Opinion ID: 2543667
Heading Depth: 1
Heading Rank: 10

Heading: Factors for Consideration in Determining Income

Text: Whether to characterize corporate earnings, profit, distributions, or salary as income is highly fact specific, Glass, 716 N.E.2d at 416 (N.C. App.), as is whether to deduct ordinary and necessary expenses from the corporate distributions when calculating income, In re Marriage of Upson, 991 P.2d 341, 343-44 (Colo. App. 1999). There are many factors to be considered when determining what amount of a Subchapter S corporation's income should be included as income for purposes of calculating support. Some of those factors include past earnings history of the corporation, ownership share, and the shareholder's ability to control distribution or retention of the net profits of the business. In those cases where income can be manipulated because of the ability to control distributions, heightened scrutiny should be exercised. See McDaniel v. McDaniel, 653 So.2d 1076, 1077 (Fla. App. 1995). Under the facts of this case, there was no indication that respondent had manipulated income for the purposes of avoiding support obligations. Respondent did not have the ability to control the distribution of corporate assets. Thus, there was substantial competent evidence to support the trial court's decision not to consider retained earnings and distributions in calculating respondent's support obligation. The decision of the district court is affirmed. DAVIS, J., not participating. BRAZIL, S.J., assigned. [1]