Cit e as 2017 Ark. 139



## S UPREME COURT OF ARKANS AS No. CV-16-144
MARILY N CU RRY TROU TMAN

APPELLANT V. RONALD TROU TMAN

APPELLEE Opinion Delivered April 20, 2017 APPEAL FROM TH E WASH INGTON COU NTY CIRCU IT COU RT [NO. DR-04-1055] H ONORAB LE MARK LINDSAY , JU DGE REVERSED AND DISMISSED; COU RT OF APPEALS OPINION VACATED.

J O S E PH I N E L I NKER H AR T, Ju s t ice Marilyn Curry T rout m an (Curry) a p p e als from a D ecember 8 , 2014 W ashingt on County Circuit Court order r educing her exhusband Ronald T rout m a n ’ s m ont hly childsupport obligat ion t o $ 2108 from $ 6005 per m ont h e st ablished by an agreem e nt of t he part ies and m em orialized in an order e nt ered o n Oct ober 2 5, 2012. The new support o bligat ion was

m ade ret r oact ive t o June 9, 2014, and t h e circuit court o rdered am o rt izat ion of t he $ 27,279 overpaym ent by a furt her $ 1000 per m ont h reduct ion in Trout m an’s paym ent s. On appeal, Curry argues t hat t h e circu i t c o u r t e r r e d in (1) finding that Trout man m et his burden of proving t hat t here has been a mat erial change o f circum st ances; and (2) calculat ing Trout m an’s incom e f or t he purpose o f c hild support
. We agree t hat T rout man f ailed to prove a m at erial change of circum st ances, and we reverse and dism iss. Aft er t he court of appeals affirm ed t h e circuit court ’ s o rder, Curry p et it ioned forCit e as 2017 Ark. 139

review. She alleged t hat the court of appeals h ad failed t o follow it s own p recedent in regard
t o t h e t reat m ent of ret ained earnings of a closely h eld Subchapt e r S corporat ion, t hus creat ing

a split of aut hority. Because i t w as apparent t h at t he c ourt of appeals decision calculat i ons conflict ed wit h prior cou r t o f appeals decisions, Pannell v. Pannell , 64 Ark. App. 262, 981 S.W.2d 531 (1998) and Anderson v. Anderson , 60 Ark. App. 221, 963 S.W.2d 604 (1998), we grant ed Curry’s pet it ion pursuantt o Suprem e Court Rule 2-4, w hich is invoked when t he
court o f appeals “renders a decision which is in conflict w it h a prior holding o f a published opinion of eit her the suprem e court or t he court of appeals.” 1 When we grant a pet it ion for review, we c onsider t he appeal as t hough it had been o riginally filed in t his court

. Lag ios v. Goldman , 2016 Ark. 59, 483 S.W.3d 810. The part ies m arried in 1998 and divorced i n 2005. In 1999, t he p art ies’ only child was born. In t he divor ce d e c r e e , Trout m an’s original support obligat ion was set at $ 762 per

m ont h. In 2011, Curry successfully pet it ioned t he circuit c ourt t o r aise Trout m an’s m ont hly

1 The dissent ’ s discussion of A nderson and Pannell shows a m isunderst anding of how appellat e-court decisions m ust affec t l o w e r - c o urt decisions. First t here is no “procedural m at t er” t hat affect s t he binding e ffect of t hese cases on t he circuit court
. When a l ower court correct ly ident ifies a point of l aw, and t he case is affirm ed, t h at holding is just as binding on t h e ci r c u i t court as a case where an appellat e court ident ifies a t rial court ’ s m ist ake of law. Second, t he t rial court in Anderson , aft er propr calculat ion o f t he incom e t hat t he payor had available for child support purposes, found t hat it would be i n equit able— in t h at case —t o count ret ained earnings in assessing t h e payor’s child-support obligat ion. Anderson was a c ase where t h e t rial court found that t he equit ies weighed in favor of deviating from t he am ount of child support indicat ed by the fam ily-support chart i ncluded in Adm inist ra t ive Order No. 10. Sect ion V of Adm i nist rat ive Order No. 10 expressly gives t rial court s the discret ion t o deviat e from t he child-support chart in appropriat e cases. The case before us is n ot a deviat ion case, but rat her one in which t he t rial court im properly calculat ed Trout m an’s incom e for childsupport purposes.
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child-support obligat ion t o $ 3,095. In 2012, Curry again pet it ioned for an increase in child support
. Pursuant t o her pet it i on, Curry sought t o discover Trout m an’s incom e in 2012, and

w h e n Trout m an resist ed, she m oved for cont e m pt
. The circuit court denied Curry’s

con t e m p t m ot ion, b ut in the sam e order, m em orialized an agreem ent by the part ies raising Trout m an’s child-support obligat ion t o $ 6,005 per m ont h. On June 9, 2014, Trout m an pet it ioned t he circuit court t o reduce his child-support paym ent s. At t ached t o his pet it i on was a sum m ary of h is t axable incom e, as report ed on his Form 1040 for 2012 and 2013, as well as t he d educt ions allowed by Adm inist rat ive Order No. 10. H e represent ed t h at t he netsumwas his incom e for child-supportpurposes. At t he hearing on h i s pet it ion, Trout m an t e st ified t hat he is a general cont ract or as well

as t he owner of o t her b u sinesses t hat he clai m ed were n ot profit able. As a cont ract or, he conduct s his business t hrough B oulder Const ruct ion, Inc. (B oulder), which h e s t a r t ed in 2004. Trout m an acknowledged t hat B oulder is a subchapt er S corporat i on, in w hich he owns all of
t h e st ock. H e claim ed t hat he used “complet e d project s” for “our type of account ing.” Trout m an furt her t est ified t hat , because o f t he account ing m et h od he used, B oulder has i n c o m e i n 2013 that will be d ist ribut ed in 2014. He also assert ed t hat i t was a sound business pract ice for B o ulder t o ret ain large sum s of c ash t o c over unforseen problem s wit h project s t hat could result in t he w ork being less profit able t han he ant icipat ed. Nonet heless, Trout m an adm it t ed t hat h e had shareholder dist ribut ions in 2013 t ot aling b et ween $ 550,000

a n d $ 580,000. Furt her, he conceded t hat as sole shareholder, he has absolut e aut h o r i t y t o decide how m uch of B oulder’s ret ained earnings he could wit hdraw.

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Trout m an st at ed t hat , as o f t he hearing, B oulde r ha d a p proxim at ely $ 400,000 in “liquid” asset s. Referring t o his t ax ret urns, which w ere m ade part of the record, Trout m an
assert ed t hat his com pany’s cash reserves “went down subst ant ially in 2013" and his account s receivable “went up drast ically.” Nonet heless, T rout m an adm it t e d that in t he 2013 t ax year, he m ade a considerable cash out lay for land for his r ock business, Winslow St one Works and also purchased a bulldozer at a cost of m ore t han $ 100,000. Trout m an acknowledged t hat he
t o ok a $ 554,000 dist ribut ion in 2013, but claim ed t hat he used it t o pay his c hild support and incom e t axes. Trout m an defended the declarat ion of his incom e f ou n d i n t h e at t achm ent t o his pet it ion. H e claim ed t hat it was t he sam e calculat ion t hat result ed i n his volunt ary decision
t o increase his m ont hly child support obligat i on from $ 3095 in 2011 t o $ 6005 in 2012. The docum ent ary evidence cont radict ed T rout m an’s t e st im o ny in several im port ant respect s. Most i m port ant ly, at t achm ent M-1 t o h i s schedule K from his 2013 f ederal t ax
ret urn indicat ed t hat B oulder report ed $ 785,392 in deferred incom e t h at w as not subject t o federal t ax in 2013. Accordingly, Trout m an’s “liquid asset s” w ere considerably higher t han he r epresent ed at t he heari n g. Also, while p urport ing to show a loss of incom e in 2013, various s c h edules showed t hat despit e a dist ribut ion o f $ 554,745 t o Trout m an as t he sole shareholder of B oulder, t he comp any’s cash reserves increased. Cert ified Public Account ant , Jake Keen, t est i fied i n Curry’s case-in-chief. H e st at ed
t h at T rout m an’s account ing m et hod, was uncom m o n, but not unknown. H e opined, based

on Trout m an’s 2013 tax r et urns, t hat Trout m an h ad at least $ 7 05,245 in i ncom e “t o live on.”

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Furt her, he t est ifie d t h a t Trout m an’s incom e in 2013 was “consist e n t bet ween 2012 and 2013.” On cross-exam i nat ion, Keen conceded t hat Boulder’s cash reserves declined bet ween 2012 and 2 013 by as m uch as $ 650,000. Nonet heless, Trout m an wit hdrew $ 554,000 t hat he did not c o unt as incom e on his 2013 t ax ret urn. Keen d isput ed t h at all of t he dist ribut ion was used for child support and t axes—he assert ed t hat , based o n a quick calculat ion, no m ore t han $ 295,000 was necessary for t h o se out lays, which left i n excess of $ 200,000 available for child support
. Trout m an present ed his Cert ified Public Account ant Reece Parcham as a rebut t al wit ness. Parcham s t a t e d t h at the “com plet ed project s” account ing m et h od was com m only used by c ont ract ors w it h r evenues of less t han $ 10 m illion p er year. H e defended Trout m an’s
assert ion t hat B oulder’s incom e was subst ant ially less t han in previous years, and assert ed that Trout m an’s incom e would be subst ant ially gr eat er in 2 014 when several project s are

com p let ed. According t o Parcham , “it will all com e out in t he wash.” Parcham could not
st at e whet her Trout m an had paid t axes on t he dist ribut i o n t hat he t ook in 2013, but assert ed
t h at Trout m an will not escape paying t axes on it at som e point

. Parcham st at e d t h at B oulder’s
ret ained earnings should no t be considered for child-support calculat ions. H e c onceded, h o w ev e r, t hat Trout m an had the “use and benefit ” or t he $ 550,000 he drew down i n dist ribut ions f

rom B oulder. Parham also conceded t h a t n o t all o f t he depreciat ion that Trout m an claim ed on his incom e-t ax ret urns were “econom ic” depreciat ion. Curry m oved t o dism i ss Trout m an’s pet it ion at t he close of the evidence. She assert ed
t h at T rout m an had not m et his burden of showing a m at erial change-of-circum st ances. The

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circuit court declined t o consider any proof of Trout m an’s incom e ot her t h an w hat was list ed in t he at t achm ent t o his p et it ion. It st at ed t hat it was going t o calculat e Trout man’s support obligat ion wit hout rega r d t o t he previous support order, considering only t he decline in Trout m an’s incom e from 2012 t o 2013. While describing Trou t m an’s account ing m et hod as “wacky,” t he circuit court declined t o “lit erally apply t he sect ion of sect ion III [in Adm inist rat i ve Order No. 10] t o t his p a r t i c ul a r fact sit u at ion.” It f urt her found t hat t h e depreciat ion t hat T rout man claim ed wa s “going t o cat c h up wit h him at som e pointin t im e.” The circuit court acknowledged that Trout m an had t he use of in excess of $ 500,000 i n 2013, b u t t h e “ preponderance of t he evidence indicat es t h at he paid t h e incom e t ax on it before he h ad u se of it

. So, t o m ake him p a y c h i l d support on it again would be punishing him

. It would be double t axat ion, so t o speak on his incom e as defined by Adm inist rat ive Order 10.” The circuit c o urt accept ed what Trout m an det erm i n ed t o be his “net incom e” for 2012 and 2013—his adjust ed gross incom e list ed on his Form 1040 for t h e tax years 2012 and 2013, less t he allowable deduct i ons list ed in Adm i n ist rat ive Order No. 1 0 ( s o c ial security,

m edic a re t ax, st at e and federal t axes, and h ealt h insurance). I t added t he sum s t oget h er, $ 470,766 for 2012 and a loss of $ 1 24,033 for 2013 and divided by t wo t o o bt ain an average for t he t wo ye a r s : $ 173,367. The circuit court t hen calculat ed the chart am ount of child support for a m ont hly i ncom e o f $ 14,447, which is $ 2108 , m ade ret roact ive t o the June 9, 2014 filing of Trout m an’s p et i t ion t o m odify. Not ing t hat in the int ervening tim e since t he filing of t he pet it ion, T r out m an had paid $ 27,279, t he circuit court ordered t hat t h e overage

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be am o r t ized by subt ract ing $ 1000 per m ont h from T r o u t m a n’s c hild-support paym ent s. Curry t i m ely filed a not ice of appeal. We review child-support cases de novo on t he record. Ch itwood v. Ch i twood , 2014 A rk. 182, 433 S.W.3d 245. U nder our st andard of review, we do not r everse a finding of fact by
t h e circuit court unless i t is clearly erroneous. Id. We give due deference to t h e cou r t ’ s superior p osit ion t o det erm ine t h e credibility of t he wit nesses and t h e weight t o b e accorded
t o t heir t est im ony. Id

. H owever, we give no deference t o a c ircuit court ’s conclusion of law. Id

. Curry first argues that t h e circuit court e r red in finding t hat Trout m an m et his burden of proving t hat t here has been a mat erial change o f circum st ances. She assert s t hat t he circuit
court ’s r uling is “flawed in t hree crit ical respect s.” First , she asser t s t h a t t h e c ircuit court ’s “exclusive” reliance on Trout m an’s report ed i n dividual incom e i n 2012 and 2013 is cont rary
t o law. Second, t he circuit court found a m at erial change of circum st ances despit e a com plet e absence of evidence regarding Trout m an’s incom e for t he first eleven m ont hs of 2 014. Third,
t h e circuit court abused it s discret ion in em ploying a met hodology for det erm ining t he

am ount and sources of incom e t hat failed t o t ake int o acco u n t T r out m an’s abilit y to

m anipulat e t he dist ribut ion of B oulder’s ret ained earnings. We f ind merit in t hese argum ent s. A part y seeking modificat ion of a child-support o bligat ion has t he burden of showing

a m at erial change of circum st ances sufficient t o warrant t he m odificat ion. B aber v. B aber , 2011 Ark. 40, 378 S.W.3d 699. Changed circum st ances war r a n t ing an adjust ment m ay include

rem arriage of t he part ies, a m inor reaching m ajority, relocat ion, change in cust ody, debt s of

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t h e part i e s, abilit y t o m eet current and fut ure o b l i gat ions, and change in t he incom e and f i n ancial condit i ons of the p art ies. See Hall v. H all , 2013 Ark. 330, 429 S. W

. 3 d 2 1 9

. Moreover, under Arkansas Code Annot at ed sect ion 9–14–107(a)(1) (Repl. 2015), a relat ively

m inor change in t he p ayor’s incom e c an const it ut e a m at erial-change-i n - c i rcum st ances. It
st at es: A change in gross incom e of t he payor in an am ount equal t o or m ore t h an t wenty percent (20%) or m ore t h an one hundred dollars ($ 100) per m ont h shall const it ut e a m a t e r i a l c hange o f c ircum st ances sufficient t o pet it ion t he court for m odificat ion o f child support according t o t he fam ily support chart aft er appropriat e deduct ions. Ark. Code Ann. § 9-14-107(a)(1). When a circuit court considers t he issue o f whet her t h ere has been a m at erial change in circum st ances, it considers the f act s t hat have changed or were n ot known by t h e court at
t h e t im e it e nt ered t he previous order. See G rable v. Grable , 307 Ark. 410, 8 2 1 S

. W .2d 16 (1991). We consider t he m at erial c hanges t hat have o ccurred since t he ent ry of t he last order

so t h at a subsequent pet it i on t o increase or decrease support will not be res judicat a. Clifford

v. D anner , 241 A r k. 440, 409 S.W.2d 314 (1966). In t he c ase before u s, Trout m an only present ed evidence of h is 2012 and 2013 incom e . W e know f rom t he 2012 support order
t h at n o evidence of Trout m an’s 2012 i ncom e was b efore t he court because, i n t he order, t he circuitcourtdeclined t o find Trout m an in cont em pt for notproviding t hat inform at ion. 2 We are mindful t h at Trout m an assert ed at t he h e a r i ng t hat he calculat ed his 2011

2 The dissent apparent ly fails t o underst and the im p ort ance of t h e changedcircum st ances doct rine. The doct rine st rikes a balance bet ween t he need for finality in any lit igat ion and t he equit able int erest in properly support i ng m inor children.

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incom e in t he sam e way t hat h e was asking t he circuit court t o in h is pet it ion. We reit erat e
t h a t t he 2 0 12 support order reflect ed an agreem ent by t h e part i es, not a c alculat io n b y t h e circuitcourt
. The circuit

court ignored t his obvious failure of proof. Inst e ad, as not ed previously,
t h e circuit court c al c u l a t e d Trout m an’s new support o bligat ion based on his declarat ion of inco m e . T h i s w a s clear error by t he circuit court for t wo reasons. First , t h e circuit court could not have d et erm ined whet her T rout m an’s incom e had c hanged since 2011 b ecause no direct evidence of Trout m an’s 2011 incom e h ad ever been b efore t he circuit court
. Second,
t h e agreed order could not even be circum st ant ial e vide nc e o f T r out man’s 2 011 incom e because, according to Trout man’s own t est im ony, his calculat ions in 2012 were t h e sam e as
t h ose he placed before t he circuitcourt in 2014. Curry argues, and we agree, t hat Trout m an’s calculat ions of his incom e for childsupport p urposes do not properly account for Boulder’s ret ained earnings and ot h er elem ent s of t he m oney t hat Trout man had available t o support his c hild, but were not taxable in 2011 under t he Int ernal Revenue Code. As our court of appeals n ot ed in Pannell v. Pannell , supra , and Anderson v. Anderson , supra , A d m inist rat ive Order No. 10 cont em p lat es a m ore expansive definit ion of incom e, that requires t he circuit c ourt t o consider t h e r et ained earnings of a closely held corporat ion. The rat ionale is sound. By focusing on t he act ual m o ney available
t o support a child, it prevent s a payor from using t he t ax code t o legally m anip u l a t e t h e

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am ountof incom e t o be considered for child-support purposes. 3 This court has defined “incom e” as “any form of paym ent , periodic or ot herwise, due
t o an individual, regar d l e s s of source, i ncluding wages, salaries, com m i ssions, bonuses,

work e r s ’ com p ensat ion, disabilit y, paym e nt s pursuant t o a p ension or ret irem ent p rogram , and int erest less” c ert ain enum erat ed deduct ions. H all , supra (quot ing A rk

. S up. Ct

. Adm in. Order No. 10(II)(a) (2011)). This int ent ionally broad definit ion is int ended t o encompass t he widest range of sources t o effect u at e t his St at e’s policy t o adequat ely support children. Id

. Our decision t oday i s conson a n t wit h our p revious recognit ion of nonperiodic monet ary judgm en t s, m onet ary gift s, cert i ficat es of deposit , ret i rem e nt paym e nt s, and even gam b ling winnings, as incom e for purposes of det erm ining child support

. See Hall , supra . B ecause we h o l d t hat t he circuit court erred in finding a m at erial change in circum st ances, and b e c a u s e C urry did not file a count erpet i t ion for an increase in child support , w e n ee d not address Curry’s second p oint regarding t he m et hod ut ilized by t he circuitcourtin calculat i ng Trout m an’s child-support obligat ion. For t h e forgoing reasons, the circuit court ’s 2014 order changing T rout m an’s m ont hly child support paym ent s ret roact i ve t o t he filing of his pet it ion is reversed and dism issed.

3 For e xam ple, i n t he case b efore us, in 2 013 Trout m an claim ed a loss for incom e t ax purposes of $ 122,487. This “loss” includes his $ 53,775 salary from B oulder. On B oulder’s F o r m 1120S, B oulder’s 2013 incom e t ax r e t urn, Trout m an’s com pensat ion appeared a s a n expense, which cont ribut ed to i t s claim ed loss of $ 1 71,892. In p ract i cal t erm s, r egardless of t h e t ax t r eat m ent of his salary, Trout m an had full use of h is salary t o live o n. A sim ilar analysis could be applied t o the depreciat ion Trout m an claim ed for his businesses. I t was a proper t ax deduct ion, b ut did not direct ly t ranslat e int o a loss of t he net wort h o f t h e asset , and m o re im p ort ant ly, t he incom e t hat Trout m an had t he benefit from

.
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Reversed and dism issed; court of appeals opinion vacat ed. Special Just ices J E R R O L D J O H N S C H O L T E N S and D A V I D H O G U E join. K E M P , C.J., and W O O D and W O M A C K , JJ., dissent

. G O O D S O N and W Y N N E , JJ., not part icipat ing.

J O H N D A N K

E M P , Chi ef Jus t i ce, di ss enti ng. I respect f ully dissent

. I believe t he circu i t c o urt correct ly det e rm ined t hat Trout m an experienced a m at erial c hange in circum st ances as defined in Arkansas Code Annot at ed sect ion 9-14-107(a)(1) (Repl. 2015). I believe t he circuit c ourt c orrect ly applied t he provisions of Arkansas Suprem e Court Adm inist rat ive Order No. 10 in det erm ining Trout m an’s incom e for child-support purposes. I would affirm

t he circuitcourt
. S H A W N A. W O M A C K , Jus ti ce, di s s enti ng. “O ur new Constitution is now establish ed, and h as an appearance th at promises permanency; but in th is world noth ing

can be said to be certain, except death and taxes. ” -B enjamin Frank lin, 1789

We are all f

am iliar wit h B e njam in F ranklin’s fam o us quot e about deat h and t axes. This

case offers a m odern-day insight int o bot h subject s. The part about t axes i s o b v ious in t he discussions about i ncom e t ax ret urns, definit ions of i n com e, account i ng m et h ods, r e t a i n ed earnings, and so on. It is t he d eat h part of t he q uot e t hat m ay not regist er wit h r eaders on t he first reading of t h e m ajorit y opinion. H owever, over t im e and applicat ion of t his decision, it

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will becom e obvious t hat t wo t h ings have died t oday at the hands of t he m ajorit y. The first , narrowly speaking, is Adm inist rat ive Order No. 10 of t his court for t he purpose of defining incom e of self-em ployed individuals. The second deat h com es in t he broader concept of t he abilit y o f circuit court s and lit i gant s t o r ely on t he plain, c lear, and concise inst ruct ional language given to t hem by o rders of this court and applicable st at ut es. B ot h die an unt im ely deat h by t he bluntforce adm inist ered t o t hemin t he m ajority opinion. There are few areas in t he law t hat provide guidance so clear as t he relevant port i on of Adm inist r a t i v e O r der No. 10 where it specifies which line of t h e t ax ret urn t o use in det erm ining i ncom e for self- e m p l o y e d payors or t he relevant st at ut e defining a m at erial change in circum st ance on eit her a percent age basis o r a specific dollar am ount
. The bizarre

reas o ni n g o f t he majority opinion m anages t o find t he t rial court ’s order clearly erroneous when it in fact followed t he specific guidance given t o it by t his courtand t he legislat ure. If
t h is court believes t hat Adm inist rat ive Order No. 10 should be alt ered, t his should be done only aft er t horough r eview b y t he Suprem e Court ’ s Com m it t ee on Child S u p port , which allows pract it ioners, circuit judges, and lay people t o part icipat e in evaluat ing an am endm ent of our adm inist rat ive orders. To r ewrit e an adm i nist rat ive order because t he m ajorit y does not part icularly like t he fact s of one case is cavalier and dangerous. As t he m ajorit y st at ed, this court reviews child-support o rders de novo on t he record, and we will not reverse a finding of fact by t he circuit court unless it is clearly erroneous. S ee,

e. g . , W ard v. D oss , 361 Ark. 153, 158, 205 S.W.3d 767, 77 0 ( 2 0 0 5 )

. In reviewing a circuit
court ’s findings, we give d ue deference t o t hat court ’s superior posit ion t o det erm ine t he

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credibility of t he wit nesses and t he weight t o be accorded t o their t e st im o ny. Id

. When t he

am ount of child support is at issue, we will n ot re v e r s e t he circuit court absent an abuse of d i s c r e t ion. Id

. In o r d er to m odify a c hild-support am ount , the p et it ioning part y m u s t dem onst rat e a m at erial change in the p ayor’s circum st ances. See, e. g . , Hall v. H all , 2013 A rk. 330, at 4–5, 429 S.W.3d 2 19, 2 22. We review a finding t hat t here has b een a m at erial change in circum st ances for c lear error. Id

. B ecause I believe t h at t h e c ircuit court fait hfully followed
t h e guidance of Adm i n i s t rat i ve Order No. 10 and t he t e x t of t he relevant st at ut e in det erm ining t hat Trout m an dem onst rat ed a m at erial change in c ircum st ances, I m ust dissent from t h e m a

jority’s c onclusion t h at t he circuit court ’s act ions were clear error under our deferent ial st andards. Trout m an has paid child support cont inuously since t h e i n i t i al decree. H i s original obligat ion was $ 762 per mont h, but t his was i ncreased twice due t o t he s u ccess of his
const r uct ion business. Trout man is t he sole shareholder in B oulder Const ruct ion, an S corporat ion. H is first obligat ion increase was to $ 3,095 per m ont h; t he second was t o $ 6,005 per m ont h. This lit igat ion st em s from Trout m an’s 2014 pet it ion t o m odify t he decree downward due t o an alleged m at erial change in his circum st ances. The circuit c ourt followed t he guidance of Adm inist rat i ve O r d e r No. 10 for selfem ployed payors, looking at Trout m an’s previous t wo incom e t ax ret urns. H i s 2012 ret urn shows personal incom e of $ 717,137, while his 2013 r et urn shows a loss of $ 171,892. Despit e his r eport ed los s e s in 2013, t he corporat e ret urns from B oulder for t hat year indicat e that Trout m an t o o k a dist ribut i o n o f $ 5 5 4 ,745 from the c om p any and t hat the c om pany had

13Cit e as 2017 Ark. 139

$ 785,392 in deferred incom e during t he year. The court considered expert t est i m ony from
account ant s represent ing bot h part ies in t he December 2 014 hearing. Curry argued t hat t he dist ribut ion from t h e c om p any, despit e not appearing on Trout m an’s personal i ncom e t ax
ret urn, should be considered incom e for t he purposes of child-support c alculat ion. Trout m an argued t hat t he t erm s of Adm inist rat ive Order No. 10 and t h e past pract ice in m odifying his

own support obligat ion u pward are consist ent wit h averaging his personal incom e t ax figures wit houtt aking special not ice of corporat e dist ribut ions or deferred incom e. The circuit court sided wit h Trout m an’s argum ent s. It gave weigh t t o t h e expert
t e st im ony t hat any perceived inconsist ency bet ween Trout m an’s r ep o rt i ng a loss in 2013 while sim ult aneously t aking a subst ant ial dist ribut ion was explained by st andard account ing pract ices for sm all const ruct i on com panies. Any corporat e dist ribut ions t h at Trout m an received t he benefit from eit her (1) had been report ed on prior t ax ret u rns and fact ored int o prior child-support pay m e n t s or (2) would be report ed o n fut ure tax r et urns w hen t he associat ed const r uct ion project s were com plet ed and c ould be fact or ed i n t o fut ure childsupport p a ym ent s. T he c ourt set Trout m an’s new paym ent at $ 2,108 and d educt ed $ 1,000 per m ont h unt i l he recouped t he overpaym ent of support u nder t he old figure, w hich he had been paying since he filed his pet i t ion for m o dificat ion. On appeal, Curry argues t hat t he circuit court clearly erred in finding t hat Trout m an proved a m at erial change in circum st ances sufficient t o just i f y a m odificat ion of child support
. She cont ends t hat t he trial court should have included t he dist ribut ion that Trout m an t ook

14Cit e as 2017 Ark. 139

and B oulder Const ruct ion’s deferred i n c o m e in 2013 when calculat ing incom e u nder t he “int ent ionally broad” definit ion provided in Adm inist r at ive Order No. 10(II). Adm i n i s t r a t i ve Order No. 10, prom u lgat e d by t his court pursuant t o the aut hority grant ed in Arkansas Code Annot at ed sect ion 9-3-312, prescribes t he m e t hod by which t his
st at e’s court s det e rm ine child-support paym ent s. T he order provides f am ily-support chart s for individuals who receive t heir incom e on regular weekly, biweekly, sem im ont hly, or m ont hly bases. The chart s specify a presum pt ively correct am o unt t h a t c ourt s should award as child support from payors i n each band o f i n c o m e. I n recognit ion of the fact t h at not all incom e
st ream s c onform t o one o f t hese l ockst ep pay p eriods, however, t he order includes a sect i on for nonsalaried p ayors. Trout man’s circum st ances are governed by t he language concerning self-em ployed payors, which st at es: For self-em p loy ed payors, support shall b e calculat ed based on t he last two years’ federal and st a t e i n c o m e t ax ret urns and t he quart erly est im at es for the current year. A self-em p loyed payor’s incom e should include c ont ribut ions m ade t o r et irem en t plans, alim ony p aid, and s e l f

- em ployed healt h insurance p aid; t his figure appears on line 22 of t he current

federal incom e t ax form

. Ark. Sup. Ct . Adm in. Order No. 10(III)(c). The o r d er gives the circu i t c o u r t discret i on to deviat e from t he specified chart s and

m et hods if itfinds specific reasons why applicat ion as writ t en would be cont r ary t o t he best int erest s of t he child. See Ark. Sup. Ct . Adm in. Order No. 10(I), (V). The order’s specified

m et hod is, however, presum pt ively c orrect absent such a f i nding. H e r e, the c ircuit court applied the language for self-employed payors as writ t en i n t he order. It weighed and accept ed
account ant t est im ony t h at t he “line 22” change in T rout m a n ’s federal and st at e t ax ret urns

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dem onst rat ing net incom e in 2012 and net loss in 2 0 1 3 r e p resent ed t he act u al st at e of his finances. Furt her, it accept e d, aft er hearing e xt ensive test im ony and argum ent at ion, t hat t he 2013 dist ribut ion necessarily cam e from funds that eit her had been t axed or would be t axed in the r elat ed project -com plet ion year in accord w it h a c om mon const ruct i on account ing pract ice. Finally, it accept ed Trout m an’s argum ent t hat t h e quart erly est i m at es as
cont em plat ed by the ord er would not be possible or helpful given his use of t h is project

com p let ion account ing pract ice and his loss in t he prior year. Wit h t his definit ion of Trout m an’s incom e in m ind, r esolut ion of t h e legal issues in t his

case should be st raight forward. The m at eria l c h a n g e i n circum st ances required t o m odify a child-support order is a creat ure of st at ut e. Arkansas Code Annot at ed sect ion 9 -14-107(a)(1) (Repl. 2 015) d efines as m at erial a “change i n gross i ncom e o f t he payor in an am ount equal
t o o r m ore t han t wenty percent (20%) or m ore t han one hundred dollars ($ 1 00) per m ont h.” The circuit court did not clearly err in finding t hat Trout m an’s t ax ret urns showing a change from an incom e of $ 7 17,137 t o a loss of $ 171,892 represent s a change in gross incom e of

m ore t han $ 1 00 per m ont h. Indeed, even if t he circuit court had accept e d Curry’s argum ent s and had i ncluded som e o r all of t he dist ribut ion that Trout m an t o ok from h is c om pan y o r deferred corporat e incom e in t he calculat ion, t he exceedingly m odest st at ut ory requirem ent for dem onst rat ing a m at er i a l change in circum st ances would have b een met
. The m ajorit y
assert s t hat the c i rcuit court overlooked a “ f ailure of proof” because of purport ed gaps in Trout m an’s present at i on of 2011 incom e dat a. Even i f t he m ajorit y’s charact erizat ion of t he 2011 inform at ion i s correct , it would be i rrelevant h ere. It is uncont est ed t hat the circuit court

16Cit e as 2017 Ark. 139

had 2012 and 2013 ret urns before it

. Given t he h uge disparit y in incom e bet ween t hose t wo years, t h e circuit court was cert ainly ent i tled to det erm i n e that a m at erial ch a n g e in circum st ances had occurred. Finally, t he m ajorit y adopt s Curry’s charact erizat ion o f A nderson v. Anderson , 60 A rk. App. 221, 963 S.W.2d 6 04 (1998), and Pannell v. Pannell , 64 Ark. App. 262, 981 S.W.2d 531 (1998), as st anding for t he proposit ion t hat A dm inist rat i ve Order No. 1 0 “requires t he circuit
court t o consider t he ret ained earnings o f a closely held corporat ion” t o prevent “a payor from using t he t ax code t o legally manipulat e t he am ount of i n com e to b e c o n s i d e r e d for childsupport purposes.” This is a deeply m isleading charact erizat ion of t hose cases. First , as a procedural m at t er, bot h cit ed cases are inst ances i n which an appellat e court affirmed c hancery c ourt decisions grounded in the result s of fact -int ensive inquiries int o t he payor’s financial st at e. In Pannell , for inst ance, t he chancellor opt ed t o include ret ained corporat e incom e in calculat ing a child-support obligat ion when t he record indicat ed t hat t he payor arguing f

or a lower paym ent was sim ult aneously using com pany funds t o purchase luxury cars, $ 100,000 w o rt h of racehorses, and an airplane fo r h i s p e r sonal use. See Pannell , 64 Ark. App. at 2 65, 9 81 S.W.2d at 532. Including ret ained corporat e i n com e m ay well m ake

sense i n a case where t he circuit court fears t he sort of b ad-fait h m anipulat i o n cont em plat ed by t he m ajorit y. Finding such m anipulat ion, however, is best left t o t he circuit court , and no such f inding was made i n t h i s case. In fact , not only did the t rial court n ot m ake a finding of

m anipulat ion t hat would trigger use of it s discret i o n t o deviat e , but t he t e st i m ony m akes clear
t h at t he account ing m et hod u sed by T rout m an was select ed at t he incept ion of t he business

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and rem ained unchanged t hroughout the life of t he com pany. If anyt hing, this gives a st rong indicat ion t hat no m anipulat ion t ook place. Second, it is im possible t o reconcile the m ajorit y’s legal sum m ary of t he p r e cedent s wit h Anderson

. In that case, t h e c ourt of appeals affirm ed a chancery c ourt decision t h at in fact excluded r et ained incom e from an S c o rporat ion from t he child-support calculat ion. See Anderson , 60 Ark. App. at 2 2 8

– 29, 963 S.W.2d at 608. Even t h ough t he chancery court considered t he ret ained earnings t o be incom e wit hin t he definit ion of Adm inist rat ive Order No. 10, it wrot e t hat t he “plaint i ff has rebut t e d t he presum pt ion t hat t he am ount reflect ed by
t h e child support chart aft er including incom e from ret ained e a r ni n g s is t he just am ount of child support t o order in t h is part i cular case.” Id. The chancellor m erely declined t o perm it
t h e payor t o deduct from his child-support calculat ion t he incom e t ax he had paid on ret ained earnings. Since the chancellor excluded t he incom e f rom t he cal c u l a t ion, giving t he payor credit for t he t axes paid on it would be a windfall. Id

. Put sim ply, t h ere is no ironclad rule that
t h e circuit court m ust i nclude ret ained corporat e incom e in child-support calculat ions. Pannell and Anderson st and only f o r the d i s c r e t i on of circuit court s t o m ake t hat i nclusion if t he circum st ances warrant it

. The circuit court in t his case fulfille d i t s d u ty precisely as cont em plat ed by Adm inist rat ive Order No. 1 0

. I w o u l d find no clear error i n it s decision t o follow t he prescribed m et hod for self-em ployed payors of looking at Trout m an’s previous t wo years’ t ax
ret urns t o calculat e i ncom e for t he purposes of child support . Furt her, any int erpret at ion of

18Cit e as 2017 Ark. 139

t h e circum st ances su p p ort s t he circuit court ’ s c onclusion t hat Trout m an experienced a

m at erial change in circum st ances for t he purposes of t he st at ut o ry definit ion. I dissent

. W O O D , J., joins in t his dissent

. Taylor Law Partners, LLP , by: W illiam B

. Putman , for appellant

. Cullen & Co. , PLLC , by: Tim Cullen , for appellee.

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