Walley v. Iannizzaro , 119 N.E.3d 974 ( 2018 )

[Cite as Walley v. Iannizzaro, 2018-Ohio-3939.]
IN THE COURT OF APPEALS OF OHIO
SEVENTH APPELLATE DISTRICT
MAHONING COUNTY
ROBERT N. WALLEY,
Plaintiff-Appellee,
v.
ANGELA C. IANNIZZARO,
Defendant-Appellant.
OPINION AND JUDGMENT ENTRY
Case No. 17 MA 0124
Civil Appeal from the
Court of Common Pleas, Juvenile Division, of Mahoning County, Ohio
Case No. 16 JI 31
BEFORE:
Cheryl L. Waite, Gene Donofrio, Carol Ann Robb, Judges.
JUDGMENT:
Affirmed.
Atty. Shirley J. Smith and
Atty. Adam V. Buente, The Law Office of Shirley J. Smith, LLC, 94 N. Market Street,
East Palestine, Ohio 44413, for Plaintiff-Appellee
Atty. Gregg A. Rossi, Rossi & Rossi, 26 Market Street, 8th Floor, Huntington Bank
Building, P.O. Box 6045, Youngstown, Ohio 44501, for Defendant-Appellant.
Dated: September 20, 2018
WAITE, J.
–2–
{¶1} Appellant, Angela C. Iannizzaro, appeals the Mahoning County Court of
Common Pleas, Juvenile Division’s decision as to calculation of child support and
income tax dependency exemption. Appellant and Appellee, Robert N. Walley, were
never married and are the parents of a minor child. The parties had reached agreement
on parenting time issues. A magistrate’s hearing was held on the sole issue of child
support. After the hearing, the magistrate issued an order setting child support and
deciding that Appellant was to claim the minor child as a dependent exemption for
income tax purposes. After a hearing on objections, the trial court modified the child
support order and ordered the tax exemption to alternate between the parties annually.
Appellant contests both the child support modification and the tax exemption ruling on
appeal.
{¶2} Appellant argues the trial court abused its discretion in modifying the child
support order based on the record and the magistrate’s finding that Appellee
manipulated his income. Appellant also contends the trial court erred in adjusting the
tax exemption order as Appellee is self-employed with no definite income and Appellant
is an employee who would be able to maximize the exemption. Based on the record,
Appellant has not established that the trial court abused its discretion as to either the
child support order or the income tax dependency exemption. Based on the foregoing,
the judgment of the trial court is affirmed.
Factual and Procedural History
{¶3} The parties were never married but resided together and have a minor
child born on September 17, 2012. The parties’ relationship ended and they began
living separately some time in February of 2015. On February 8, 2016, Appellee filed a
Case No. 17 MA 0124
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motion with the Mahoning County Common Pleas Court, Juvenile Division, seeking to
be named the custodial parent of the minor child, a motion for calculation of child
support, and a motion for award of the tax exemption.
{¶4} A hearing was held before a magistrate on April 18, 2017. Prior to the
hearing, the parties had resolved parenting issues relative to the minor child and the
terms of a shared parenting plan were read into the record. The only issues unresolved
related to the financial issues of child support and the income tax dependency
exemption. Both parties testified on direct and cross-examination at the hearing. The
testimony was solely related to the issue of income calculation for the purposes of child
support. Evidence was presented that Appellant was an hourly employee and had a
second child. Appellee testified that he was the sole owner of a lawn care company and
owned half of a lawn fertilizing service. Extensive testimony was presented that
although Appellee’s income tax returns and profit and loss statements from the
businesses indicated that he earned only $10,000 per year, several personal expenses
were improperly classified as business expenses. These included daycare expenses,
child support, and other household expenses. There was also evidence presented that
Appellee had been paying $500 per month to Appellant for child support absent any
order, as well as $500 per month directly to the child’s daycare. No evidence was
presented relative to the income tax exemption. At the request of the magistrate, both
parties submitted proposed findings of fact and conclusions of law. Appellant’s
submission stated that, after accounting for all of the personal expenses Appellee had
classified as business expenses, his self-generated income should total $30,000
Case No. 17 MA 0124
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annually, while her income from employment was $27,040 annually. In her filing she
stated that the child support calculation owed by Appellant should be $747 per month.
{¶5} In his proposed findings of fact and conclusions of law, Appellee submitted
that he was self-employed without a consistent paycheck and that his income was
$10,027 annually. Appellee proposed that his child support obligation should be
$269.57 per month. Neither party included any findings of fact or conclusions of law
relative to the income tax dependency exemption.
{¶6} A magistrate’s decision was issued on June 19, 2017. Based on the
testimony at the hearing and other evidence admitted, the magistrate concluded that
Appellee’s income calculation included deductions that were not business related and
that these were required to be added to Appellee’s income, finding:
Plaintiff’s exhibit #8, Keepin’ It Green profit and loss statement for the time
period of January through December, 2016 evidenced a net income of
$14,775.50 but again included non-allowable deductions of child support
of $4,800, daycare of $1,354, house payment of $750 and household -
$3,093.77 for a total of $16,901.77. The Court shall compute Plaintiff’s
2016 income at $31,677.27 and shall also add 50% of the Keepin’ It
Green Fertilizing profit (Plaintiff’s exhibit #9) for 2016 of $1,340.42. His
total 2016 income is $32,347.48.
(6/19/17 J.E., pp. 1-2.)
{¶7} The magistrate determined: (1) Appellee was to pay $591.65 per month
as his child support obligation; (2) Appellant would be responsible for the child’s health
Case No. 17 MA 0124
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insurance coverage; and (3) Appellant was entitled to claim the minor child as a
dependent for all tax purposes beginning with tax year 2017.
{¶8} Appellee filed objections to the magistrate’s decision on July 3, 2017.
Pursuant to Civ.R. 60(A), he contended that the magistrate made a clerical error in
calculating his income for 2016 because when adding the stated income of $14,775.50
to the court’s disallowed deductions of $16,901.77 and 50% of the fertilizer service
profit, Appellee’s income should total $26,114, not $32,000. Appellee also objected that
he was not credited for $1,354 in daycare he had paid. Finally, Appellee objected that
Appellant was exclusively granted the child income tax dependency exemption rather
than having the deduction alternate between the parties. Appellant filed a motion in
opposition asserting that the income arrived at by the magistrate was in the same range
as Appellee’s 2015 calculated income of $32,429.94 and that the court had actually
omitted additional disallowed deductions from Appellee’s 2016 income which accounted
for the discrepancy in the total. Appellant argued the matter should be remanded to the
magistrate for a recalculation based on the evidence. Regarding the income tax
dependency exemption, Appellant contended that if Appellee’s income was $10,000
from self-employment, fluctuated and was as unreliable as he alleged, and Appellant’s
income was approximately $27,000 as an hourly employee, Appellant should be
awarded the exemption every year because she was better able to maximize the benefit
of the exemption.
{¶9} An objection hearing was held on August 4, 2017. Both parties were
present with their counsel. The transcript of this hearing was not made a part of this
record. In a judgment entry dated August 11, 2017, the trial court held:
Case No. 17 MA 0124
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The Court reviewed the evidence and case law and hereby finds that
Plaintiff is entitled to an adjustment in child support. See attached
worksheet incorporated herein and marked as Exhibit A. The Court
further finds that the annual income of both parties is relatively the same
and that parents share the expenses and care of the Minor Child.
Therefore, pursuant to Ohio Revised Code Section 3119.82, the Court
hereby finds both parties are entitled to claim the Minor Child as a
dependent for all tax purposes in alternating years, commencing with
Mother for odd numbered tax years and Father for even numbered tax
years.
(8/11/17 J.E.)
{¶10} Appellant filed a timely appeal presenting two assignments of error.
ASSIGNMENT OF ERROR NO. 1
THE TRIAL COURT ABUSED ITS DISCRETION IN FINDING THAT
PLAINTIFF'S ANNUAL GROSS INCOME FROM EMPLOYMENT FOR
CHILD SUPPORT CALCULATION WAS TWENTY-SIX THOUSAND ONE
HUNDRED TWELVE DOLLARS ($26,112.00) AS SET FORTH IN THE
COURT'S ATTACHED WORKSHEET TO THE AUGUST 11, 2017
JUDGMENT ENTRY.
{¶11} In her first assignment of error Appellant raises two issues. First, she
claims the trial court erred because it failed to utilize the correct calculation in
determining Appellee’s income and abused its discretion in adjusting this figure for child
support calculation purposes. Second, the amount of income calculated by the court for
Case No. 17 MA 0124
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Appellee in 2016 is not supported by the evidence because the court failed to include all
disallowed deductions into its calculation. Appellee maintains that the magistrate’s
decision was based on a clerical error and the trial court correctly adjusted his income
to reflect the accurate total pursuant to Civ.R. 60(A). Appellee also asserts that all
disallowed deductions were rolled back into Appellee’s income and no further
modifications are required.
{¶12} An appellate court may reverse a trial court’s modification of a
magistrate’s decision only if it finds the modification amounts to an abuse of discretion.
See Arrow Fin. Servs. v. Kuzniak, 7th Dist. No. 06 MA 133, 2007-Ohio-2191 citing
Wade v. Wade, 113 Ohio App. 3d 414, 419, 680 N.E.2d 1305 (1996). In order to find an
abuse of discretion, a reviewing court must find that a trial court’s decision was arbitrary,
unconscionable or unreasonable. Blakemore v. Blakemore, 5 Ohio St. 3d 217, 219, 450
N.E.2d 1140 (1983).
{¶13} Appellee alleged to the trial court that the magistrate’s decision was based
on a clerical error and filed his objections pursuant to Civ.R. 60(A), which reads in
pertinent part:
Clerical mistakes in judgments, orders or other parts of the record and
errors therein arising from oversight or omission may be corrected by the
court at any time on its own initiative or on the motion of any party and
after such notice, if any, as the court orders.
{¶14} “The term ‘clerical mistake’ refers to a mistake or omission, mechanical in
nature and apparent on the record which does not involve a legal decision or judgment.”
Blust v. Lamar Advertising of Mobile, Inc., 183 Ohio App. 3d 478, 2009-Ohio-3947, 917
Case No. 17 MA 0124
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N.E.2d 373, at ¶ 20 quoting State ex rel. Litty v. Leskovyansky, 77 Ohio St. 3d 97, 100,
671 N.E.2d 236 (1996), superseded by rule on other grounds.
{¶15} When computing child support payments, the trial court must calculate the
parties’ annual gross income utilizing the worksheet provided for in R.C. 3119.022.
“Gross income” includes “the total of all earned and unearned income from all sources
during a calendar year, whether or not the income is taxable, and includes income from
salaries, wages, overtime pay and bonuses * * * and all other sources of income.” R.C.
3119.01(C)(7). As Appellee is self-employed, R.C. 3119.01(C)(13) applies. It states:
“Self-generated income” means gross receipts received by a parent from
self-employment, proprietorship of a business, joint ownership of a
partnership or closely held corporation, and rents minus ordinary and
necessary expenses incurred by the parent in generating the gross
receipts. “Self-generated income” includes expense reimbursements or
in-kind payments received by a parent from self-employment, the
operation of a business, or rents, including company cars, free housing,
reimbursed meals, and other benefits, if the reimbursements are
significant and reduce personal living expenses.
{¶16} In the trial court’s judgment entry there is no mention of Civ.R. 60(A) nor is
there mention of clerical errors contained within the magistrate’s decision. There is no
itemized listing of disallowed deductions or evidence that a separate calculation was
done by the trial court. The judgment entry states, in pertinent part, “[t]he Court
reviewed the evidence and case law and hereby finds that [Appellee] is entitled to an
adjustment in child support. See attached worksheet incorporated herein and marked
Case No. 17 MA 0124
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as Exhibit A.” (8/11/17 J.E., p. 1.) The attached child support worksheet lists
Appellee’s income at $26,112. Appellant did not file a transcript of the hearing
regarding the objections to the magistrate’s decision. In the absence of a transcript, this
Court must presume regularity in the trial court proceedings. Grenga v. Ohio Edison
Co., 7th Dist. No. 03 MA 41, 2004-Ohio-822, ¶ 14.
{¶17} A party claiming a business expense has the burden of providing suitable
documentation to establish the expense. A trial court is not required to accept all
business expenses that party claims to have deducted as ordinary and necessary
business expenses incurred in generating gross receipts. Houts v. Houts, 99 Ohio
App.3d 701, 706, 651 N.E.2d 1031 (3d Dist.1995). Further, an income tax return is not
the only suitable evidence of a party’s income or expenses. Id.
{¶18} The record in the instant matter contains claims by Appellee that he
incurred legitimate business expenses. These were considered during the hearing
before the magistrate. The magistrate apparently was not convinced that all of the
business deductions listed in Appellee’s tax statement and profit and loss statement for
his business reflected “ordinary and necessary” business expenses incurred in
generating gross receipts. The magistrate held that for tax years 2015 and 2016,
Appellee deducted such expenses as daycare, child support, a house payment, and an
expense simply listed as “household,” none of which are even nominally business
expenses incurred in generating gross receipts for his landscaping company.
{¶19} The magistrate’s decision set forth a formula by which it calculated
Appellee’s income for child support purposes. Appellee’s stated gross income for 2016
was $14,775.50. The magistrate rolled back into that amount the disallowed deductions
Case No. 17 MA 0124
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improperly listed as business expenses, including $4,800 in child support, $1,354 for
daycare, a house payment of $750; and the line item entitled “household” in the amount
of $3,093.77. The sum of those items is $9,997.77. The court also included one-half of
the profit from a separate fertilizer business, which was $1,340.42. Thus, Appellee’s
stated income, the disallowed deductions and Appellee’s profit from the fertilizer
business were added together to reflect Appellee’s income for child support calculation
purposes. The magistrate calculated that total at $32,347.48. However, the actual sum
of those three figures is $26,113.69. It was from this error in mathematical calculation
that Appellee filed his objections pursuant to Civ.R. 60(A).
{¶20} Appellant contends the magistrate intended the inclusion of additional
disallowed deductions to be rolled into Appellee’s income, but this contention is not
supported in either the magistrate’s entry or in the transcripts of the magistrate’s
hearing. The trial court, after a hearing on Appellee’s objections, issued its judgment
entry setting Appellee’s income at $26,112.00. This is almost identical to the actual
total of the figures contained in the magistrate’s decision. Without more explanation
from the trial court in its judgment entry, and without a transcript of the objection
hearing, this Court must presume that the trial court reviewed the magistrate’s decision,
agreed with the inclusion of the disallowed deductions, and corrected Appellee’s income
accordingly. Although Appellant contends the trial court did not utilize the proper statute
in calculating Appellee’s income, there is nothing in this record to support this
contention. In fact, the trial court’s calculation appears to amount to a correction of the
scrivener’s error made by the magistrate. Based on the record before us, the trial court
Case No. 17 MA 0124
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did not abuse its discretion in determining Appellee’s gross income. Appellant’s first
assignment of error is without merit and is overruled.
ASSIGNMENT OF ERROR NO. 2
THE TRIAL COURT ABUSED ITS DISCRETION BY AWARDING THE
INCOME TAX DEPENDENCY EXEMPTION TO BOTH PARTIES IN
ALTERNATING YEARS.
{¶21} Appellant argues that the trial court erred in modifying the decision of the
magistrate to award the income tax dependency exemption to Appellant, and instead to
award the exemption to both Appellee and Appellant on alternating years. Appellant
contends that, as she is an hourly employee with a steady income who receives a W-2
form from her employer, she is better suited to realize the benefit of the exemption than
Appellee, who is self-employed and whose income fluctuates. Appellant seeks either a
reversal of the trial court’s order or a remand ordering the court to conduct an
evidentiary hearing considering the statutory factors found in R.C. 3119.82. Appellee
states that the trial court was correct in determining that both parties have relatively
similar incomes and both share in the expenses of the child under the shared parenting
plan. Thus, the tax exemption should properly alternate between the parties.
{¶22} We review the trial court’s determination of which parent may claim the
minor child as a dependent for federal income tax purposes under an abuse of
discretion standard. In re J.H., 7th Dist. No. 10 JE 15, 2011-Ohio-6536, ¶ 13. R.C.
3119.82 governs the allocation of the tax dependency exemption. It reads, in pertinent
part:
Case No. 17 MA 0124
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Whenever a court issues, or whenever it modifies, reviews, or otherwise
reconsiders a court child support order, it shall designate which parent
may claim the children who are the subject of the court child support order
as dependents for federal income tax purposes as set forth in section 151
of the “Internal Revenue Code of 1986,” 100 Stat. 2085, 26 U.S.C. 1, as
amended. If the parties agree on which parent should claim the children
as dependents, the court shall designate that parent as the parent who
may claim the children. If the parties do not agree, the court, in its order,
may permit the parent who is not the residential parent and legal
custodian to claim the children as dependents for federal income tax
purposes only if the court determines that this furthers the best interest of
the children and, with respect to orders the court modifies, reviews, or
reconsiders, the payments for child support are substantially current as
ordered by the court for the year in which the children will be claimed as
dependents. In cases in which the parties do not agree which parent may
claim the children as dependents, the court shall consider, in making its
determination, any net tax savings, the relative financial circumstances
and needs of the parents and children, the amount of time the children
spend with each parent, the eligibility of either or both parents for the
federal earned income tax credit or other state or federal tax credit, and
any other relevant factor concerning the best interest of the children.
{¶23} The magistrate determined that: “Pursuant to Revised Code 3119.82,
Mother shall be entitled to claim all of the minor children as dependents for all tax
Case No. 17 MA 0124
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purposes commencing with tax year 2017. The Court notes that no argument was
presented at Trial relative to the tax exemption for the Minor Child.” (6/19/17
Magistrate’s Decision, p. 6.)
{¶24} In his objections to the magistrate’s decision and in his appellate brief,
Appellee contends that the magistrate did not state that the parties agreed on the
exemption and, as no testimony was provided on the issue, the magistrate had no basis
on which to award the exemption to Appellant. In the alternative, Appellee argues that
as the parties have similar incomes, the exemption should alternate between them.
Appellee also argues that it is in the best interest of the child for him to receive the
exemption because Appellant has the ability to claim her other child for tax purposes,
which will “relieve the financial stress and burden placed on [Appellee] and will allow
him to further benefit the child in the future.” (7/3/17 Objections to Magistrate’s
Decision, p. 5.)
{¶25} On appeal, Appellant contends there is a presumption in favor of the
income tax dependent exemption being given to the residential parent and that she
spends more parenting time with the minor child despite the shared parenting
agreement. Appellant argues that Appellee presented no evidence to rebut this
presumption or to establish that it was in the best interest of the child for him to receive
the tax exemption.
{¶26} In its judgment entry after a hearing on the objections, the trial court
allocated the exemption as follows:
The Court further finds that the annual income of both parties is relatively
the same and that parents share the expenses and care of the Minor
Case No. 17 MA 0124
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Child. Therefore, pursuant to Ohio Revised Code Section 3119.82, the
Court hereby finds both parties are entitled to claim the Minor Child as a
dependent for all tax purposes in alternating years, commencing with
Mother for odd numbered tax years and Father for even numbered tax
years.
(8/11/17 J.E.)
{¶27} The parties’ respective arguments relative to the tax exemption issue are
not as clearly dispositive as they claim. Appellant cites to Singer v. Dickinson, 63 Ohio
St.3d 408, 588 N.E.2d 806 (1992) for the contention that a presumption exists that the
dependency tax exemption belongs to the residential parent. This is not accurate. In
Singer, the Ohio Supreme Court acknowledged that the trial court has continuing
jurisdiction over the tax exemption issue and the IRS Code does not preempt a state
court’s ability to allocate tax dependency exemption to a noncustodial parent. Id. at
paragraph one of syllabus. However, as Appellant admits, she and Appellee entered
into a shared parenting agreement and both are designated as residential parents under
the terms of that agreement. Despite Appellant’s assertion that she has more parenting
time, both are considered residential parents.
{¶28} Appellee argues that the tax exemption status should be shared by the
parties, claiming that this is in the best interest of the child because it will relieve a
financial burden on Appellee caused by having to pay his child support obligation.
Notwithstanding this tenuous argument that improving his finances in this manner
translates to the best interest of the minor child, the trial court did not abuse its
discretion in ordering the dependency exemption to alternate between the parties.
Case No. 17 MA 0124
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{¶29} Both parents are residential parents. Moreover, by their own assertions,
they have relatively similar incomes once the court made the determination as to
Appellee’s income. Factors the trial court considers when the parents do not agree on
the exemption are enumerated within R.C. 3119.82 and include:
[N]et tax savings, the relative financial circumstances and needs of the
parents and children, the amount of time the children spend with each
parent, the eligibility of either or both parents for the federal earned
income tax credit or other state or federal tax credit, and any other
relevant factor concerning the best interest of the children.
{¶30} In its judgment entry, it is clear the trial court reviewed the gross incomes
of both parties, which are less than $1,000 apart annually. The court also considered
the shared parenting agreement and its effect on the amount of parenting time and
expenses incurred by each parent. These are both appropriate statutory factors. R.C.
3119.82 contains no requirement that the trial court provide its reasoning on the record
when making its determination regarding the tax exemption. The record must contain
financial information of the parties to support the trial court’s findings regarding
allocution of the exemption. See Streza v. Streza, 9th Dist. No. 05CA008644, 2006-
Ohio-1315; Batcher v. Pierce, 2015-Ohio-2130, 35 N.E.3d 904 (9th Dist.). This record
is replete with evidence regarding the financial status of both parties. The hearing
before the magistrate was held solely in regard to the financial data of both parties,
including testimony as to employment, tax returns, and the profit and loss statements
from Appellee’s self-employment. Although there is no transcript from the hearing on
the objections to the magistrate’s decision, we presume the trial court relied on the
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financial data of record. The decision of the trial court to alternate the tax exemption
between the parties is supported by the record and is in accordance with the factors
enumerated in R.C. 3119.82. Appellant’s second assignment of error is without merit
and is overruled.
{¶31} Based on the foregoing, Appellant’s assignments of error are without merit
and the judgment of the Mahoning County Court of Common Pleas, Juvenile Division, is
affirmed in full.
Donofrio, J., concurs.
Robb, P.J., concurs.
Case No. 17 MA 0124
[Cite as Walley v. Iannizzaro, 2018-Ohio-3939.]
For the reasons stated in the Opinion rendered herein, the assignments of error
are overruled and it is the final judgment and order of this Court that the judgment of the
Court of Common Pleas, Juvenile Division, of Mahoning County, Ohio, is affirmed.
Costs to be taxed against the Appellant.
A certified copy of this opinion and judgment entry shall constitute the mandate in
this case pursuant to Rule 27 of the Rules of Appellate Procedure. It is ordered that a
certified copy be sent by the clerk to the trial court to carry this judgment into execution.
NOTICE TO COUNSEL
This document constitutes a final judgment entry.