Opinion ID: 2960710
Heading Depth: 3
Heading Rank: 2

Heading: An amount equal to six-tenths of statewide average earnings for persons with similar work history and occupational qualifications; or

Text: c. An amount equal to ninety percent of the obligor’s greatest average gross monthly earnings, calculated without using self-employment losses, in any twelve consecutive months beginning on or after twenty-four months before commencement of the proceeding before the court. When tax returns are not available or are unreliable, the guidelines require the district court to use profit and loss statements that more accurately reflect the obligor’s current self-employment income to properly calculate income. See Entzie v. Entzie , 2010 ND 194, ¶ 6, 789 N.W.2d 550. [¶19] Here, in calculating child support, the district court found Wesley Klein’s gross annual income to be $82,937 based only on his 2013 W-2 statement from Basin Electric, and the court imputed Mary Ann Klein a gross annual income of $34,470. There was evidence at trial showing that Wesley Klein had annual farm income losses every year between 2008 and 2012, and the court estimated he received $24,000 in 2013 for serving on the Farm Bureau Board, the Nodak Mutual Board, and the Mercer County Zoning Board, but he could only be on the higher paying boards for approximately a three-year term. The court essentially offset all of Wesley Klein’s income from the various boards, which the court considered temporary in nature, with the continuing farm losses. [¶20] Mary Ann Klein disputes the district court’s determination of Wesley Klein’s annual wage income. She contends his gross annual income should be increased from $82,937 to $128,830. Mary Ann Klein argues that Wesley Klein’s 2014 partial year wage statements should be used in place of his 2013 W-2 statement because his 2014 pay stubs “project” his annual wages from his employer to be $100,870. She asserts his wage income was expected to be significantly greater in 2014 than in 2013 and materially affects his child support obligation. [¶21] Mary Ann Klein also argues the district court erred in offsetting Wesley Klein’s farm losses by his annual board income. She seems to concede on appeal the board income and farm income are both self-employment income. However, she asserts such an offset is not permissible under N.D. Admin. Code § 75-02-04.1-05(7), because if three or more years of self-employment income are averaged and more than 40 percent of each of those years were losses, there can be no offset. In this case, she asserts five years were averaged from 2008 to 2012, with all of those five years incurring losses. She therefore argues there should be no offset and income from all the boards must be added to his wages. [¶22] Wesley Klein responds, however, that his income may not by extrapolated from a partial year, Korynta v. Korynta , 2006 ND 17, ¶ 16, 708 N.W.2d 895, and extrapolating his income from mid-year 2014 pay stubs is contrary to law and common sense. He asserts the 2013 W-2 is the best evidence of his wage income. Wesley Klein also contends his self-employment income was properly considered by the court under N.D. Admin. Code § 75-02-04.1-05, and the five-year average was a negative figure primarily based on the farm income losses. He argues that while hobby farm losses cannot be used to reduce “wage income” under N.D. Admin. Code § 75-02-04.1-05(7), “negative” self-employment income may be used to reduce other self-employment income under this Court’s decision in Shae , 2014 ND 149, ¶ 16, 849 N.W.2d 173. [¶23] As we explained in Shae , “N.D. Admin. Code § 75-02-04.1-05(6) and (7) restrict when loss may be applied to reduce income unrelated to self-employment .” Shae , 2014 ND 149, ¶ 16, 849 N.W.2d 173 (emphasis added). Here, however, in calculating Wesley Klein’s child support obligation, the district court relied only on his 2013 W-2 wage statement. For purposes of child support, the court appears to have simply disregarded as temporary or offset the “estimated” $24,000 of income from the various boards against his farm losses. Although potentially nominal in amount, we note that Wesley Klein has in previous years treated the Mercer County income as wages, which could not be offset here under N.D. Admin. Code § 75-02- 04.1-05(7). [¶24] Further, although he asserts his continued farming is necessary to remain on the higher paying boards, the district court has not made findings or any analysis, and the record is simply unclear, whether Wesley Klein’s board income is self-employment income that may be properly offset by the farm losses under the guidelines. While we agree that Wesley Klein’s income cannot be extrapolated from partial-year pay stubs for 2014, because the district court relied on his wage income from 2013, we conclude that the court erred in assuming that his farm income would either continue to be negative or “be a wash” for 2013. Further, it is also unclear from this record whether the estimated board income for 2013 was even appropriately considered self-employment income under the guidelines to be properly offset by the farm losses. [¶25] We therefore conclude the district court erred as a matter of law in its calculation of Wesley Klein’s income for child support purposes and reverse and remand for the court to make additional findings and calculations. On remand, the district court may permit additional discovery and evidence to be submitted regarding Wesley Klein’s 2013 income.