Opinion ID: 886038
Heading Depth: 2
Heading Rank: 4

Heading: House construction.

Text: ¶ 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 profits from houses constructed 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 average of $37,594.00 was added to the income from Keith's other operations to arrive at his total income. The profit from each house was determined by having Patricia review 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 the 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. Mr. Bourdeau testified that the $61,417.00 is representative of what Keith is capable of earning, even if it has not actually been sold. ¶ 29 Both parties agree that the house has not sold and at this time is not on the market. Furthermore, there is no evidence to suggest that the house 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 court impermissibly imputed income. Rule 37.62.106, ARM, provides: (1) Income for child support includes actual income, imputed income, or any combination thereof which fairly reflects a parent's resources available for child support. .... (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 parent: (a) is unemployed; (b) is underemployed; (c) fails to produce sufficient 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 exist. The record established that Keith is working full-time for State Construction and has purchased property for spec home construction in the future. Imputed income is not appropriate for a parent who is working full-time and to the full extent of his earning 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 arrive at a five-year average of income from construction. The facts indicate that Keith was 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 economic 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. ¶ 32 Patricia argues the Guidelines allow for the projection of income based upon what is likely to happen in the future. While she is correct that 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 application of the guidelines based on temporary or seasonal conditions. Income and expense may be annualized using one of the two following methods: (a) seasonal or fluctuating income may be averaged over a period sufficient to accurately reflect the parent's earning ability; or (b) current income or expenses may be projected when a recent increase or decrease in income is expected 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 Keith'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 brief. According to the Guidelines, income projection is appropriate where a change in income is expected in the 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 District Court erred when it attributed income to Keith for the future sale of the home at 524 East Granite.