Opinion ID: 2316731
Heading Depth: 1
Heading Rank: 5

Heading: Melson Formula Determination of Net Income

Text: The first step of the Melson Formula requires the Family Court to determine each support obligor's net income. Kenton v. Kenton, 571 A.2d at 782. For the purpose of computing child support according to the Melson Formula, net income is determined as follows: 1. DETERMINE EACH SUPPORT OBLIGOR'S NET INCOME. Add: a. Income from employment, as well as all other sources (such as pensions, dividends, interest, etc.); and b. Business expense accounts to the extent that they provide the support obligor with something he would otherwise have to provide (such as automobile, lunches, etc.). Subtract: a. Income taxes figured on the basis of the maximum allowable exemptions; b. Other deductions required by law, including attachments and child support payments made pursuant to Court order or written separation agreement; c. Deductions required by the employer, or the union, except credit union payments; d. Legitimate business expenses; e. Benefits such as hospitalization insurance which are maintained for the obligor's dependents. Dalton v. Clanton, 559 A.2d at 1213 (emphasis added). This Court has previously held that the issue of what constitutes a legitimate business expense, as that term is used in the Melson Formula, should usually be determined by generally accepted accounting principles. R.T. v. R.T., 494 A.2d at 155. However, the conclusion that generally accepted accounting principles recognize a particular item as a legitimate business expense, is not dispositive of whether the Family Court should always ultimately deduct it from the income component in Step 1 of the Melson Formula's equation. Id. The Melson Formula operates as a rebuttable presumption in calculating child support in Delaware. Dalton v. Clanton, 559 A.2d at 1211. As a rebuttable presumption, the Delaware procedure provides for a uniform approach to child support decisions, unless the Family Court is persuaded that an application of the Melson Formula would be inequitable. Id. (citation omitted). The mathematical result which is the product of the Melson Formula can never be the basis of a child support order under the Delaware procedure, until that result passes the litmus test of the rebuttable presumption. When the calculation according to the Melson Formula is mixed together with the specific facts in a case, the result must be equitable. If the result is inequitable, the presumption is rebutted, and the support calculation pursuant to the Melson Formula must yield to the extent that is necessary to balance the equities in the case. Id. at 1212.