Court Opinion

ID: 4636140
Source: CourtListenerOpinion
Date Created: 2020-11-24 22:32:44.209446+00
Date Added: 2024-06-11T07:58:29.686442
License: Public Domain

Digitally signed by
                                                                               Reporter of
                                                                               Decisions
                                                                               Reason: I attest to
                             Illinois Official Reports                         the accuracy and
                                                                               integrity of this
                                                                               document
                                     Appellate Court                           Date: 2020.10.03
                                                                               11:48:38 -05'00'

                  In re Marriage of Hochstatter, 2020 IL App (3d) 190132

Appellate Court          In re MARRIAGE OF ANDREA D. HOCHSTATTER, Petitioner-
Caption                  Appellee, and JEFFREY R. HOCHSTATTER, Respondent-
                         Appellant.

District & No.           Third District
                         No. 3-19-0132

Rehearing denied         May 12, 2020
Opinion filed            May 12, 2020

Decision Under           Appeal from the Circuit Court of Bureau County, No. 15-D-51; the
Review                   Hon. Cornelius J. Hollerich, Judge, presiding.

Judgment                 Affirmed.

Counsel on               Roger C. Bolin, Boyle & Bolin, of Hennepin, for appellant.
Appeal
                         James R. Angel, of Princeton, for appellee.

Panel                    JUSTICE McDADE delivered the judgment of the court, with opinion.
                         Justices Holdridge and Wright concurred in the judgment and opinion.
                                              OPINION

¶1       The petitioner, Andrea D. Hochstatter, filed for a dissolution of her marriage to the
     respondent, Jeffrey R. Hochstatter. She also filed a motion seeking an award of temporary
     maintenance and child support. The parties agreed on a temporary amount, and eventually the
     circuit court ruled that Jeffrey owed Andrea an amount for retroactive unallocated maintenance
     and child support. On appeal, Jeffrey argues that the circuit court erred when it (1) awarded
     Andrea retroactive unallocated maintenance and support and (2) ruled that he was not entitled
     to a deduction from his income for depreciation. We issued an order on February 7, 2020,
     affirming the circuit court’s decision. Jeffrey petitioned for rehearing. With modifications to
     what are now paragraphs 24-26 for the purpose of clarification, we adhere to our prior
     disposition affirming the circuit court’s judgment, this time, as an opinion.

¶2                                                FACTS
¶3        Andrea and Jeffrey married in August 1999, and they separated in the fall of 2011. They
     had one child together, a daughter, who was born in December 2000. Andrea filed for divorce
     on July 22, 2015, and sought, inter alia, reasonable temporary and permanent child support
     and maintenance. Andrea also filed a motion on the same day that sought temporary relief,
     including custody of the parties’ child, child support, and maintenance.
¶4        The parties entered into an agreed order on November 4, 2015, in which Jeffrey agreed to
     pay, prospectively and until further order, the mortgage on Andrea’s residence, her car
     insurance, and $250 per month for their “child’s personal expenses.”
¶5        The parties’ final pretrial stipulation listed Andrea’s entitlement to maintenance and child
     support among other contested issues.
¶6        The circuit court held a hearing on the petition over three days in August 2017. After the
     hearing, the court granted the parties time to file position papers. Andrea’s position paper, filed
     March 28, 2018, included a specific request that maintenance and child support be awarded
     retroactive to July 22, 2015, the date on which she filed the petition for dissolution.
¶7        On August 31, 2018, the circuit court issued a written 43-page “Phase 2 Decision” in which
     it addressed the outstanding issues. In relevant part, the court’s decision included a calculation
     of the parties’ gross and net incomes for purposes of determining Jeffrey’s child support
     obligation. In arriving at those figures, the court considered that the legislature had amended
     the applicable provision of the Illinois Marriage and Dissolution of Marriage Act (Act) (750
     ILCS 5/505 (West 2018)), which now included specific instructions for calculating business
     income. Jeffrey had sought a deduction for depreciation in the amount of $28,194, which was
     the amount he listed on Schedule F (farm income) of his 2014 tax return. The court refused to
     grant the deduction, also noting in its decision that, while Jeffrey’s 2016 tax return contained
     more recent farm income data, the difference between 2014 and 2016 was de minimis.
¶8        The court also determined in its decision that retroactive unallocated maintenance and child
     support was appropriate in the amount of $34,150. The circuit court issued a judgment of
     dissolution on September 25, 2018, which incorporated its “Phase 2 Decision.”
¶9        Jeffrey filed a “Post-Trial Motion for Modification of Judgment” on October 24, 2018. In
     part, the motion alleged that the circuit court erred by not granting him a full depreciation

                                                  -2-
       deduction from Schedule F of his 2016 tax return, which was $35,193. He claimed that none
       of that amount was accelerated depreciation. The motion also alleged that the court incorrectly
       calculated the amount Jeffrey had paid in temporary maintenance and child support.
¶ 10       In its ruling on Jeffrey’s motion, the circuit court ruled that, because the legislature
       explicitly mentioned only accelerated depreciation, it did not intend to change existing law on
       nonaccelerated depreciation. Thus, the court rejected Jeffrey’s claim for any depreciation
       deduction. The court did grant Jeffrey’s motion regarding the calculation of his past payments
       of temporary maintenance and child support. After recalculating, the court reduced his
       maintenance and child support obligation from $34,150 to $28,626.36.
¶ 11       Jeffrey appealed.

¶ 12                                            ANALYSIS
¶ 13       Jeffrey’s first argument on appeal is that the circuit court erred when it awarded
       maintenance and child support from the date of Andrea’s petition for dissolution and in an
       amount beyond what the parties agreed to in the temporary order.
¶ 14       Because Jeffrey’s argument implicates only the circuit court’s statutory authority to grant
       maintenance and/or child support from the date of the petition for dissolution, we review this
       legal question de novo. See, e.g., Walton v. Illinois State Police, 2015 IL App (4th) 141055,
       ¶ 11.
¶ 15       There is no question that the circuit court has the authority to award maintenance and/or
       child support in a dissolution proceeding. 750 ILCS 5/504 (West 2014) (authorizing
       maintenance awards); id. § 505 (authorizing child support awards). Further, section 501 of the
       Act provides that a party to a dissolution proceeding can request and receive temporary
       maintenance and/or child support. Id. § 501(a).
¶ 16       One of the principal purposes of granting temporary maintenance and/or child support is
       to attempt to balance the equities between the parties as fairly as possible while the dissolution
       case is pending. See Kenly v. Kenly, 47 Ill. App. 3d 694, 698 (1977); see also In re Marriage
       of Schroeder, 215 Ill. App. 3d 156, 165 (1991) (holding that “[t]he historical and practice notes
       for section 501(d) indicate the purpose of the section is to encourage amicable temporary
       settlements without establishing precedent for later hearings as to need or ability to pay
       support”). Significantly, an order for temporary maintenance and/or child support “does not
       prejudice the rights of the parties or the child which are to be adjudicated at subsequent
       hearings in the proceeding.” 750 ILCS 5/501(d)(1) (West 2014); see also Schroeder, 215 Ill.
       App. 3d at 165 (holding that “[t]emporary orders are not binding on the trial court and are
       terminated and superseded by the provisions of the final decree [citations], and are effective
       until resolution of the prayers for dissolution [citation]”).
¶ 17       In this case, Jeffrey claims that, because the parties agreed on the temporary amount he
       would pay in maintenance and child support, the circuit court no longer had the authority to
       award retroactive maintenance and child support. He contends that doing so would constitute
       a modification of the parties’ agreement that Andrea never requested. However, this is not a
       case about modification, as modification under the Act applies to final orders (see 750 ILCS

                                                   -3-
       5/510 (West 2014)). 1 Rather this case involves a section 501 order for temporary maintenance
       and child support, which by nature is merely a stopgap that lasts only until the court finally
       resolves the pending questions of maintenance and child support. See id. § 501(d)(1);
       Schroeder, 215 Ill. App. 3d at 165. It is irrelevant to that determination whether the parties
       agreed to the amounts in the order for temporary maintenance and child support, despite what
       Jeffrey contends. See Schroeder, 215 Ill. App. 3d at 165.
¶ 18        For the foregoing reasons, we reject Jeffrey’s argument and hold that the circuit court had
       the statutory authority to award Andrea maintenance and child support from the date of her
       request in the petition for dissolution, with appropriate credit given for the temporary payments
       Jeffrey had made.
¶ 19        Jeffrey’s second argument on appeal is that the circuit court erred when it calculated his
       income for child support purposes without granting him a deduction for “non-accelerated
       depreciation generated as part of [his] farming operation.” He claims that the 2017 amendment
       of section 505 of the Act changed prevailing case law that did not allow depreciation
       deductions from gross income for purposes of calculating child support obligations unless they
       fell into the category of debt repayment.
¶ 20        Initially, we note that, in the circuit court, Jeffrey argued that he was entitled to a deduction
       for depreciation in the amount of $35,193, which was based on his 2016 tax return, and that
       the entire amount constituted nonaccelerated depreciation. On appeal, he has changed his
       argument and now cites his 2014 tax return, which the circuit court used when calculating his
       income, and claims that, of the $28,194 figure from Schedule F, $19,706 was accelerated
       depreciation and $8488 was nonaccelerated depreciation. Thus, he now argues that he was
       entitled to a deduction for nonaccelerated depreciation of $8488.
¶ 21        While Jeffrey did not make this specific argument in the circuit court, the amount of the
       deduction is a secondary consideration. Both arguments present the underlying question of
       whether the circuit court correctly applied section 505 of the Act regarding depreciation
       deductions. This issue presents a question of statutory interpretation; accordingly, our review
       is de novo. In re Marriage of Brill, 2017 IL App (2d) 160604, ¶ 40.
¶ 22        Prior to July 1, 2017, section 505(a)(3)(h) of the Act permitted, in relevant part, deductions
       for “[e]xpenditures for repayment of debts that represent reasonable and necessary expenses
       for the production of income.” 750 ILCS 5/505(a)(3)(h) (West 2016). Thus, for an individual
       to successfully claim a deduction for depreciation, he or she had to establish that it was a
       reasonable and necessary expense for the production of income and that “ ‘it [fell] into the
       category of debt repayment as evidenced by a specific repayment schedule.’ ” In re Marriage
       of Vance, 2016 IL App (3d) 150717, ¶ 42 (quoting In re Marriage of Nelson, 297 Ill. App. 3d
651, 655 (1998)).
¶ 23        Effective July 1, 2017, section 505 of the Act was substantially rewritten, including the
       provisions applicable to calculating gross and net incomes. See Pub. Act 99-764 (eff. July 1,
       2017) (amending 750 ILCS 5/505). In part, the legislature added a section for the calculation
       of business income. See 750 ILCS 5/505(a)(3.1) (West 2018). In relevant part, section
       505(a)(3.1)(A) provided:

           1
             In fact, the only two cases Jeffrey cites in support of his argument on this issue involve
       modification under section 510. Nerini v. Nerini, 140 Ill. App. 3d 848, 854 (1986); In re Marriage of
       Pettifer, 304 Ill. App. 3d 326, 327 (1999).

                                                     -4-
                     “(3.1) Business income. For purposes of calculating child support, net business
                 income from the operation of a business means gross receipts minus ordinary and
                 necessary expenses required to carry on the trade or business. *** The court shall apply
                 the following:
                          (A) The accelerated component of depreciation and any business expenses
                     determined either judicially or administratively to be inappropriate or excessive
                     shall be excluded from the total or ordinary and necessary business expenses to be
                     deducted in the determination of net business income from gross business income.”
Id. § 505(a)(3.1)(A).
¶ 24        It is clear that section 505(a)(3.1)(A) now explicitly excludes accelerated depreciation from
       the calculation of net business income and does not explicitly mention nonaccelerated
       depreciation. Id. The implication from the continued omission of nonaccelerated depreciation
       from the plain language of the statute is that it could still be deducted, but only if the court, in
       its discretion, determines it to be an appropriate and reasonable business expense that is
       required to carry on the trade or business. See id. At a fundamental level, this is no different
       than the way nonaccelerated depreciation was handled in the preamendment version of section
       505.
¶ 25        In his petition for rehearing, Jeffrey argues, inter alia, that this court has ignored the
       following question: “Can a trial court in a divorce case continue the virtually blanket denial of
       non-accelerated depreciation as a deductible expense on the authority of pre 2017 case law in
       light of the 2017 amendments to the law itself?” We have not ignored this question. While the
       legislature did not retain any of the prior language requiring depreciation to fall into the
       category of debt repayment to qualify for a deduction, as stated in the previous paragraph,
       qualifying for the deduction still requires the claimant to convince the circuit court that
       nonaccelerated depreciation is an appropriate and reasonable business expense that is required
       to carry on the trade or business. The fatal error in Jeffrey’s argument is that he claims he is
       entitled to the deduction based on the amendment. No such entitlement exists.
¶ 26        It is important to note that Jeffrey does not argue that the circuit court abused its discretion
       when it used the prior case law in arriving at its decision to deny him a deduction for
       nonaccelerated depreciation. We do not believe that the amendment to section 505(a) regarding
       business income automatically negated all of the prior case law. Rather, that case law could
       still provide a circuit court with guidance when deciding, in its discretion, whether to allow a
       deduction for nonaccelerated depreciation—i.e., whether nonaccelerated depreciation
       constitutes an ordinary and necessary expense required to carry on the trade or business. See
id. In the absence of an actual cognizable and supported claim that the court’s decision not to
       grant the deduction constituted an abuse of discretion, we hold without further analysis that
       the court’s decision was not erroneous.

¶ 27                                        CONCLUSION
¶ 28       The judgment of the circuit court of Bureau County is affirmed.

¶ 29       Affirmed.

                                                     -5-