasonal rentals. Based upon the sale of many of the 

condominiums, the respondent reported capital gains of $1,000,389 on his 

2011 personal tax return.

In 2011, the respondent restructured a loan that he owed to SLF, 

converting it to a line of credit. Since that time, he has used the line of credit 

for various expenses, both personal and business-related. At the time of the 

hearing, the respondent had borrowed $887,754 against the line of credit. The 

respondent has never made any payments toward the outstanding principal or 

interest.

In November 2011, the petitioner moved to modify child support, 

asserting that three years had passed since the previous support order and 

that circumstances had materially changed, warranting a new support order. 

See RSA 458-C:7 (Supp. 2013). In addition, the respondent filed two motions 

to modify orders regarding health insurance and medical expenses and 

miscellaneous expenses. A final hearing on all motions was held on August 10, 

2012.

At the hearing, the parties disagreed about what comprised the 

respondent’s “gross income” for the purpose of determining child support. Paul 

Buck, a certified public accountant who performs various financial services for 

the respondent and SLF, including preparing the individual and S-corporation

tax returns, testified that because the capital gains from the condominium 

sales were not transferred from SLF to the respondent “in any way, shape or 

form,” they were not available to the respondent. Rather, he testified that the 

respondent’s “income” in 2011 should be limited to his $39,000 salary and the 

$2,750 monthly housing benefit for his residence in Holderness.

The trial court determined that the capital gains generated by the sale of 

the condominium units were “irregular” income that should be considered as 
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part of the respondent’s gross income for the purpose of establishing his child 

support obligation. See RSA 458-C:2, IV(c) (2004). To calculate the weekly 

child support obligation, the court used the adjusted gross income figure from 

the respondent’s 2011 federal income tax return, resulting in a support 

amount of $2,411 per week. Accordingly, the court ordered the respondent, 

within sixty days, to pay $9,644 for the four weeks from the date of service of 

the request for modification, November 29, 2011, through the end of 2011. 

Upon reconsideration, however, the court amended its order to permit payment 

in monthly installments. The court also concluded that it needed to review the 

respondent’s 2012 federal income tax return to calculate the amount of 

irregular income from capital gains for 2012. The trial court has held in 

abeyance further calculation of the respondent’s on-going child support 

pending the outcome of this appeal. 

Both parties appealed the support order. In her appeal, the petitioner 

argues that the trial court erred in: (1) failing to characterize a loan from SLF 

to the respondent as income for the purpose of child support; (2) failing to 

impute substantial “regular” income to the respondent as a result of that loan 

and the respondent’s capital gains; (3) treating the capital gains as “irregular” 

income and calculating the associated arrearage as applicable only to a fourweek period at the end of 2011; and (4) using the respondent’s adjusted gross 

income figure, rather than gross income minus legitimate business expenses, 

to determine his 2011 income. In his cross-appeal, the respondent maintains 

that the trial court erred in: (1) considering capital gains income from SLF, 

given that the asset was awarded exclusively to him in the divorce decree and 

that the capital gains were received by the corporation and, though taxable to 

him, were not actually distributed to him individually; (2) using his adjusted 

gross income figure to determine his income for 2011; and (3) arriving at a 

“grossly excessive” child support obligation based upon his 2011 capital gains 

income.

Child support is governed by RSA chapter 458-C (2004 & Supp. 2013), 

and, accordingly, resolution of the issues on appeal requires us to interpret 

this chapter. As we examine the statutory language, we do not merely look at 

isolated words or phrases, but instead we consider the statute as a whole. In 

the Matter of Woolsey & Woolsey, 164 N.H. 301, 304 (2012). In so doing, we 

are better able to discern the legislature’s intent, and therefore better able to 

understand the statutory language in light of the policy sought to be advanced 

by the entire statutory scheme. Id. We review the trial court’s statutory 

interpretation de novo. Id. at 303. 

We must first determine whether capital gains from the sale of the 

condominium units should be included in “gross income” for the purpose of 

calculating the respondent’s child support obligation. The statute provides:
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“Gross income” means all income from any source, whether earned 

or unearned, including, but not limited to, wages, salary, 

commissions, tips, annuities, social security benefits, trust 

income, lottery or gambling winnings, interest, dividends, 

investment income, net rental income, self-employment income, 

alimony, business profits, pensions, bonuses, and payments from 

other government programs [ ] except public assistance programs 

. . . .

RSA 458-C:2, IV. The petitioner asserts that the net profits from the sales of 

SLF condominium units are “gross income” for purposes of calculating child 

support. The respondent counters that, because several neighboring states 

include capital gains in the definition of “gross income,” but New Hampshire 

does not, the legislature intended to exclude capital gains from “gross income” 

when calculating child support.

We agree with the petitioner. The statute expressly states that “gross 

income” means “all income from any source, whether earned or unearned,” id.,

and, therefore, it “includes, but is not limited to, the items listed therein, which 

allows the trial court to count as gross income items that are not specifically 

listed in the statute.” In the Matter of Albert & McRae, 155 N.H. 259, 263 

(2007). The statute’s broad language evinces the legislature’s intent to 

“minimize the economic consequences to children,” RSA 458-C:1 (Supp. 2013), 

in domestic relations cases by “mandat[ing] that an obligor’s entire income be 

considered.” In the Matter of Jerome & Jerome, 150 N.H. 626, 633 (2004) 

(quotation omitted). Moreover, “[m]ost states that have considered the question 

classify realized capital gains as income for the purpose of child support 

computation.” In re Children of Knight v. Lincoln, 317 P.3d 210, 214, 214 n.4

(Okla. Ct. App. 2013) (collecting cases). Accordingly, we conclude that capital 

gains from SLF are “gross income” for the purpose of determining child 

support. 

We are not persuaded by the respondent’s argument that, because some 

states include capital gains in the definition of “gross income” but New 

Hampshire does not, our legislature specifically intended to exclude them. Our 

task here is to interpret our child support statute, RSA chapter 458-C; the 

definition of “gross income” in other states’ statutes does not control our 

analysis. 

Furthermore, were we to exclude capital gains from “gross income,” a 

person deriving substantial income exclusively from capital gains would pay no 

child support. The legislature could not have intended such an absurd result. 

See Bank of N.Y. Mellon v. Cataldo, 161 N.H. 135, 138 (2010) (refusing to 

construe statute to lead to absurd result).
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The petitioner asserts that both the capital gains from the sales of the 

condominium units and the money available to the respondent through the line 

of credit should be included in “gross income.” We reject this assertion. The 

capital gains were treated as SLF funds, which, in turn, the respondent drew 

down as a line of credit. Including both in “gross income,” therefore, would be 

double-counting the funds available to the respondent for the purpose of child 

support. Because “[w]e believe that calculating a parent’s ability to pay child 

support necessitates determining an actual ability to pay,” Woolsey, 164 N.H. 

at 306, we find no error in including the capital gains, but excluding the funds 

obtained through the line of credit, in determining “gross income.” 

 

The respondent asserts that because he was awarded SLF as part of the 

property settlement in the parties’ divorce, the capital gains on the sales of the 

condominium units should not constitute “gross income” for the purpose of 

calculating child support. He maintains that “[t]he party who is awarded the 

property [as part of the division of marital assets] is entitled to develop, invest, 

sell or otherwise manage the property as his or her own for life.” 

“[P]roperty division and child support serve different functions and are 

governed by different requirements. . . . [T]he child of divorced parents receives 

nothing from the property division.” Jerome, 150 N.H. at 633 (quotation 

omitted). Accordingly, “it is not necessarily ‘double-counting’ to treat the [Scorporation] as marital property, award it to [the respondent], offset the award 

to [the petitioner], and then use the income from the asset to determine the 

level of child support.” Rattee v. Rattee, 146 N.H. 44, 49 (2001). We note that 

here we are dealing with capital gains generated in a business context, so we 

have no occasion to consider whether, for example, capital gains generated 

from the sale of a personal residence and reinvested in a new residence must 

be included in gross income for child support purposes. 

We next address whether the trial court correctly calculated the “gross 

income” generated by the sales of the condominium units. To determine “gross 

income,” the trial court used the adjusted gross income figure from the 

respondent’s 2011 tax return. The petitioner contends that this was error, and 

we agree. “Few courts rely solely on personal income tax returns to determine 

the amount of income available for purposes of calculating child support.” 

Albert, 155 N.H. at 264 (quotation omitted). Indeed, “how federal income 

taxation statutes define ‘income’ is of little relevance to [the] interpretation of 

gross income under the child support guidelines.” In the Matter of State & 

Taylor, 153 N.H. 700, 704 (2006). Moreover, as the petitioner observes, the 

respondent’s adjusted gross income for federal tax purposes does not reflect his

“gross income” for child support purposes because it includes deductions for 

such things as depreciation, discretionary retirement contributions for the 

respondent and his current wife, and nonbusiness-related rental property 

losses -- expenses that were not necessary for producing income. Accordingly, 
6

because the trial court erroneously relied upon the respondent’s adjusted gross 

income, we vacate and remand for a redetermination of his child support 

obligation.

The petitioner contends that the proper measure of “gross income” is to 

deduct legitimate business expenses from business profits. We agree. SLF is

an S-corporation; the respondent is the sole shareholder. Courts in other 

jurisdictions have decided that a sole shareholder of an S-corporation is 

considered to be self-employed. See Glass v. Oeder, 716 N.E.2d 413, 415, 416 

(Ind. 1999); Gase v. Gase, 671 N.W.2d 223, 231 (Neb. 2003); see also In the 

Matter of Hampers and Hampers, 166 N.H. ___, ___ (decided June 24, 2014) 

(analogizing self-employment to joint ownership of partnership, which, like Scorporation, is subject to “pass through” taxation). In Woolsey, we held that 

self-employment income includable for the calculation of child support was 

gross receipts net of legitimate business expenses. Woolsey, 164 N.H. at 306. 

We explained that business expenses must be “actually incurred and paid” and 

“reasonable and necessary for producing income” in order to be deductible 

from self-employment income. Id. at 307 (quotations omitted). “It is for the 

trial judge to determine whether claimed expenses meet those criteria.” Id. 

Consequently, the trial court should “scrutinize the self-employed parent’s 

financial situation closely, and . . . exclude as a business expense any 

expenditure which the court in its discretion finds will personally benefit the 

parent.” Merrill v. Merrill, 587 N.E.2d 188, 190 (Ind. Ct. App. 1992). We note 

that “[i]n situations where the individual with the support obligation is able to 

control the retention and disbursement of funds by the [S-corporation], he or 

she will bear the burden of proving that such actions were necessary to 

maintain or preserve the business.” In re Marriage of Brand, 44 P.3d 321, 327 

(Kan. 2002); cf. Hampers, 166 N.H. at ___ (holding that limited partner has 

burden of demonstrating deductibility of partnership’s expenses because 

partner has ability to obtain information to establish propriety of partnership’s 

actions).

Because the respondent has raised the issue on appeal, on remand the 

trial court shall include written findings addressing whether special 

circumstances warrant deviation from the application of the support 

guidelines. See RSA 458-C:5, I (Supp. 2013) (requiring court, where the issue 

is raised by either party, to make written findings “relative to the applicability” 

of special circumstances). In light of our decision, we need not address the 

parties’ remaining arguments. 

Vacated and remanded.

HICKS, CONBOY, LYNN, and BASSETT, JJ., concurred.