Court Opinion

ID: 9779776
Source: CourtListenerOpinion
Date Created: 2023-08-30 00:44:59.374103+00
Date Added: 2024-06-11T07:33:40.454631
License: Public Domain

JUSTICE McDADE, concurring in part and dissenting in part: I am in general agreement with the majority’s analysis and conclusions regarding each of the issues on review save one. For the reasons that follow, I believe the trial court erred in concluding that the proceeds of the sale of Michael’s AEG stock did not constitute income and further believe that those proceeds should be considered in the recalculations of child support and maintenance on remand. I would reverse the trial court’s order on that issue and, therefore, respectfully dissent from the majority’s contrary decision. Molly argues first that the trial court erred in treating the sale as an exchange of one form of property for another form of property. Instead she contends the funds are income for child support purposes because income includes “a valuable benefit *** that enhance[s] *** wealth and facilitate[s] *** ability to support.” In re Marriage of Rogers, 213 Ill. 2d 129, 137, 820 N.E.2d 386, 390 (2004). Molly concedes that the stock itself was an “intangible” and “non-spendable” “non-producing asset.” However, once Michael sold it, he acquired “something [he] could spend as he saw fit.” Molly asks this court to order him to pay 28% of those funds as child support. Second, Molly asserts that under section 510(8) of the Dissolution Act, the income from the sale of the stock is property that the trial court should have considered in determining Michael’s maintenance obligation. Michael responds Rogers is distinguishable because the sale of his stock was not a “gift” and the proceeds of the sale are not income because “[t]he cash proceeds from the stock purchase *** took the place of the former shares of stock, as another form of property.” Michael notes the property in its former form (shares of stock) was nonmarital property, and he relies on In re Marriage of O’Daniel, 382 Ill. App. 3d 845, 850, 889 N.E.2d 254, 258 (2008), for the proposition that because the “property” already belonged to him as nonmarital property, the change in form of the property from stock to cash does not make the cash “income.” In O’Daniel, the question was whether an IRA distribution constituted income. The court held: “When an individual withdraws money he placed into an IRA, he does not gain anything as the money was already his. Therefore, it is not a gain and not income. The only portion of the IRA that would constitute a gain for the individual would be the interest and/or appreciation earnings from the IRA.” O’Daniel, 382 Ill. App. 3d at 850, 889 N.E.2d at 258. I find Michael’s argument to be unpersuasive. As his nonmarital property, the stock represented an investment. Thus, O Daniel actually supports Molly’s position that Michael’s earnings from the investment constitute income. O’Daniel holds that any appreciation in value of the stock “would constitute a gain.” Michael notes he suffered a capital loss from the transaction. Under O Daniel, the amount of the capital loss goes to the question of whether, as a result of the transaction, his wealth was enhanced, and may reduce the amount of real income generated from the proceeds of the sale. However, a capital loss would not change the nature of the earnings generated by the asset, which in this case constitutes cash proceeds of sale, from income to property. See also In re Marriage of Colangelo, 355 Ill. App. 3d 383, 392, 822 N.E.2d 571, 578 (2005) (“even though the unrealized stock options were allocated to the parties as marital property, the realized stock distribution met the definition of ‘income’ for purposes of determining child support”). Michael also notes that the company required him to cash out his shares as a result of its decision to institute a reverse stock split. While the fact that Michael did not choose to sell his asset but was forced to sell is relevant to the question of his good faith in the transaction, it is irrelevant to the question of whether the transaction generated spendable earnings that enhanced his wealth. Michael contends that “[t]he concept of property is distinct from income; otherwise, all property transactions, which naturally result in another form of property, would be considered income.” However, if cash proceeds are held to be just another form of property, then no sale of a capital asset would ever generate income. As our supreme court has noted: “As the word itself suggests, ‘income’ is simply ‘something that comes in as an increment or addition ***: a gain or recurrent benefit that is usufally] measured in money ***: the value of goods and services received by an individual in a given period of time.’ Webster’s Third New International Dictionary 1143 (1986). It has likewise been defined as ‘[t\he money or other form of payment that one receives, usu[ally] periodically, from *** investments, royalties, gifts and the like.’ Black’s Law Dictionary 778 (8th ed. 2004).” (Emphases added.) Rogers, 213 Ill. 2d at 136-37, 820 N.E.2d at 390. I believe this court should hold that the proceeds of Michael’s stock sale constitute income.