# FILED
Au gust 8, 1996 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COURT OF AP PEALS OF

TENNESSEE, WESTE RN SECTION AT JACKS ON

_______________________________________________________ ) NINA ALIC E KIMBLE, ) Shelby Law ) Circuit Court No. 137254 R.D. Petitioner/Appellee. ) ) VS. ) C. A. No. 02A01-9503-CV-00049 ) MICHAEL WA YNE KIMBLE, ) ) Responde

nt/Appell ant. ) )

______________________________________________________________________________ From the Circuit Cou

rt of Shel by C ounty

at Memphis
. Honorable Kay S. Robilio, Judge Michael L. Agee , AGEE & AGEE, Bartlett, Tennessee Attorney for Respo ndent/Ap

pellant.
Kathryn A. King , SHEA, KING & L

ANDERS, Memphis, Tennessee Attorney for Petitioner/Appe llee.

OPINI ON FIL

ED: AFFI RMED IN P

ART, REVERSED IN PA RT AND REM ANDED FARMER, J.
HIGHERS, J. : (Concur s) LILLARD, J. : (Concur s)The gravamen of this appeal is child support. Nina Alice Kimble and Michael Way ne Kimble were ma

rried in 1985, divorced in 1992 and will be referred to a s Wife and Husband,
re sp ec ti ve ly. When they

married, Wife had

a son from a previous marriage a nd Husband a daughter. Husband adopted the son but Wife did not adopt the daughter.

The divorce decree incorporate d the terms of a marital dissolution agreement which provided that Husband would pay c hild supp or t of $250 monthly for 24 months. I t was further agreed that

at the end of that period it would not be necessary for Wife to show a

mater ial ch ange of circumstances upon petitioning for an increase in child support due to the fact that Husband had just begun a new business and his income was uncertain a t that time.

Wi fe petitione d for an increase in child support and the matter was r eferred to a referee. Following a hearing, the re feree ruled that the child support be increa sed to $637 per month “which includes adjustment for self-emp. tax and fact of no visitation and $37 for her

cost of he alth insurance on child.” Wife was also awarded $1,700 in attorney’s fees. Upon motion, the trial court modified the referee’s ruling a nd ordered that Husband pay $348 per month “as

base chi ld support , taking into consideration the Ch ild Support Guidelines and deviating therefrom by allowing [Husband] credit of 21% of his net income, or $441, for expend itur es for hi s daugh

ter, L ydi a Kimble.” The cour

t ordere d Husband

to pay an additi onal $225 per month as child support du e to Husband’s non-visitation and $37 for the child’s health insurance, for a total month

ly support award of $610. T

he court additiona lly o rdered Husband t

o pay Wife appr

oximately $3,000 in

attorney’s fees. Husband’s motion for rehearing or, alternatively , to alter or amend the judgment was denied. Husband appeals to this Court where our scope of review i s de novo of the record with a presumption that the tr

ial cour t’s findin gs of fa

ct are c orrect

unless t he preponde rance of the evidenc e is other

wise. Rule

13(d) T. R.A.P.

The trial court stated from the bench that anadditional $225 was awarded due to the fact that Husband had no visitation with his adopted son and, according to Husband’s testimony , had virtually no contact

with the child whatsoever. Husband argues that this was e rror on the part of the trial court be cause Wif

e failed to prese nt any evidenc e of the c

hild’s expe

nses. Wife argues that the additional amount of $ 225 pe r month for non-visitation is proper. She relies upon ch. 1240-2-4-.02(6) which pr ovides fo r an upwa rd devia tion if the child is not stay

ing ove rnight with the obligor for the average visitation period of ever y other wee kend f

rom Fri day evenin g unti l Sun day morni ng, two weeks during the summer and two weeks during holiday periods throug

hout the year.

Need and ability to

pay are factors to be considered in determining child support. Our review of this matter is hampered somewhat by the fact thatthe record contains scant evidence of the expenses incurred by W ife as a result of her custody of Christopher. While it appeared that Husband w as testi fying f rom a statement of income and expenses before the re feree, such a document does not appear in this record. Other than the testimony of Husband, the evidenc e consist s of his 1993 individua

l income ta

x return, a

corpora te retur n and two c ancele d check s.
Moreover, the record

before us is not en

tirely clear as to the formula used by the court in arriving at the figure of $225. In Lindberg v. Lindberg , No. 02A01-9407-CV-00169 (Tenn.App. 1995), this Court held that, in accordance with the guidelines, there is to be an “upward or

downward deviation when ce

rtain ass umptions up on which t h e Department

of Health and Safety

based the regulations are not present.” Lindberg , sli p op. a t 8 (ci ting Nash v. Mull e , 846 S.W. 2d 803, 805 (Tenn. 1993)). In the event of non- visitation, Lindberg held that a trial ju dge is “to increase the amount of support from the guidelines minimum to some amount that would approximate th e expenses incurred

by t he custod ial pare nt that [he/ she] would

not . . . otherwise have incurred if the obligor parent had

appropriately

exercised his visitation.” Id . (Emphasis added.) We find a remand of this cause to the trial court necessary with instructions to entertain eviden ce on the amount of actual expenses incurred by Wife, on Christopher’s behalf, due to Husband’s non-visitation.

Wife further

contends that the trial court erred in considering the fact that Husband is the sole s upport of

his minor daughter from a previous marriage because the c hild is not included in a decree of chil d support. She relie s upon a po rtio n of the guidelines which provides that the children of

the obligor who are not

included in the decree of child support shall not be considered for the purposes of reducing the obligor’s net income or in calculating g uideline amounts. See ch. 1240-2-4-.03(4). We do not believe that the intent of the guidelines was to cover a situation such
as this, where a sole surviving parent has sole cust ody of a minor

child, asthere c ould not re asonably be expected to be a support orde r enteredby a court in th

ese cir cumstanc es. Without d

oubt he is1 R.C. 3113.215(A).

obli ga ted to support

his minor da

ughter . The Child

Support Gu

idelines a pply as a rebuttable presumption in child support cases. T.C.A. § 36-5-101(e)(1). As noted, the guidelines are subject to deviation upward or downward when the assumption s on which they are bas ed do not p ertain to
a particular situation. See Nash v. Mull e , 846 S.W.2d at 805. Wife cites to this Court’s decision in Tower v. Tower , No. 02A01-9407-CV-00170 (Tenn. App. Nov. 3, 1995). However , the father in Tower contended he was voluntarily paying child support for

children from a previous marriage. He did not pur

port to be the sole surviving parent. Under the present circumstances, we f ind no error by the trial cou

rt in extend

ing Husb and a cr

edit for e xpenditure s for his daughter, for whom he is the sole support.

Husband argues that his actual out-of-pocket e xpenses of $10,313, representing the purchas e of cert

ain offic e equipme

nt in the calendar year

1993, wasproperl

y deducted f

rom his g ross income. Wife coun

ters that these expe

nses are included within his d

epreci atio n deduction of $12,108 on his federal income tax return and are not deductible in ac cordancewith the guidelines. The guidelines provide that “[i]ncome f rom self- employ

ment inclu des incom

e from bu siness operations and rental properties, etc., less rea sonable expenses necessary to produce such income. Depreciation. . . should not be considered reasonable expenses.” Tenn. Comp. R. & Reg s., ch. 1240-2-4-.03(3). The parties stipulated that Husband paid $10,313 for the office equipment. The trial court deducted this figure from Husband’sgross income as a means to guard aga

inst his “paying child support on money

he [does] no t have.”Husband a greesthat depr

eciation is not dedu ctible

for child supp ort purpo ses.

Our research of this issuehas unco vered the following: I n Kamm v

. Ka mm , 616 N.E.2d 900 (Ohio 1993), the Supreme Court of Ohio considered whether ca pital expenditures may be used to re duce the

gross income of a parent in calculating the a ppropriate amount of

child supp ort. The cour t looked to

state sta tute 1 for guidance which identified “self- generated income” as“gross receip ts received by

a parent from sel f employment . . . and rents, minus ordinary and necessary expenses incurred

by t he pare nt in generating

the gro ss receipts.” The statute defined “ordinary and necessary expense s incurred in generating gr oss receipts” as “actual cash items expended by theparent

or his business. ‘Ordinary a nd necessary

expenses incurred in generating g ross receipts’ does not include depreciation expenses and other non-cash items that are allowed as deductions on any federal tax return of the parent or his business.” Kamm , 616 N.E.2d at 902.

The obligor parent in Kamm was a farmer who sought to deduct the acquisiti on cost of a tracto r from hisgross income in determining his child support obligation. Id
. at 900. The court conclud ed that the acquisition of a capital asset by a self-employed child support obligor ma y b e deductib le agains t his gross receipts for purposes of computing his/her child suppor

t obliga tion so long as the acquisition is “ordinary and necessary ” and acquired by an actual cash expenditure. Id
. at 902.

The court continued:

It may be argued that our decision permits “ double

dipp ing” by allowing the child -support

obligor to deduct th

e capita l asset co sts fro m both his child-support obligation and his federal income t a x lia bil it y. While so doing, we on ly p oint out tha

t this is not double dipping in the traditional sense of that term inasmuch as the dipping is at two different we lls. Th e legislature specifically prohibits any double dipping from the child-support obligat ion well by excluding any additional, duplicative deductio n for t he capi tal as set co st th rough depreciationin the last

sentenc e of R.C. 3113.215(a)(4). Though we believe t he preferred way to recognize a child-support obligor’s expense for a capital asset would have been

to spread the deduction of its cost over its useful life via depreciation rather than bya lumpsum deduction, the legislature has chosen otherwise.

Id
.

The court in Kamm recognized that such construction could result in a financial advan tage to the child support obligor, enabling him or her to reduce h is/he r income for purposes of setting child support by ac cumulating assets, taking a tax deduction for them and

having his child support lowered. He/she could “continue the process by depreciating the assets and/or repla cing the m.” T o guard against this “potential for inequitable r esults,” Kamm held that “allowance of a deduction for acquisition of a capital asset by a self-employed, child-support ob ligor against such obligor’s gross receip ts may be grounds for d

eviation from the c

hild-supp ort guid

elines . . . .” Id
. Factors to be incl

uded in a c ourt’s c onsidera tion of whe

th erdeviation is proper were identified as(1) the cost of the capita l asset co mpared t

o the par ent oblig or’s gr

oss income ; (2) the c ost of th e capital asset co mpared t

o the net w orth

of the obligor’s business; (3) the existence of a past pattern of acquisition of

capital a ssets as d

eduction s again st grossincome f or child support calculations; (4) the proximity

in time of t

he acquisition of t

he capit al asset t o the date of termin a tion of the

child support obligation; (5) analy sis of the necessity of the capital asset to maintain or increase p as t or current levels of income as op posed to unnecessary , punitive or overly ag gressive expansion of business; and (6) whether the asset is acquired from the current year’s income or out of past yea

r(s)’ savings. Id
.

In Zakrowski v. Zakrowski , 594 N.E.2d 821 (Ind. App. 1992), the issue befor e the Courtof Appeals of Indiana was whether the trial court had erre d in disallo wing ce rtain bus iness expenses in calculating the obligor’s available income for child support. One such business expense
was for various items of office equipment. Zakrowski , 594 N.E.2d at 823. The pertinent provisions of Indiana’schild supp ort guid elines sta ted:
Weekly Gross I ncome fr om self-e mploy ment, operation of a business , re nt and royalties is define d as gross receipts minus ordinary and ne ce ss ar y ex pe ns es . S pe ci fi ca ll y exclud ed from ordinary and necessary expenses for purposes of

these Guidelines are depreciation,

. . . or any

other bus iness expe

nse dete rmined by

the Co urt to b e inapprop riate for dete rmining weekly gross i nco me for purposes of calculating child support. In g eneral , these types of income and expenses from

self-employment or ope

ration of a business should be carefully reviewed.

Id
. The court noted that “[a]lthough purchases of business equipment may proper

ly be considered ‘reaso nable

and nec essary ’ expendit ures in child suppor

t computa

tions, a de duction f

rom gro ss income is not mandatory .” The court concluded that the trial court had not abused its discretion when labeling the se particular expenditures as “investments” benefiting the oblig or rather than “expenses.” Id . at 823-24.

Fi na ll y, in Beardsley v. Heazlit t , 654 N.E.2d 1178 (Ind. App . 1 995), the Indiana Courtof Appeals noted that the state’s child support guidelines had been “updated” in Marc h 1993 to read:Weekly gross income from self employ ment, . . . is defined as gross receip ts minus ord

inary and nec essary

expenses. In g eneral , these typ es of inc ome and e xpenses fr

om se lf-emp loyment or operation of a business should be carefully reviewed in order that the deductions be restricted t o re asonable out-of-pocket expenditures necessary for the p roductio n of income. These expenditures may includ e a reasonable yearly de duction for necessary capital expenditures.
Beardsley , 654 N.E.2d at 1181.

As noted, the Tennessee child support guidelines provide only that self-employment income (for purposes of calculating child supp ort) “inc ludes inc ome from business operations . . . less reasonable expe nses to pro duce such income,” and that depreciation allowa nces are not considered

reasona ble expens es. Ch. 140 -2-4-.0 3(3). B oth jurisdi ctions re ferenc ed above

likewise
ex clude de preciation as a reasonable (“or dinary and necessary ”) expense for purposes of establishing child support. As seen in Beardsley and Zakrowski , Indian a allows for the deduction of out-ofpocket capital expenditures from an obligor’s gross income, if de termined reasonable and necessar y after careful review by

the trial cou

rt. Converse

ly, such ded

uction is e xpressly mandate d by

the Ohio state legislature; however, the

potential for abuse was judicially curtailed by the sta

te supreme court when permitting a deviation from the child support guidelines in the event such deduction is taken.

As our own state legislature has not seen fit to either expressly exclude or au thori ze
a deductio n for ca

pital expenditures, we believe it within the

sound disc

retion of the trial court to determine when and

if expenditures of

this ty pe are “ reasona ble.” We b eli eve th e factors propoundedby t

he court in Kamm are worthy of consider ation in arriving at such a decision. They
are not to be used to determine whether deviation from the guide lines is p roper, but rather, in our case, whether such a deduction is “reasonabl e.” We al so note tha t under c ertain c ircumsta

nces it may be appropriate, as sugge sted by the court in Kamm , to spread the deduction of the capital asset’s cost “over its useful life via depreciation” rather than a lu mp sum deduction. See Kamm , 616 N.E.2d at 903. On remand, we direct the trial court to determine whether Husband’s out-of-pocket expenses for the office equipment are rea sonable after consideration o f the factor s cited with approval herein and all others determined re levant.Husband next contends that the trial court erred in awarding Wife attorney ’s fees and costs. It is Husband’s position that Wife failed to present evidence of he r i nability to pay

her attorney’sfees. As this Court said in Sherrod v. Wix , 849 S.W.2d 780 (Tenn. App. 1992), per m. app. denied

(Tenn. March 1, 1993):

Tenn. Code Ann. § 36-5-103(c) states that awarding leg al expenses in custody

and suppo

rt proceedings i s discretionary with the trial court. However, the appellate courts have not nec essarily bee n consistent in identif

yin g the co nsidera

tions on wh

ich these discretionary

decisions should be made. Some panels follow the criteri a used to award legal expenses in divorce proceeding s and re fuse to approv e awar

ds in the a

bsence o f proof t

hat the pa

rty requesting the f

ees is unable to pay

his or her lawye

r. Johnson v. Johnso n , A pp. No. 01-A-01-9103-CV-00107, slip op. at 13, 16 T.A.M. 39-10, 1991 WL 169568 (Tenn.Ct.App. Sept. 4, 1991) (citing Fox v. Fox , 657 S.W.2d 747 (Tenn. 1983) ). Others have approved awards even in the a

bsence of proof of inability to pay and have pointed out thatability to pay is not a prerequisite for awarding leg al expenses under Tenn. Code A nn. § 36-5-103(c). Gaddy v. Gaddy , App. No. 03-A-01-9109-CV-306, slip op. at 9, 17 T.A.M. 17-18, 1992 WL 63441 (Tenn.Ct.App. April 1, 1992), perm. app. denied (Tenn. Oct. 26, 1992). Like t he Eastern Section in Gaddy v. Gaddy , we find that ability to pay should not be the controlling consideration with regard to awards for leg al expense s in custody or support proceedings. It is certainl y a factor to be considered, but trial courts may award attorney’sfees without proof that the requesting party is unable to pay themas long a s the awa

rd is just and equitable under the facts of the case. The purpose of

these awards is to protect the children’s, not the custodial parent ’s, le gal rem edies . Accor dingl y, requir ing p aren ts who pr ecipitate custody or support proceedings to underwrite t h e costs if their c laims a

r e ultimate

ly f ound to be

unwarr anted is ap pr op ri at e a s a ma tt er of po li cy.

Sherrod , 849 S.W.2d at 785 (footnote omitted). Wife’s attorney pre sented her affidavit of her charges and expenses totaling $3,027. We find no error in the tria l court’saward o f attorne

y’ s fees. We decline Wife’s r

equest to award h er addit ional atto rney ’s fees for this a

ppeal.

It results that the judgment of the trial court allowing Husband a 21% credit for the expenses incurre d for his d aughte r, Ly dia, is af firmed; t he judg ment a

warding Wife $3,02 7 in attorney’sfees is affirmed; and the judgment in all other re spect s is rev ersed. T his cause is remanded to the tria

l court with instructions to hear evidence regar ding Wife’s costs in the care of the parties’ son, Ch

r istopher, due to Husband’s non-visitation and to consider the relevant factor s st ated h erein in

determin

ing whe ther the entire a mount of Hu sband’s c apital expe nditures isreasona

ble as a dedu ction fro m his gro ss income for purp ose s of calculating child support. The parties may

present additiona

l evidenc e on this iss ue as det ermined necessa ry b y th e trial c ourt. Costs are a ssessed equally a gainst Michael Way

ne Kimble and Nina Alice Kimble, for which
ex ec ut io n m ay i ss ue if

ne ce ss ar y.

________________________________ FAR MER , J.

______________________________ HIG HERS, J. (Conc

urs)

______________________________ LI LL ARD, J. (Conc

urs)