In re Marriage of Hochstatter

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-