No. 01-715 IN THE SUPREME COURT OF THE STATE OF MONTANA 2002 MT

PATRICIA MARIE ALBRECHT, Petitioner and Appellee,

v. KEITH VINCENT ALBRECHT, Respondent and Appellant.

APPEAL FROM: District Court of th e Eighteenth Judicial District, In and for the County of Gallatin, The Honorable Thomas A. Olson, Judge presiding.

COUNSEL OF RECORD: For Appellant: Gregory O. Morgan, Gregory O. Morgan, P.C., Bozeman, Montana For Respondent: Kirsten Mull Core, Kirsten Mull Core, P.C., Bozeman, Montana

Submitted on Briefs: March 21, 2002 Decided: October 10, 2002 Filed:

__________________________________________ ClerkJustice Terry N. Trieweiler deliver ed the Opinion of the Court.

23 1¶ The Petitioner, Patricia Marie Albrecht , filed a petition for dissolution of her marriage to Respondent, Keith Vincent Albrecht , in the District Court for the Eighteenth Judicial District in Gallatin County. Following trial the Di strict Court found the marriage to be irretrievably broken, awarded custody of the parties' three minor children to Patricia and ordered that Keith pay child support in the total amount of $2,412.00 per month. Keith appeals the District Court’ s child support award. We affi rm in part, reverse in part and remand to the District Court for further proceedings consistent with this Opinion. 2¶ The issue presented on appeal is whethe r the District Court erroneously calculated Keith’s child support obligation? FACTUAL BACKGROUND 3¶ Keith and Patricia Albrecht were married on February 26, 1983. They had three children during their marriage. Patricia filed a petition for dissolution of their marriage on December 22, 1999. The District Court issued its Findings of Fact, Conclusions of Law, and Decree of Dissolution of Marriage on Augu st 29, 2001. In the Decree the court ordered that Keith pay child support in the amount of $2,412.00 per month for the three children. The District Court relied upon th e testimony of Patricia’s expert, Mr. Nicholas Bourdeau, and adopted his final child support calculation. 4¶ Mr. Bourdeau arrived at Keith’s child su pport obligation by fi rst determining that Keith’s income for 1999 was $93,987.00 fr om full-time self-employment as a roofing contractor and excavator and from house construction done in his spare time. Keith, however, reported an income of $37,747.00 from these s ources in his 1999 Amended4 U.S. Individual Income Tax Return. Mr. Jan St aker, Keith’s CPA, testified that Keith’s average income from 19 95-1999 was $26,613.00. Mr. St aker’s knowledge of Keith’s income and expenses was based on the info rmation given to him by Keith, and was not based on an actual review of Keith’s business re cords. The parties s tipulated that Keith’s gross receipts for 1999 were ap proximately $217,244.00. 5¶ The District Court ignored Keith’s in come tax returns as evidence of income based on Mr. Bourdeau’s testimony that he be lieved the returns were unreliable for child support purposes. It was Mr. Bourdeau’s impression that Keith’s tax returns were “aggressive” and potentially “overreaching.” Consequently, Mr. Bourdeau did his own income and business expense analysis by reconstructing Keith’s business records. The difficulty and expense of aud iting the business records led the District Court to the conclusion that averaging in come for a period of three preceding years to determine income was not necessary. 6¶ Therefore, the District Court input $93,987.00 for self-emp loyment income on Line 1 of the Child Support Worksheet A (W orksheet A). Howeve r, for the purpose of calculating federal income tax, state income tax and social security payments for allowable deductions on Line 2 of Worksheet A, the District Court averaged the actual taxes and Social Security payments made fro m the four preceding years. The average of those deductions was $1,649.00. This resulted in $92,338.00 of income on Line 3 of Worksheet A. The question on appeal is whether a child support obligation based on income calculated in this manner is correct.5 STANDARD OF REVIEW 7¶ The standard of review of a district court’s award of child support is whether the court abused its discretion. In re Marriage of Craib (1994), 266 Mont. 483, 490, 880 P.2d 1379, 1384. In deciding whether a district court abused its discretion, we determine whether “the trial court acted arbitrarily w ithout employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice.” In re Marriage of Kovarik , 1998 MT 33, ¶ 21, 287 Mont. 350, ¶ 21, 954 P.2d 1147, ¶ 21 (citing In re Marriage of Wessel (1986), 220 Mont. 326, 333, 715 P.2d 45, 50). This court has stated that “a district court must apply its discre tion in a realistic manner, taking into account the actual situation of the parties.” In re Marriage of Noel (1994), 265 Mont. 249, 252, 875 P.2d 358, 359. 8¶ A district court’s findings of fact ar e reviewed to determ ine whether they are clearly erroneous. In re Marriage of Stufft (1997), 286 Mont. 239, 250-51, 950 P.2d 1373, 1379 (citing Interstate Production Credit v. DeSaye (1991), 250 Mont. 320, 322, 820 P.2d 1285, 1286). To determine whether they are clearly errone ous, we consider: 1) whether the findings are supported by subs tantial evidence; 2) if the findings are supported by substantial evidence, whether th e district court misapprehended the effect of the evidence; and 3) where the district court’s findings are supported by substantial evidence, and the evidence has not been misapprehended, whether “review of the record leaves the court with the definite and firm conviction that a mistake has been committed.” Interstate Production Credit , 250 Mont. at 323, 8 20 P.2d at 1287 (citing United States v.6 United States Gypsum Co. (1948), 33 U.S. 3 64, 68 S.Ct. 525, 92 L.Ed. 746). The standard of review of a distri ct court’s conclusions of law is whether the district court’s conclusions are correct. In re Marriage of Brown (1994), 263 Mont. 184, 187, 867 P.2d 381, 382 (citing Burris v. Burris (1993), 258 Mont. 265, 26 9, 852 P.2d 616, 619). DISCUSSION 9¶ Keith assigns error to several of the Di strict Court’s findings and in turn to the methodology employed by Mr Bourdeau. We ha ve classified his criticisms as follows. A. Failure to consider inco me from years ot her than 1999. 10¶ Keith contends that the District Court erred by calculating hi s actual income for child support purposes based on his income for 1999 alone , rather than taking a threeyear average as require d by law. He alleges this error resulted in a skewed and inaccurate portrayal of his income. 11¶ In determining child sup port obligations, a district co urt must follow the Child Support Guidelines (Guidelines) unless clear and convincing evidence is produced demonstrating that the applicatio n of the standards and guidelin es is unjust to the child or to any of the parties, or is inappropriate in that particular case. Section 40-4-204(3)(a), MCA; See In re Marriage of Albinger , 2002 MT 104, ¶ 12, 47 P. 3d 820, ¶ 12, 309 Mont. 437, ¶ 12. The Instructions for Completi ng Child Support Worksheets provide that determination of the income fo r a self-employed parent usually requires an average of at least three years of the net in come from Schedule C of that pa rent’s income tax returns.7 12¶ This Court has recommended consideration of at least two years of income taxes when a district court is determining gross income. In re Marriage of Jacobson (1992), 251 Mont. 394, 399, 825 P.2d 561, 565. Fu rthermore, Rule 37.62.108(3)(a), ARM, provides that income should be annualized to avoid the po ssibility of skewed application of the Guidelines based on temporary or seasonal conditio ns. The period over which income is averaged should be su fficient to accurately reflect the parent’s earning ability. Rule 37.62.108(3)(a), ARM. While Worksheet A does not mandate calculating income using a three-year average, the Guidelines and our cases create a strong preference for averaging income. Finally, a dist rict court must be realistic and take the actual situation of the parties into acco unt when calculating ch ild support obligations. In re Marriage of Noel , 265 Mont. at 252, 87 5 P.2d at 359. The end sought is equity and accuracy in determining income of the party charged with child support obligati ons, while serving the best interests of the child. It would serve no one’s best interests to attribute unrealistic income to a parent. If we expect a parent to meet both his needs and the needs of the children, child support calculatio ns must be realistic. 13¶ Patricia cites two cases in which this Court affirmed a district court’s award of child support based upon one year’s income. In re Marriage of Jacobson , 251 Mont. at 399, 825 P.2d at 565; In re Marriage of Nash (1992), 254 Mont. 231, 235-36, 836 P.2d 598, 600-01. While we did no t require evidence of income from more than one year in either case, the cited cases are inapplicable due to the factua l differences from this case. In both Jacobson and Nash , the obligated parties were em ployees receiving wages rather8 than self-employed individuals. In re Marriage of Nash , 254 Mont. at 233, 836 P.2d at 600; In re Marriage of Jacobsen , 251 Mont. at 399, 825 P.2d at 565. The preference for a three-year average on net income expresse d in Worksheet A applies to self-employed individuals who do not receive income in the form of wage s or a salary. A salaried employee or wage earner’s income can be mo re easily ascertained by reviewing one year of income because, absent a foreseeable promo tion, salary or wages can be presumed to remain consistent or predictable over a peri od of time. However, self-employment is not as predictable. Self-employed business owne rs experience fluctuations in profits from year to year. Therefore, it is necessary to consider the business history to fairly and accurately determine income. 14¶ We conclude that the District Co urt abused its discretion when it based determination of Keith’s inco me on only what he earned in 1999. Income for a selfemployed parent shoul d be calculated based on a three-ye ar average of that parent’s net earnings. A district court is not permitted to deviate from the Guidelines absent clear and convincing evidence that following the Guide lines would be unjust to the child or to any of the parties, or is inapprop riate in that particular case. The testimony of Mr. Bourdeau fails to provide clear and conv incing evidence that applying th e three-year average of net earnings from Schedule C would result in inju stice. Mr. Bourdeau ’s testimony does not provide specific evidence that the cost of auditing previous years would be prohibitive and he could only speculate about inaccuracies of the previous tax ye ars. Accordingly,9 we conclude the District Court abused its discretion by deviating from the Guidelines’ preference for a three-year average of net income for a self-employed parent.
B. Income tax returns. 15¶ Keith argues that the court erred when it rejected his 1999 in come tax returns as evidence of his income. He cites the following language from Rule 37.62.108(2), ARM: “Income of the parents must be documented. This may include pay stubs, employer statements, income tax returns, profit and loss statements.” Keith further contends that the court erred when it failed to consider his tax returns for previous years. 16¶ The District Court disregarded the 19 99 tax return submitted by Keith based upon Mr. Bourdeau’s testimony that tax returns ar e inferior evidence of income for child support purposes due to the tendency of ta xpayers to minimize income to avoid tax liability. He further testified that income ca lculations for child support purposes attempt to look at the disposable income of the pa rties and determine the standard of living and income accordingly. 17¶ In concluding whether the District Cour t erred when it disregarded Keith’s income tax returns, Rule 37.62.108(2 ), ARM, provides little guidance. While the rule mandates income verification, and income tax return s are referred to as one form of income verification, they are not the exclusive me thod. The income w ith which a court is concerned for child support purposes is a pare nt’s disposable income rather than taxable income. In re Marriage of Wersland (1991), 249 Mont. 169, 172, 814 P.2d 991, 993; In re Marriage of Sullivan (1990), 243 Mont. 292, 29 6, 794 P.2d 687, 689.10 18¶ Substantial evidence was produced at trial that Mr. Bourdeau conducted an extensive review of Keith’s r ecords and completely reconstr ucted his income based upon that review. Mr. Bourdeau testified that his review of Keith’s records indicated they were unreliable for child support purposes due to the aggressive manner in which expenses were deducted and the comming ling of personal and business expenses. We conclude that the District Court was not required to accept Keith’s income tax returns as verification of his income and further conclude that the Dist rict Court did not err when it found that the review performed by Mr. Bourde au resulted in a more reliable estimate of Keith’s income than the submitted tax returns. C. Expense calculation. 19¶ Keith contends that the District Court e rred by rejecting busine ss expenses that he claimed in his 1999 tax returns. Keith argues that the simila rity in the language used by the Guidelines and IRS Regulations suggest th at deductions for tax purposes are the same as deductions for child support purposes. Patricia claims there was no error because expenses for income taxes may differ from income and expenses for child support
purposes. 20¶ Keith testified that certain travel expe nses were not consider ed by the District Court in its calculation of income. He referred generally to credit card receipts from 1999 as documentation of travel e xpenses incurred while looking for excavating equipment. Keith also claimed that expenses such as a dvertising, dump fees, vehicle expenses and office expenses were not considered by the court.21¶ The District Court found that the business expenses claimed by Keith were not legitimate. Furthermore, te stimony given at trial by Mr. Bo urdeau convinced the court that the expenses claimed for tax purposes were not properly doc umented and therefore not permitted pursuant to the Guidelines. 22¶ The District Court found substan tial commingling of pe rsonal and business expenses in Keith’s records. The separation of personal and business expenses accounts in part for the differe nce in the court’s expense figures and Keith’s expense figures. The court concluded that business expenses for ta x purposes are not necessarily permitted for child support purposes which was supported by testimony given by Mr. Bourdeau at trial: A: See, there’s a difference between ta x return income a nd income for child support.

. . . . A: [W]e are going to allow business expenses but only expenses that are necessary and reasonable to the opera tion and generation of the income of the business. TR page 20, lines 9-11; TR page 21, lines 8-11. 23¶ Actual income includes “economic bene fit from whatever source derived.” Rule 37.62.106(2)(a), ARM. Rule 37.62.106(2)(b), ARM, provides that when determining actual income for the purposes of child support, reasonable “ordinary and necessary expenses” required for the produc tion of income may be deduct ed from the gross receipts of a parent who receives income or benefits as the result of an ownership interest in a business. Business expenses for purposes of calculating child support do not include personal expenses or expens es not necessary for the pr oduction of income. Rule 37.62.106(2)(b), ARM. Furthermore, reimbursement allowances for actual employment

11expenses may only be considered to the ex tent they have been documented. Rule 37.62.106(2)(e), ARM. Accordi ng to Mr. Bourdeau’s interp retation, which was adopted by the court and not raised on appeal, Ru le 37.62.106(2)(e), ARM, requires a selfemployed parent to provide documentati on to prove expenses are legitimate. 24¶ The Guidelines’ rule for expense deduc tions mirrors IRS Reg. § 1.162(a), which provides that a deduction fo r all “ordinary and necessary expenses” incurred while carrying on a trade or business is permitt ed. The federal tax regulations burden the taxpayer to demonstrate that claimed expenses are necessary and leg itimate. 26 C.F.R. § 162.17(d)(2). Expenses may be estimated th rough secondary source s where the records are incomplete: [A] taxpayer might establish the he was in travel status a certain number of days but that it was impractical for hi m to establish the details of all his various items for travel expense. In such a case rail fares or plane fares can usually be ascertained w ith exactness and automob ile costs approximated on the basis of mileage covered. A reasonable approximation of meals and lodging might be based upon receipted hotel bills . . . since detailed records of incidental items are not required, deductions for these items may be based upon a reasonable approximation. In cases where a taxpayer is called upon to substantiate e xpense account information, the burden is on the taxpayer to establish that the am ounts claimed as a deduction are reasonably accurate and co nstitute ordinary and necessary business expense paid or incurred by him in connec tion with his trade or business. 26 C.F.R. § 162.17(d)(3). 25¶ Keith alleges that the similar ities in the language require a court to permit the expenses claimed for tax purposes as expenses for child support purposes as we ll. We agree that

12the categories and types of expenses permitte d by the tax code an d the Guidelines are similar. However, a district court is not requi red to accept expenses at face value simply because they were claimed on tax returns wh en calculating income for child support. In re Marriage of Sullivan , 243 Mont. at 296, 794 P.2d at 68 9. Disposable income and not taxable income is the focus of inquiry for ch ild support purposes. In re Marriage of Murphy (1994), 268 Mont. 1, 6, 88 5 P.2d 440, 443. A district court has broad discretion to determine whether a parent’s claimed business expenses are reasonable for purposes of calculating child support. In re Marriage of Chiovaro (1990), 247 Mont. 185, 192, 805 P.2d 575, 579. 26¶ Based on our review of the record, we conclude that with one exception the District Court did not abuse its discretion when it decided which of Keith’s claimed expenses were deductible and th at its findings with regard to expenses were not clearly erroneous. However, based upon our review of Petiti oner’s Exhibit P-2 and Mr. Bourdeau’s audit, we find no evidence to indi cate that advertising and dump fees were taken into account. Keith claimed a total of $741.00 in advertising expenses and $503.15 in dump fees. We conclude that the Distri ct Court abused its discretion when it did not consider advertising and dump expenses claimed by Keith as business expenses. D. House construction. 27¶ Keith contends that the court erred when it imputed income for the home he built at 524 East Granite, Bozeman, Montana. In calculating income, Mr. Bourdeau included

13profits from houses constructe d and sold as "spec" homes by Keith from 1995-1999. The average yearly income from the building and selling of "spec" homes was arrived at by adding the profit from five houses that were sold between 1995 and 1999 along with the estimated profit from the family home at 524 East Granite, and dividing the profit by the five years of operation. The five-year av erage of $37,594.00 was added to the income from Keith’s other operations to arrive at hi s total income. The profit from each house was determined by having Patricia revi ew Keith’s house construction records. 28¶ Keith challenges the $61,417.00 estimated profit from the sale of 524 East Granite that the court included in th e five-year average of profits on the grounds that the house has not been sold, and therefore he received no economic benefit which would meet the Guidelines’ definition of actual income. M r. Bourdeau testified that the $61,417.00 is representative of what Keith is capable of ea rning, even if it has not actually been sold. 29¶ Both parties agree that th e house has not sold and at th is time is not on the market. Furthermore, there is no evid ence to suggest that the hous e could have been sold and Keith refrained from doing so. We conclude that Keith has received no economic benefit from the 524 East Granite house. 30¶ Next, we must determine whether the c ourt impermissibly imputed income. Rule 37.62.106, ARM, provides: (1) Income for child su pport includes actual income, imputed income, or any combination thereof which fairly re flects a parent’s resources available for child support.

14. . . . (6) ‘Imputed Income’ means income not actually earned by a parent, but which will be attributed to the parent based on: (a) the parent's earning potential if employed full time; (b) the parent's recent work history . . . . (7) Income should be imputed whenever a paren t: (a) is unemployed; (b) is underemployed; (c) fails to produce su fficient proof of income; (d) has an unknown employment status; or (e) is a full time student . . . . 31¶ Based upon the factual record and the Guidelines, we conclude that the District Court erred by imputing income for the home at 524 East Granite . None of the conditions necessary for imputing income ex ist. The record establishe d that Keith is working fulltime for State Construction and has purchased property for “spec” home construction in the future. Imputed income is not appropri ate for a parent who is working full-time and to the full extent of his earn ing capacity. The calculations submitted to the court were intended to represent Keith’s income from house construction. Accordingly, a profit analysis for each house was performed to arri ve at a five-year average of income from construction. The facts indicate that Keith wa s capable of selling five "spec" homes in a five-year period. Including an estimate of what the sixth home at 524 East Granite will sell for adds income for which Keith has received no economi c benefit. Keith’s income from house construction is fairly represented by the average of the profits from the five homes actually sold from which Keith received an economic benefit.

1532¶ Patricia argues the Guidelines allow fo r the projection of income based upon what is likely to happen in the fu ture. While she is correct th at the Guidelines allow for income projection, her argument is based upon misapplication of the law. Rule 37.62.108(3), ARM, provides in part: [I]ncome for child support and expenses should be annualized to avoid the possibility of skewed app lication of the guidelines based on temporary or seasonal conditions. Income and expe nse may be annualized using one of the two following methods: (a) s easonal or fluctuating income may be averaged over a period su fficient to accurately reflect the parent’s earning ability; or (b) current income or expens es may be projecte d when a recent increase or decrease in income is expe cted to continue for the foreseeable future. 33¶ Review of the record demonstrates that the court chose to annualize Keith’s house construction by averaging the income from Ke ith’s house construction for the five years he operated the business. However, no evidence indicates the need to project income as suggested in Patricia's brie f. According to th e Guidelines, income projection is appropriate where a change in income is expected in th e future and fairness to the children, or the parent, necessitates taking the change into account. In the instant case, there is no evidence to suggest that Keith's house construction business will change in the foreseeable future. Absent evidence of a foreseeable change, this argument is unpersuasive. 34¶ Accordingly, we conclude that the Dist rict Court erred when it attributed income to Keith for the future sale of the home at 524 East Granite.

16E. Allowable deductions. 35¶ Keith contends that the District Court erred by manipulating the amount of federal tax, state tax, and Social Security payments deductible on Line 2 of Worksheet A. The program used by the court to reach Keith's ch ild support obligation ta kes into account an estimated amount of tax and deducts it from the total income entered in Line 1 of Worksheet A. Mr. Bourdeau entered the average taxes pa id by Keith over the four preceding years rather than using the taxe s he would pay on inco me of $93,987.00. 36¶ As discussed above, the District Court ascertained that Keith’s actual income was $93,987.00 based upon an audit of Keith's bus iness records from 1999 . The court did not base its actual income upon an average of three years cons istent with th e Guidelines' preference. However, when determining the de ductions available to Keith for taxes, the court chose to average the income tax due fo r Keith in 1995, 1996, 1997, and 1998. The District Court found tax retu rns for these years applicable for Line 2 of Worksheet A despite its finding that they were inaccurate for income purposes. Mr. Bourdeau entered the average of taxes paid rath er than the taxes due on $93, 987.00 because he felt it more accurately reflected disposable income for child support purpose s. Keith paid an average of $1,596.00 in federal taxes, $53.00 in state taxes and nothing for So cial Security during the years considered by the court. The total allowable deductions based upon these numbers is $1,649.00 for an income of $93, 987.00. After deductions, Keith’s yearly

17income on Line 3 of Worksheet A is $92,33 8.00. His child support obligation based upon these calculations is $2,412.00. 37¶ Keith argues that the court erred by us ing the four-year average of actual taxes paid in calculating his allowable deductions . Specifically, he contends that the Guidelines allow deductions for the federal ta x, state tax and Social Security payments that he would be required to pay on income of $93,987.00. The a llowable deductions on a $93,987.00 yearly income are $17,144.00 fo r federal income tax, $4,660.00 for state income tax and $11,966.00 for Social Security payments. The tota l allowable deductions according to Keith’s calculations are $33,770.00, giving Keit h an income of $60,217.00 on Line 3 of Worksheet A. Keith maintains his child support payment will be reduced by $1,000.00 per month if the taxe s due on $93.987.00 are used on Line 2 of Worksheet A. 38¶ We are asked to determine whether a dist rict court can use the average taxes paid from previous years for determ ining allowable tax deductions when it did not rely upon those tax returns to determ ine income, and relied upon only one year to determine income. Rule 37.62.1 10, ARM, provides:

18allowable deductions from income include:

. . . . (d) the actual income ta x liability based on tax returns. If no other information is available, use the ta x tables which show the amount of withholding for a single person with one exemption; (e) the actual social security paid . . . . 39¶ The Instructions for Comple ting Child Support Worksheets provide for the allowable deductions on Line 2. With respect to federal and state income tax deductions, the Instructions provide that the total amount of tax due from tax returns, the average tax liability if income was averaged, or the amount of tax due according to state and federal rules if tax returns are not available, may be deducted. The amount of Social Security withheld from gross pay according to the pa rent’s W-2 forms s hould be entered if available, otherwise the amount due should be calculated based upon the federal regulations. 40¶ According to the Instructions, taxes fo r the purposes of allowable deductions may only be determined by using an average of taxes from previous years where the court averaged that parent’s income in calculating th e income figures used in Line 1. The court did not average Keith’s inco me. Therefore, it was improper for the court to use the average tax liability from previous ye ars on Line 2 of Worksheet A. 41¶ Next we address whether it was proper for the court to determine tax liability for Line 2 based upon reported taxes rather th an the amount due on the court’s income

19figures according to IRS Circular E. The Gu idelines and legal prece dent on the issue of child support emphasize one fundamental principl e. Child support should be sufficient to maintain the standard of livin g a child enjoyed befo re dissolution after his or her parents have separated. Rule 37.62.101(2), ARM. This is determined by reviewing each parent’s ability to support the childre n of the dissolved marriage based upon that parent’s disposable income. In re Marriage of Murphy , 268 Mont. at 6, 885 P.2d at 443. In the present case, the court has determined Keith’s disposable income to be considerably greater than the income he reported and paid taxes on in 1999. This Court has subsequently affirmed the District Court’s calculations for 1999 using Mr. Bourdeau’s audit with some excep tions. To allow a deduction for an expense that was not paid would result in an inaccurate picture of dis posable income. Keith’s disposable income, as determined by the District Court, is his actual income less taxes and Social Security due according to tax returns. In this case, Keith only paid ta xes on $37,747.00 of income. Therefore, it would be inappropr iate to allow him to deduct over $30,000.00 of expenses
he did not incur. We conclude that the Distri ct Court did not abuse its discretion when it relied on the actual tax paid during the years in question. 42¶ The final determination of allowable deductions will depend on those years the District Court relies on to determine the averag e of Keith’s actual income. Only the taxes and Social Security payments ma de during those years should be averaged to arrive at the deductions allo wed on Line 2.

20F. Margin of error. 43¶ Keith argues that the court misapplied the law when it held that Mr. Bourdeau allowed a $33,000.00 margin of error in Ke ith’s favor when determining income. Mr. Bourdeau testified that business losses are not permitted by the Guid elines and that he technically excluded $33,559.00 of income that could have been attributed to Keith when he subtracted losses in that amount from Keith’s income. Though it is not perfectly clear how this impacted the co urt’s findings, we resolve the issue to preclude further confusion on remand. 44¶ Neither Mr. Bourdeau nor the District Court demonstrated where the Guidelines provide that business losses are not to be in cluded in income calculations. After independent review of the Guidelines, we fi nd no rule or regulation to support this conclusion. The only mention of excluding business losses is found in Rule 37.62.111, ARM, which provides: “Deduc tions which are not allowable und er the rules include: . . . (b) a net loss in the operation of a business or fa rm used to offset other income. . . .” This rule prevents a parent fro m counting business losses tw ice. It does not prohibit consideration of business losses when determin ing income. We therefore conclude that the District Court erred when it held that Mr. Bourdeau in cluded a $33,000.00 margin of error favoring Keith in his calculations. G. Biased expert opi nion and calculations.

2145¶ Keith’s argument concerning the biased nature of Mr. Bourdeau’s child support calculations is not clearly articulated. He ma intains that the child support calculation was biased because Mr. Bourdeau did not adequa tely involve him in the review process. Additionally, he contends that the District Court erred by relyi ng upon Mr. Bourdeau’s testimony because Mr. Bourdeau allowed Patricia to aid him in reviewing Keith’s records and expense determinations. 46¶ The record demonstrates that Patric ia conducted the boo kkeeping for Keith’s operations and was familiar with his business records. Mr. Bourdeau testified that he gave Patricia specific instructions for auditi ng the records and reviewed her work and the records to insure sh e was complying with his instructions. Furthermore, while Keith contested the expense calculations reached by Mr. Bourdeau, he produced no evidence that his expenses were legitimate, that Mr. Bourdeau’s determinati ons were incorrect, or that Patricia’s involvement in reviewing Keith’s records ac tually prejudiced the child support calculation. 47¶ In non-jury trials, the cr edibility of the witnesses and the weight gi ven to their testimony and evidence presented at trial is a ma tter left to the discretion of the district

court. In re Marriage of Kovarik , ¶ 30 (citing Keebler v. Harding (1991), 247 Mont. 518, 523, 807 P.2d 1354, 1357); Pankratz v. Teske, 2002 MT 112, ¶ 18, 309 Mont. 499, ¶ 18, 48 P.3d 30, ¶ 18. We conclude that the Distri ct Court did not abuse its discretion when it

22found that the aud it conducted by M r. Bourdeau was reliable in spite of the fact that Patricia was involved in reviewing Keith’s business records. 48¶ We affirm in part, reverse in part, a nd remand to the District Court for further findings regarding Keith’s child support obligations consis tent with this opinion.

___________________ ____________ _________ Justice We Concur:

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