FILED

January 6, 1998

Cecil Crowson, Jr.

Appellate C ourt Clerk

 IN THE COURT OF APPEALS OF TENNESSEE

SUZANNE MONIQUE SWILLEY ELY : KNOX CHANCERY 

 : CA No. 03A01-9707-CH-00255

 Plaintiff-Appellee :

 :

 :

vs. : HON.FREDERICK D. McDONALD

 : CHANCELLOR

 :

 :

KENNETH RAY ELY : 

 :

 Defendant-Appellant : AFFIRMED AND DISMISSED 

DAIL R. CANTRELL, WITH CANTRELL, PRATT & VARSALONA, OF CLINTON, 

TENNESSEE, FOR APPELLANT 

WM. STANTON MASSA, III, OF KNOXVILLE, TENNESSEE, FOR APPELLEE

 O P I N I O N

 Sanders, Sp.J.

The pivotal issue on this appeal is whether or not the

trial court erred in its calculation of the gross income of the

obligor for determining his child support obligation.

Our review is "de novo" on the record accompanied by a

presumption of correctness of the trial court's findings of fact

unless the evidence preponderates otherwise. TRAP Rule 13(d). 
2

We find the evidence does not preponderate against the findings

of the trial court, and affirm for the reasons hereinafter

stated.

The Plaintiff-Appellee, Suzanne Ely (wife) and

Defendant-Appellant Kenneth Ely ( husband) were divorced in 1988. 

The parties had two children, Monique aged seven and Christopher,

aged five at the time. The parties entered into a marital

dissolution agreement which provided, as pertinent, that the

husband purchase the wife's interest in a trucking business they

jointly owned and operated. The wife was awarded the custody of

the children, with visitation privileges of the husband, and he

was to pay $350 per month as child support and $1,200 per year

into a trust fund for the children until the youngest child

reached the age of 18 years. He was also to pay one-half of the

children's medical and dental expenses which were not covered by

insurance.

Following the divorce, the wife, on three occasions,

filed contempt proceedings against the husband for failure to

comply with the marital dissolution agreement, which had been

incorporated into the decree of divorce. The first contempt

petition was filed in October, 1989, the second was filed in

January, 1992, and the third one in 1995. Each of the petitions

alleged the husband had failed to pay the wife his share of the

medical expenses for the children. The third petition, however,

alleged, as pertinent, that there had been a material and

substantial change in circumstances since the divorce to justify

an increase in child support. The wife alleged the husband was

self-employed at the time of the divorce; he was the sole owner

of Ely Trucking Company and his business and income had increased
3

in the interim. She alleged she was entitled to an increase over

and above the guidelines in that husband had vested with the

parties' children less than the amount provided by either the

guidelines or the final decree of divorce.

In his respective answers to wife's petitions, husband

did not deny his indebtedness to the wife but denied he should be

held in contempt. In his answer to the wife's petition for an

increase in child support, as pertinent, he said, "The respondent

neither admits or denies that there was been a material and

substantial change in circumstances such as to justify an

increase in child support since original order or that his income

has increased to any extent since that time...."

Each of the petitions filed by the wife was referred to

a referee of the chancey court for hearing, findings, and

recommendations. The referee held hearings and filed findings

and recommendations in the first two petitions, finding the

husband in contempt, recommending judgments in favor of the wife,

and the award of her attorney's fees. Decrees were entered by

the chancellor confirming the recommendations of the referee, and

these matters are not at issue on this appeal.

The referee held a hearing on the wife's third petition

for contempt and modification of child support in December, 1995. 

He filed a findings and recommendations order in which, as

pertinent, he said that, based on the evidence and testimony of

the parties, he found the husband owed the wife $1,067.27 for

medical expenses. He found "...the respondent is self-employed

and has failed to comply with Rule 8 of the local rules of

practice for the Knox County Referee and thus petitioner is
4

entitled to a continuance to allow time for discovery of

respondent's financial information." The order provided that all

other matters and issues raied by the wife be reserved until a

further hearing to be held on February 17, 1995. An order of

confirmation of referee's findings and recommendations was

entered by the chancellor.

The referee held a further hearing on February 27,

after which he filed findings and recommendations which, as

pertinent, held that the petition in contempt and the

modification of child support could not be held at that time and

set a hearing on those issues for April 22, 1996. He also

directed the husband to furnish at or before that hearing "his

1099's from tax years 1994 and 1995 showing his gross income for

those years, an itemization and documentation of all expenses and

adjustsments of his gross income."

The record fails to show a hearing was held on April 22

but shows a hearing was held on June 25. The record fails to

show the husband furnished his 1099's for 1994 and 1995 setting

out his gross income for those years or that he filed itemization

and documentation of all his expenses as previously ordered by

the referee.

Following the June 25 hearing the referee entered

findings and recommendations. As pertinent, he found "... upon

the testimony of the Respondent and of other nonparty

witnesses...the court finds that the petitioner's petition for

contempt and for modification of child support are well founded

and the best evidence of Respondent's income is loan

documentation for 1994 obtained from First American National Bank
5

and entered into the record as exhibits, that Respondent's

credibillity is suspect, that the Respondent's gross income is

$160,000 per year...." He found the husband's monthly payments

should be $2,094 and all other issues should be reserved pending

husband's appeal to the court.

Following the entry of the referee's findings and

recommendations, the husband filed in the Chancery Court for Knox

County a request for appeal and hearing in that court on

referee's findings and recommendations of June 25. He said he

disagreed with the findings and recommendations of the referee

and they were not supported by the proof in the record. He

requested a hearing before the court and the entry of an

appropriate order after the hearing.

The wife also appealed from the findings and

recommendations of the referee on the February 27 hearing related

to certain relief sought by her which is not now at issue on this

appeal.

On December 6, the appeals of both parties were heard

by Chancellor McDonald, Chancellor for Part 1 for Knox County.

The chancellor found, based on the child support guidelines,

1240-2-4-.03 December, 1994, revised 3(a), and the husband's 1995

federal income tax return, which was filed as an exhibit in the

hearing, that the husband's gross income for 1995 was $132,064,

and he should pay $2,097 per month as child support for two

children. His monthly obligation, which was to begin from the

date of filing the petition for modification on December 6, 1996,

together with interest, would be a total of $26,374.26. A decree
6

was entered in keeping with the court's findings and the husband

has appealed.

Since our review on appeal is "de novo" on the record

accompanied with a presumption of correctness of the trial

court's findings of fact unless the evidence presented on the

trial preponderates against such findings, we must look at the

record to determine whether the evidence supports the findings by

the court or preponderates against his findings. 

Rule 26, TRAP, requires the appellant, in support of

his appeal, to timely file in the appellate court a transcript of

the proceedings in the trial court. Rule 24, TRAP, sets forth

what should be contained in the transcript which, in general,

includes all the evidence offered in the trial court together

with all the supporting exhibits. In the case before us, the

only thing contained in the record is a transcript of the

argument of counsel before the chancellor and one intelligible

exhibit, being a copy of the husband's 1040, 1995 tax return.

The Appellant, in his brief, as pertinent, states: 

"The trial court's ruling required Mr. Ely to pay Twenty-five

Thousand, One Hundred Sixty-four Dollars ($25,164.00) in child

support each year. The only proof entered at trial were Mr.

Ely's tax record, (Exhibits 1 & 2, December 6, 1996), which

clearly show that his income for 1995 was a negative Eighteen

Thousand Four Hundred and Twenty-six Dollars ($18,426.00)

(Exhibit 2, December 6, 1996). Therefore, the Appellee did not

meet the burden of proof necessary to show a material change in

circumstances which would justify a change in child support."
7

Also, there is nothing in the record to show what

evidence was before the referee for his determination of the

issues before him.

The Appellant's 1040 tax form for federal income taxes

for 1995 shows the Appellant had a total income in 1995 of

$732,022. His expenses of doing business plus his claimed

deductions for tax purposes exceeded his income by $18,426,

resulting in there being no taxable income, and a paper loss of

$18,426. Included, however, in the expenses and deductions was a

claim of depreciation for the year of $132,064.

The Tennessee guidelines for calculating child support

awards for self-employed obligors, as pertinent, provide:

Gross income shall include all income from any source

(before taxes and other deductions), whether earned or

unearned....Income from self-employment includes income

from business operations and rental properties, etc.,

less reasonable expenses necessary to produce such

income. Depreciation, home offices, excessive

promotional, excesssive travel, excessive car expenses,

or excessive personal expenses, etc., should not be

considered reasonable expenses. (Emphasis ours.) 

Tenn.Comp.R. & Regs. 1240-2-4-.03(3)(a)(1994).

The chancellor very reluctantly held that this

provision mandates the addition of the full amount of the

expenses claimed as "depreciation" on the husband's tax return to

his gross income, stating: "So what I'm going to do is take his

tax return, add back the depreciation, and then set the support

in accordance with the Guidelines, and I think it's absolutely

and utterly wrong, and then you can take an appeal from that.

.... And I mean, I wish you well because I don't like to have to

enforce unfair, grossly unfair laws like this."
8

The 1040 tax return fails to show what the claimed

depreciation is for, nor was any proof offered before the

chancellor, and there is none in the entire record, which we can

consider which would establish the Appellant was entitled to

claim his depreciation even if it were not expressly excluded

under the child support guidelines.

Since the guidelines for fixing child support for an

obligor who is self employed define gross income as "income from

business operations...less reasonable expenses necessary to

produce such income," then specifically provide

"Depreciation...should not be considered reasonable expenses,"

based on the evidience, or lack thereof, we find the court had no

alternative but to disallow the depreciation claimed as a

deductable expense.

Appellant argues that a substantial amount of the total

he claimed as "depreciation" on his federal tax return was

actually the capital expense of purchasing trucks for his

business. According to Appellant, the Internal Revenue Service

does not allow him to deduct as an expense the cost of purchasing

a truck in one lump sum, but rather makes him spread out the cost

of the truck over its useful life, which expense is classified as

"depreciation" for income tax purposes. Thus, he argues, it is

unfair to disallow him to deduct a substantial capital expense of

his busines, the purchase of trucks which are obviously necessary

for the operation of a trucking business, only because he is

required to classify this capital expense as "depreciation" for

income tax purposes. To do so results in the inequitable result

which requires him to pay child support based on a calculation of

"gross income" which he does not really have. 
9

We recognize the equitable principles in Appellaant's

argument and it is apparent from the transcript of the record

before the chancellor that he agreed with the argument in

principle but he had no alternative under the provisions of the

child support guidelines or the evidence in the record.

It is a well-settled rule of evidence in this

jurisdiction that "the burden of proof rests upon him who

affirms, not upon him who denies." Gibson's Suite in Chancery,

Fifth Edition § 451; Galbreath v. Nolan, 429 S.W.2d 447, 450

(Tnn.App.1967) 58 Tenn.App. 260.

Under the guidelines, the trial court would not have

been at liberty to deduct any expenditure claimed as a deduction

unless it was shown to be "reasonable expenses necessary to

produce such income" for the business. On the trial of the case,

there was no effort made by the Appellant to show that any of his

expenditures were reasonable or necessary to produce the income

for the business. Absent such a showing, how can it be said the

court was in error in failing to treat the uenexplained

depreciation so as to be allowed as capital expenditures? We

think the question answers itself. 

The Appellant also states in his brief, as pertinent: 

"Neither the Tennessee Legislature nor the Child Support

Guidelines promulgated by the Child Welfare Department, have seen

fit to either expressly exclude or authorize a deduction for

capital expenditures. The standard that has been followed by

this Honorable Court has been to leave it to the discretion of

the trial court to determine when and if said expenditures are
10

"reasonable." Citing the unreported case of Kimble v. Kimble, 21

Tenn. 35-7 (Tenn.App.1996).

The issue of whether or not the trial court should have

considered depreciation claimed for tax purposes as a reasonable

and necessary expenditure was not an issue on the trial of the

case and has been raied for the first time on appeal, which the

Appelllant is not at liberty to do. Airline Construction, Inc.

v. Barr, et al., 807 S.W.2d 247 (Tenn.App.1990); Atkins v.

Kirkpatrick, et al., 823 S.W.2d 547 (Tenn.App.1991); Simpson v.

Frontier Community Credit Union, 810 S.W.2d 147 (Tenn.1991.)

In the case of Foley v. Dayton Bank & Trust, 696 S.W.2d

356 (Tenn.App.1985), this court, in addressing the consideration

of an issue raised for the first time on appeal, quoted with

approval, at 359, as follows: "The jurisdiction of the Court of

Appeals is appellate only, T.C.A. § 16-4-108 (1980) and it should

consider only such matters as were acted upon by the trial

court." See Irvin v. Binkley, 577 S.W.2d 677 (Tenn.App.1979).

The decree of the chancellor is affirmed and the appeal

is dismissed. The cost of this appeal is taxed to the Appellant.

 __________________________

 Clifford E. Sanders, Sp.J.

CONCUR: 

___________________________

Houston M. Goddard, P.J.

___________________________

Herschel P. Franks, J.