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

Heading: Deduction of depreciation expenses from income.

Text: 1. In calculating child support, the first step is to determine the parents' current monthly net income from the most reliable evidence presented. See In re Marriage of Powell, 474 N.W.2d 531, 534 (Iowa 1991). Net monthly income is defined in the guidelines as gross monthly income less specifically enumerated deductions. Id. at 533. Although the Iowa child support guidelines do not specifically provide for a deduction for depreciation expenses, see In re Marriage of Gaer, 476 N.W.2d 324, 326 (Iowa 1991), we have adopted the view that `depreciation should not categorically either be deducted as an expense or treated as income, but rather that the extent of its inclusion, if any, should depend on the particular circumstances of each case.' Id. at 328 (quoting Stoner v. Stoner, 163 Conn. 345, 307 A.2d 146, 151 (1972)); see also In re Marriage of McKamey, 522 N.W.2d 95, 99 (Iowa App.1994) (concluding that district court properly increased self-employed husband's income by amounts taken from business for personal use, but claimed as business expenses on husband's tax returns); In re Marriage of Starcevic, 522 N.W.2d 855, 856-57 (Iowa App.1994) (husband was not entitled to deduct depreciation expenses from income for purposes of calculating child support where farming was not husband's sole source of income; at best, farm was a hobby, and at worst, a tax shelter). In Gaer, 476 N.W.2d at 329, we noted that for tax purposes, the parties had used an accelerated method of depreciation to calculate depreciation expenses for a semi-truck tractor and trailer. We concluded, however, that the noncustodial parent, a farmer, was entitled to a deduction for depreciation expenses calculated under a straight line method of depreciation rather than under the accelerated method. Using a straight line method of depreciation, we recalculated the father's income and adjusted the amount of child support according to the child support guidelines. 2. Upon our review, we conclude that it was proper for the court of appeals to recalculate depreciation of Randy's personal property farming assets under a straight line method of depreciation in order to do justice between the parties. As we noted in Gaer, id. at 329, we believe that reasonable depreciation on farm machinery and other assets related to the farm business is an expense reasonably necessary to maintain that business, and that such expenses should be considered in calculating Randy's income. We affirm the decision of the court of appeals on this issue.