Court Opinion

ID: 9723224
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:07:39.647507+00
Date Added: 2024-06-11T13:16:10.056155
License: Public Domain

PRESIDING JUSTICE COOK, concurring in part and dissenting in part: I agree with much of what is said in the majority opinion, but disagree that a deduction should be allowed in any event for the purchase or lease of a vehicle. Defendant is self-employed as a realtor through Coldwell Banker Hallmark Realty, Inc. (Coldwell Banker). He also has interests in numerous properties which, although they produce some income, result in a net loss for tax purposes. Defendant’s 1993 Federal income tax return, schedule C, shows "gross receipts or sales” in the amount of $31,703. That figure was reported to the Internal Revenue Service by Coldwell Banker on a form 1099-Misc as nonemployee compensation. In fact, the total commissions from defendant’s 1993 sales were $48,929.40. The $31,703 is a net figure, after Coldwell Banker deducted its share. Coldwell Banker supplies defendant with an office and pays expenses such as rent, utilities, and secretarial help from its share. Although defendant is self-employed, the $31,703 paid to him by Coldwell Banker is very much like the wages and salary paid to an employee and reported on form W-2. On his schedule C, defendant listed expenses for advertising, car and truck expenses ($10,500), depreciation, legal and professional services, office expense, supplies, meals and entertainment ($1,075), and other expenses. Defendant’s schedule C lists total expenses of $15,249. To determine his net income for child support purposes, defendant asked that the $31,703 be reduced by $10,500 (his car and truck expenses), and by $1,075 (his meals and entertainment), plus taxes paid of $3,673. The trial court agreed those deductions could be made and accordingly calculated the child support per guidelines to be $262.20, but awarded $300 per month. In setting child support by use of the guidelines, the key determination is the calculation of the payor’s net income. The legislature has wisely chosen not to use net income as shown on a payor’s tax returns. In many cases, one example being where a taxpayer has a loss carryover from prior years, net income as shown on tax returns does not adequately measure an individual’s current ability to pay child support. Section 505(a)(3) expresses a legislative intent to limit the deductions which may be made in calculating net income. Section 505(a)(3) of the Act is nevertheless a troublesome provision. Section 505(a)(3) purports to compute net income by starting with the broadest possible figure, "the total of all income from all sources” (750 ILCS 5/505(a)(3) (West 1992)), and then subtracting only the deductions which it lists. It seems clear there are obvious deductions which are not listed. For example, how is net income calculated for a merchant engaged in the sale of goods? Under section 505(a)(3) the court must begin with the total of the merchant’s receipts from sales. Can there be a deduction for cost of goods sold? The only listed deduction which might apply is section 505(a)(3)(h), but that seems overly restrictive. There should be a deduction for cost of goods sold even if the merchant pays cash for them, even if there is no "repayment of debts,” and even if the expense is a continuing one. I conclude the legislature intended to allow such obvious deductions even without specific language in section 505(a)(3). In the present case, for example, defendant was not required to include the total commissions he earned and was entitled to a credit for the share taken by Coldwell Banker, including amounts it paid for his office expenses. I agree with the majority that the deductions listed in section 505(a)(3) were intended to be limited. Defendant is not entitled to deduct his entertainment expenses or his gasoline expenses, whether or not there is a "repayment of debt.” An individual who charges such expenses (and thereby incurs a debt) is not entitled to a deduction where one who pays cash is not. Section 505(a)(3)(h) is limited to extraordinary, large ticket, nonrecurring expenses. That is borne out by the nature of the debts considered by previous cases interpreting section 505(a)(3)(h) — debt incurred in purchasing a plane in Hart, debt incurred in the purchase of a hunting lodge in Hell, and debt incurred in purchasing real estate in Cornale (there disallowed). I disagree with the majority that the cost of leasing or purchasing a vehicle could ever be deducted under section 505(a)(3)(h), whether or not it is "reasonable and necessary.” Almost everyone has vehicle expenses; such expenses are not of the extraordinary nature required for deduction under section 505(a)(3)(h). For most people there will never come a time when the cost of acquiring vehicles is at an end, and child support payments could automatically return to their full level. (750 ILCS 5/505(a)(3)(h) (West 1994) ("self-executing modification upon termination of such payment period”).) In most cases, an employee who receives a paycheck should not be entitled to any deduction under section 505(a)(3)(h). In this case defendant, although said to be self-employed, is very much like the rest of us who receive a paycheck. I disagree with the majority’s apparent encouragement of courts to depart from the guidelines in order to consider what a fair amount of child support would be after deduction of expenses which cannot be deducted from net income under section 505(a)(3). The guidelines are valuable because they provide a definite figure in most cases, among other things saving the time of the parties and the courts. The guidelines will lose, that value if courts routinely go beyond them, and this is not a case where that should be required. I agree this decision should be reversed and remanded, but I would not direct the trial court to consider whether lease payments on the 1993 Mercedes are reasonable and necessary deductions for the production of income. Instead, I would direct the trial court not to allow any deductions for car expenses and to award child support at the guidelines amount.