Court Opinion

ID: 6115837
Source: CourtListenerOpinion
Date Created: 2022-02-03 16:08:06.307756+00
Date Added: 2024-06-11T08:21:56.367686
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                  revision until final publication in the Michigan Appeals Reports.

                           STATE OF MICHIGAN

                            COURT OF APPEALS

KATHIE ANN ADAMS,                                                     UNPUBLISHED
                                                                      January 27, 2022
               Plaintiff-Appellee,

v                                                                     No. 353793
                                                                      Mecosta Circuit Court
EVERETT CASEY YOUKER,                                                 LC No. 14-022604-DP

               Defendant-Appellant.

Before: SAWYER, P.J., and SERVITTO and RICK, JJ.

PER CURIAM.

        Defendant appeals by delayed leave granted1 the trial court’s order in which the trial court
determined defendant’s child support obligation. We remand this matter to the trial court in order
for the trial court to provide further explanation of its calculation of defendant’s income.

       Plaintiff and defendant were never married, but share a son. Defendant owns and operates
his own business, Casey’s Excavation LLC. For tax purposes, Casey’s Excavation uses
accelerated depreciation.

        This case was initiated in 2014, and since that time has covered a number of issues related
to the parties’ child, including child support. In July 2019, the trial court ordered defendant to pay
plaintiff $1,577 a month in child support. Defendant objected to the trial court’s order and argued
that the child support calculation was based on an incorrect amount of income for defendant. A
hearing was held in September 2019, at which time the trial court reserved its ruling on this issue
to allow defendant time to provide evidence of the straight-line depreciation for his company.
After receiving a letter from defendant’s accountant that indicated that the straight-line

1
 Adams v Youker, unpublished order of the Court of Appeals, entered October 26, 2020 (Docket
No. 353793).

                                                 -1-
depreciation for Casey’s Excavation in 2018 was $277,969.20, the trial court determined that
defendant’s child support obligation was $1,297.

        Defendant objected, and again argued that the calculation of his net income was incorrect.
Defendant argued that his actual average monthly cash flow was consistent with a net income of
$3,266.71 a month. The trial court held an evidentiary hearing in January 2020, at which time the
trial court heard testimony from defendant and his accountant. The trial court determined that
defendant’s annual income was $213,713 and that his monthly child support obligation was
$1,296. Defendant now appeals.

        Defendant’s sole claim of error in this appeal is that the trial court erred when it calculated
his 2018 income for the purpose of calculating defendant’s child support obligation. We remand
to allow the trial court to provide further explanation of its order entered January 24, 2020.

        “Generally, child support orders, including orders modifying child support, are reviewed
for an abuse of discretion.” Clarke v Clarke, 297 Mich App 172, 178-179; 823 NW2d 318 (2012).
Whether the trial court properly applied the Michigan Child Support Formula (MCSF) is a question
of law that we review de novo. Id. at 179. A trial court’s decision to deviate from the formula
provided in the MCSF to determine a party’s child support obligation is an act of discretion. 2017
MCSF 1.04(A). Factual findings underlying a trial court’s decisions regarding child support are
reviewed for clear error. Id.

        Pursuant to statute, the trial court should apply the MCSF in order to determine a party’s
child support obligation.2 MCL 552.605(2); 2017 MCSF 1.01(B). The first step in calculating a
child support obligation is to calculate both parents’ individual incomes. 2017 MCSF 2.01. “Net
income” for the purpose of calculating a child support obligation means all income minus the
deductions and adjustments permitted by the MCSF. 2017 MCSF 2.01(A). “The objective of
determining net income is to establish, as accurately as possible, how much money a parent should
have available for support.” 2017 MCSF 2.01(B).

        The MCSF acknowledges that determining income for self-employed individuals can be
difficult. 2017 MCSF 2.01(E)(1). Regarding the calculation of a self-employed parent’s income,
and how to treat depreciation, the MCSF explained as follows:

              (e) For a variety of historical and policy reasons, the government allows
       considerable deductions for business-related expenses before taxes are calculated.
       Those same considerations are not always relevant to monies a parent should have
       available for child support. Therefore, some deductions should be added back into
       a parent’s income for purposes of determining child support, including:

                                               * * *

2
 Because this hearing took place in 2020, the trial court used the 2017 version of the MCSF. A
new version of the MCSF went into effect on January 1, 2021.

                                                 -2-
               (iii) Depreciation figured at a straight-line (not accelerated) rate on a
       parent’s (not a corporation’s or partnership’s) tangible personal property, other than
       for personal vehicles or home offices, should be deducted from income. Any parent
       who uses accelerated depreciation for tangible personal property may deduct the
       value of the straight-line depreciation amount for property other than personal
       vehicles or home offices, if the parent provides proof of what the straight-line
       amounts would have been. [2017 MCSF 2.01(E)(4)(e)(iii).]

        The trial court is required to “comply with the plain language of the MCSF, and may not
read language into the MCSF that is not present.” Clarke, 297 Mich App at 179.

        The trial court may order child support in an amount that deviates from the directives of
the MCSF if the trial court determines from the facts of the case that application of the MCSF
would be unjust or inappropriate. MCL 552.605(2); 2017 MCSF 1.04(A). There is a presumption
that the child support obligation determined by the application of the MCSF is appropriate. 2017
MCSF 1.01(B).

        If the trial court determines that deviation from the MCSF is required, the trial court must
set forth the following either in writing or on the record:

              (a) The child support amount determined by application of the child support
       formula.

               (b) How the child support order deviates from the child support formula.

               (c) The value of property or other support awarded instead of the payment
       of child support, if applicable.

               (d) The reasons why application of the child support formula would be
       unjust or inappropriate in the case. [MCL 552.605(2)(a)-(d); 2017 MCSF 1.04(B).]

       In the instant case, the trial court used the following formula and provided the following
explanation:

               First, the accelerated depreciation ($205,271) must be added to the 2018
       profit ($80,140). The accelerated depreciation must be added back to the profit for
       support calculation purposes ($285,411). Then the accelerated depreciation
       ($205,271) is subtracted from the straight-line ($277,969) giving a value of
       $72,689. That difference is subtracted from $285,411 from above.

                                 $205,271 + $80,140 = $285,411

                                 $277,969 - $205,271 = $72,698

                                 $285,411 - $72,698 = $213,713

                                                -3-
              As Defendant’s excavation business is a sole proprietorship, and because
       depreciation is a tax benefit given for tax calculation purposes, for child support
       purposes it is necessary to add back in the depreciation as shown above.

               For child support calculation purposes, Defendant is assessed at $213,713.

        This Court reviews each step of the trial court’s calculations. Step one of the trial court’s
calculation is supported by the MCSF. See 2017 MCSF 2.01(E)(4)(e)(iii). Under the MCSF, a
parent cannot deduct accelerated depreciation from their income for child support purposes. Id. It
was proper for the trial court to add defendant’s accelerated depreciation back into his 2018
income. See id. However, the second step of the trial court’s calculation does not appear to be
supported by the MCSF. The MCSF allows for the deduction of straight-line depreciation from a
parent’s income, but there is nothing in the MCSF that directs the trial court to deduct from a
party’s income the difference between straight-line depreciation and accelerated depreciation. See
id. But that is what the trial court did when it first found the difference between straight-line and
accelerated depreciation ($277,969 - $205,271 = $72,698) and then subtracted that difference from
$285,411 to arrive at $213,713. The trial court did not explain why it used this formula.

         The trial court does have the discretion to deviate from the formula prescribed in the MCSF,
but the trial court is required to make specific findings when making such a deviation. See 2017
MCSF 1.04(A), (B)(1); MCL 552.605(2). Such findings were not made by the trial court in this
case. To the extent that the trial court was purposefully deviating from the MCSF, it was error to
do so without making the required findings. Moreover, the trial court’s written order indicates that
the trial court did not intend to deviate from the MCSF in its calculation and that the trial court
was attempting to calculate defendant’s income pursuant to the direction of 2017 MCSF
2.01(E)(4)(e)(iii). We, therefore, reject plaintiff’s argument that the trial court’s calculation was
the product of a proper use of discretion to deviate from the MCSF formula.

       Regardless of whether the trial court intended to deviate from the MCSF in its calculation
of defendant’s income, it is necessary to remand this matter to allow the trial court to explain its
determination of defendant’s income. If the trial court intended to calculate defendant’s income
pursuant to the MCSF, then the trial court should explain why it only subtracted a portion of
defendant’s straight-line depreciation from defendant’s income.               See 2017 MCSF
2.01(E)(4)(e)(iii). If the trial court intended to deviate from the MCSF, then the trial court must
make the requisite findings pursuant to MCL 552.605(2)(a)-(d).

        Defendant also argues on appeal, as he did previously to the trial court, that his actual net
income for 2018 was $39,200.52. On appeal, defendant asks this Court to vacate the trial court’s
order and to direct the trial court “to calculate support based upon the actual available monthly
income of Defendant/Appellant.” This opinion should not be interpreted as an instruction to the
trial court to find that defendant’s 2018 net income was $39,200.52 as suggested by defendant.

        Additionally, defendant’s argument that the trial court disregarded his evidence regarding
his income is not persuasive. Defendant presumes that the trial court disregarded this evidence
because the evidence was not “reflected” in the trial court’s order. This is incorrect. Defendant’s
evidence demonstrated that the straight-line appreciation for Casey’s Excavation was $277,969.

                                                -4-
That is the figure used by the trial court in its calculations. Defendant’s argument that the trial
court disregarded his proffered evidence is factually inaccurate.

       Finally, we note that the trial court made a mathematical error in its calculation. In the trial
court’s written order entered January 24, 2020, the calculation made by the trial court was
$285,411 - $72,698. In the trial court’s order, the final result of that calculation was $213,713.
However, that calculation should have resulted in a total of $212,713.

         This matter is remanded to allow the trial court to provide further explanation of the
formula that it used to determine defendant’s net income and to amend the typographical error in
the trial court’s calculation. We retain jurisdiction.

                                                               /s/ David H. Sawyer
                                                               /s/ Deborah A. Servitto
                                                               /s/ Michelle M. Rick

                                                 -5-
                              Court of Appeals, State of Michigan

                                                ORDER
                                                                               David H. Sawyer
 Kathie Ann Adams v Everett Casey Youker                                         Presiding Judge

 Docket No.     353793                                                         Deborah A. Servitto

 LC No.         14-022604-DP                                                   Michelle M. Rick
                                                                                 Judges

               Pursuant to the opinion issued concurrently with this order, this case is REMANDED for
further proceedings consistent with the opinion of this Court. We retain jurisdiction.

                Proceedings on remand in this matter shall commence within 56 days of the Clerk’s
certification of this order, and they shall be given priority on remand until they are concluded. As stated
in the accompanying opinion, the trial court shall provide further explanation of the formula that it used
to determine defendant’s net income and shall amend the typographical error in the trial court’s
calculation. The proceedings on remand are limited to these issues.

               The parties shall promptly file with this Court a copy of all papers filed on remand. Within
seven days after entry, appellant shall file with this Court copies of all orders entered on remand.

               The transcript of all proceedings on remand shall be prepared and filed within 21 days after
completion of the proceedings.

                                                           _______________________________
                                                            Presiding Judge

                                 January 27, 2022