Opinion ID: 2001225
Heading Depth: 2
Heading Rank: 3

Heading: Calculation of income using income averaging method.

Text: 1. After the court of appeals recalculated Randy's income by applying a straight line method of depreciation, the court then determined Randy's income by using a four-year average of Randy's income for the years 1993, 1994, 1995 and 1996. Verna contends it was error for the court of appeals to average Randy's income over a four-year period. 2. We have said that when a parent's income is subject to substantial fluctuations, it may be necessary for the court to average the parent's income over a reasonable period when determining the current monthly income. Powell, 474 N.W.2d at 534; see also In re Marriage of Robbins, 510 N.W.2d 844, 846 (Iowa 1994) (stating it is unrealistic and unfair to fix child support obligations based solely on the most recent periodic income amounts). Our court of appeals has used the average method of calculating income to determine the child support obligations of a farmer. See In re Marriage of Cossel, 487 N.W.2d 679, 683 (Iowa App.1992) (farmer's income calculated by averaging income over three-year period); In re Marriage of Hoag, 380 N.W.2d 8, 10 (Iowa App.1985) (farmer's income calculated by averaging income over five-year period). Thus, Iowa case law clearly allows a court to compute a parent's annual income by using the method employed by the court of appeals. Based on the evidence presented, we believe that the court of appeals properly calculated Randy's net annual income, after applying a straight line method of depreciation, by averaging his income over a four-year period. The amount of child support set by the court of appeals of $201 per month is in accordance with that required by the guidelines. D. Unusual financial circumstances and substantial injustice. 1. Verna further contends that the court of appeals erred by not considering Randy's unusual financial circumstances and argues substantial injustice was imposed upon Verna and their daughter in calculating Randy's child support obligation. There is a rebuttable presumption that the amount of child support which would result from the application of the guidelines is the correct amount of child support to be awarded. In re Marriage of Bergfeld, 465 N.W.2d 865, 869 (Iowa 1991) (citations omitted). We explained in Bergfeld: The court shall not vary from the amount of child support which would result from the application of the guidelines without a written finding that the guidelines would be unjust or inappropriate as determined under the following criteria: (1) Substantial injustice would result to the payor, payee, or child; (2) Adjustments are necessary to provide for the needs of the child and to do justice between the parties, payor, or payee under the special circumstances of the case; and (3) Circumstances contemplated in Iowa Code section 234.39 [foster care expense]. Id. (citations omitted); see also Iowa Code § 598.21(4)(a). Although each court used a different amount for annual net income, both the district court and court of appeals applied the guidelines to determine Randy's monthly child support obligation. In doing so, neither court varied from the amount established by the guidelines. Additionally, Randy did not contend on appeal that the amount established by the guidelines was unreasonable or unfair. Rather, his challenge to the district court's calculation of child support was directed at how the court calculated his annual and monthly net income, taking into account depreciation expenses. Verna argued on cross-appeal that the court had authority to depart from the amount of child support mandated by the child support guidelines, and thus to increase Randy's child support obligation, based on Randy's unusual financial circumstances and that failure to do so would result in substantial injustice to the parties' child. Verna explains the unique circumstances as being that Randy and his brother Tom had taken withdrawals of approximately $5000 per month from the farm partnership during the dissolution proceedings and that the majority of Randy's living expenses are paid by the farm business. As a result, Verna asserts that the evidence shows that Randy's disposable and discretionary income is more than that reflected on the tax returns. The court of appeals denied Verna's cross-appeal, finding no evidence that Randy's net income is as high as she claims. Verna reasserts this argument in her application for further review. Based upon our de novo review of the record, we find no evidence justifying an upward departure from the guidelines. Specifically, there was no evidence that the withdrawals were other than of capital from the partnership. Verna has not overcome the presumption that application of the child support guidelines figure would be the correct amount to be awarded. We conclude that the court of appeals properly determined Randy's child support obligation.