Huelskamp v. Huelskamp

[Cite as Huelskamp v. Huelskamp, 185 Ohio App.3d 611, 2009-Ohio-6864.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
AUGLAIZE COUNTY
HUELSKAMP,
APPELLEE, CASE NO. 2-09-21
v.
HUELSKAMP, OPINION
APPELLANT.
Appeal from Auglaize County Common Pleas Court
Domestic Relations Division
Trial Court No. 2007 DR 0217
Judgment Affirmed in Part, Reversed in Part and Cause Remanded
Date of Decision: December 28, 2009
APPEARANCES:
Rob C. Wiesenmayer II, for appellee.
William E. Huber, for appellant.
Case No. 2-09-21
WILLAMOWSKI, Judge.
{¶ 1} Defendant-appellant, Timothy Huelskamp, appeals the judgment of
the Auglaize County Court of Common Pleas, Domestic Relations Division,
granting a divorce from plaintiff-appellee, Amy Huelskamp. Timothy contends
that the trial court erred in dividing the marital and separate property, in
determining the value of the marital property, in calculating child support, and in
awarding custody of the children to Amy. For the reasons set forth below, the
judgment is affirmed in part and reversed in part.
{¶ 2} Timothy and Amy were married on May 20, 2000. Two children
were born as issue of the marriage. The parties separated in April 2007, and Amy
filed for divorce in November 2007. Trial was first set for September 30, 2008,
but was rescheduled for May 27 and 28, 2009, after the trial court ordered the
joinder of third parties1 who shared property interests in the parties’ real estate and
hog-finishing business. The trial court granted the divorce and issued its final
judgment entry on June 30, 2009.
{¶ 3} At trial, the parties stipulated that the grounds for the divorce would
be incompatibility and that they had reached an agreement concerning the division
of personal property. The majority of the testimony at the trial concerned the
ownership and valuation of the residential property; the operation, ownership, and
1
Timothy owned real estate jointly with his parents, and he had a business partnership with his brother.
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valuation of the hog-finishing business; and parenting and custody issues. There
was also testimony regarding the parties’ incomes, assets, vehicles, and debts, and
the 2008 income tax return and refunds.
{¶ 4} Timothy and Amy have two children, Dalton, age 9, and Gabrielle,
age 5. In 2008, both parties originally filed shared-parenting plans with differing
divisions of time. However, at trial, Amy requested that she be named the
residential parent and that the visitation schedule that had been in effect for the
past year be continued. There was considerable testimony indicating that the
parties’ relationship with each other was very acrimonious. The guardian ad litem
recommended shared parenting, but suggested that the children should be
exchanged in a public location to avoid confrontation between the parents. The
trial court rejected any shared-parenting plan, due to the parties’ inability to
cooperate, and designated Amy as the residential parent and legal custodian. The
trial court granted Timothy expanded visitation times, in excess of the standard
orders, and ordered him to pay child support, with credit given for the extra time
that the children would be spending with him.
{¶ 5} When the parties married in 2000, they lived in a very old and
“dilapidated” house on 20 acres of land that had been owned by Timothy’s mother
and father. In 1990, prior to the marriage, Timothy purchased an undivided half
interest in this property from his parents. In late 2001 and early 2002, the parties
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demolished the old home and built a new residence on the property, with Timothy
acting as general contractor and doing much of the construction work. Timothy
and Amy obtained a mortgage in 2002 for $120,000 to cover the expenses
involved in building the home.
{¶ 6} The trial court found that Timothy’s half interest in the land was his
separate property prior to the marriage and awarded that to him. The trial court
determined that the house itself was built during the marriage and was marital
property. The court awarded possession of the house to Timothy, along with
responsibility for the mortgage. However, there was considerable conflicting
testimony in trying to determine the marital valuation of the home, which was
complicated because the value of the house needed to be calculated independent of
the land. The trial court did not find either of the parties’ appraisals credible and
valued the property in accordance with the county tax-appraisal record, which
separated the land and building values and was utilized by both appraisers in
coming to their conclusions. The tax appraisal put the value of the buildings2 on
the property at $145,770, leaving a marital equity of $40,130.40.
{¶ 7} Another area of contention involved the hog-finishing-business
partnership that Timothy and his brother commenced in 2005.3 The business
2
Although there were other outbuildings on the property, the testimony indicated that the house itself was
the only building of value as the others were either too old or in a poor location to be worth anything.
3
Amy and Timothy’s brother’s wife were also originally on the note and financially liable for the building
of the barn and the purchase of the equipment.
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purchased equipment and constructed a hog barn on acreage owned by Timothy’s
father. The brothers raise hogs under a contract with a company that provides the
piglets and feed. In return, they raise the hogs to maturity and are paid monthly
according to the contract. The partnership’s income tax returns show a gross
profit but indicate that the business is operating at a net loss after deducting
depreciation and expenses. Amy presented the testimony of a CPA expert witness
who found that the value of Timothy’s share of the hog-finishing partnership was
$34,870. Timothy did not present any expert testimony concerning the valuation
of the business. The trial court found that the expert’s valuation was credible and
ordered that the hog-finishing business should be awarded to Timothy, free and
clear of any claim of Amy. However, the court found that this was a business that
was begun during the marriage and was entirely marital property subject to
division.
{¶ 8} Other marital property divisions included Amy’s 401(k) account, the
2008 tax refunds, and Timothy’s truck. Amy was permitted to retain her
retirement account and the tax refund, and Timothy was awarded his truck. The
trial court enumerated the following awards of the parties’ marital property:
Amy: 401(k) $13,281.00
Tax Refund $ 1,978.00
Total: $15,259.00
Timothy: House $40,130.40
Business $34,870.00
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Truck $ 600.00
Total: $75,600.40
Based upon the trial court’s allotment of the marital assets and equity, Timothy
received $60,341.40 more in marital property than Amy. In order to equalize the
marital property division, the trial court ordered Timothy to pay Amy her share,
$30,170.70, within 90 days.
{¶ 9} It is from this judgment that Timothy appeals, presenting the
following eight assignments of error for our review.
First Assignment of Error
The Trial Court erred and abused his [sic] discretion in determining
what was marital and what was separate property
Second Assignment of Error
The Trial Court erred and abused it’s [sic] discretion in determining
the value of the residential real estate.
Third Assignment of Error
The Trial Court erred and abused it’s [sic] discretion in not giving
[Timothy] credit for the contribution of his separate property for the
construction of the home.
Fourth Assignment of Error
The Trial Court erred and abused it’s [sic] discretion in it’s [sic]
valuation of the partnership business.
Fifth Assignment of Error
The Trial Court erred and abused it’s [sic] discretion in allocating
and dividing the 2008 income tax refund.
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Sixth Assignment of Error
The Trial Court erred and abused it’s [sic] discretion by failing to
consider the tax consequences that resulted in dividing and awarding
marital property.
Seventh Assignment of Error
The Trial Court erred and abused it’s [sic] discretion in determining
that the depreciation should be considered income in calculating
support.
Eighth Assignment of Error
The Trial Court erred and committed an abuse of discretion in
finding that the shared parenting plan is not in the best interest of the
minor children.
{¶ 10} Several of the assignments of error involve similar legal concepts.
Therefore, in order to facilitate the review, we elect to address some of the
assignments of error together and out of order.
First, Third, and Fifth Assignments of Error
{¶ 11} In these three assignments of error, Timothy asserts that the trial
court erred in determining what was marital and separate property, and in dividing
the marital and separate property. Timothy contends that he did not receive the
correct allocation for his share of the parties’ residence, for his contributions to the
construction of the residence, and from the parties’ 2008 income tax refunds.
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{¶ 12} It is well settled that trial courts have “broad discretion to determine
what property division is equitable in a divorce proceeding.” Cherry v. Cherry
(1981), 66 Ohio St.2d 348, 421 N.E.2d 1293, paragraph two of the syllabus. A
trial court's decision allocating marital property and debt will not be reversed
absent an abuse of discretion. Jackson v. Jackson, 3d Dist. No. 11-07-11, 2008-
Ohio-1482, ¶ 15, citing Holcomb v. Holcomb (1989), 44 Ohio St.3d 128, 131, 541
N.E.2d 597. The term “abuse of discretion” means more than a mere error; it
implies that the court's attitude is unreasonable, arbitrary, or unconscionable.
Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 450 N.E.2d 1140.
{¶ 13} A trial court is charged with the duty of distinguishing between
marital property and separate property in accordance with the definitions set forth
in R.C. 3105.171(A). Lust v. Lust, 3d Dist. No. 16-02-04, 2002-Ohio-3629, ¶ 12.
Marital property includes property that is currently owned by either or both
spouses and that was acquired by either or both of the spouses during the
marriage. R.C. 3105.171(A)(3)(a). Property acquired during a marriage is
presumed to be marital property unless it can be shown to be separate. Barkley v.
Barkley (1997), 119 Ohio App.3d 155, 160, 694 N.E.2d 989.
{¶ 14} Separate property is defined by R.C. 3105.171(A)(6)(a) and includes
any real or personal property, or interest in such, that was acquired by one spouse
prior to the date of the marriage. Neville v. Neville, 3d Dist. No. 9-08-37, 2009-
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Ohio-3817, ¶ 11. The commingling of separate property with other property does
not necessarily destroy the identity of the separate property, except when the
separate property is not traceable. R.C. 3105.171(A)(6)(b). Therefore, traceability
is the main issue in determining whether separate property has become marital
property due to commingling. Earnest v. Earnest, 151 Ohio App.3d 682, 2003-
Ohio-704, 785 N.E.2d 766, ¶ 38, citing Peck v. Peck (1994), 96 Ohio App.3d 731,
734, 645 N.E.2d 1300. Separate property can be converted to marital property if
one spouse grants the other spouse an interest in the property. Jackson v. Jackson,
3d Dist. No. 11-07-11, 2008-Ohio-1482, ¶ 7. The general rule with regard to
separate property is that the trial court must disburse a spouse's separate property
to that spouse. R.C. 3105.171(D). Nevertheless, the trial court has broad
discretion in dividing property equitably in a divorce. Berish v. Berish (1982), 69
Ohio St.2d 318, 319, 432 N.E.2d 183.
{¶ 15} The determination whether property is marital or separate is
reviewed under the manifest-weight-of-the-evidence standard. Gosser v. Gosser,
11th Dist. No. 2006-T-0029, 2007-Ohio-3201, ¶ 29. A trial court’s judgment will
not be reversed as being against the manifest weight of the evidence if the court's
judgment is supported by some competent, credible evidence. This highly
deferential standard of review permits the affirmation of the trial court's judgment
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if there is even “some” evidence to support the court's finding. DeWitt v. DeWitt,
3d Dist. No. 9-02-42, 2003-Ohio-851, ¶ 11.
{¶ 16} In his first assignment of error, Timothy complains that the trial
court did not make an equitable division of the land (owned jointly by Timothy
and his parents) and the house (built by Timothy and Amy during their marriage).
It appears that he is arguing that the value of the land and the value of the house
were intertwined and that requiring Timothy to pay Amy for her half of the equity
in the house was inequitable.
{¶ 17} The trial court arrived at the value of the house independent of the
20 acres of land on which it was situated. Timothy’s ownership of the land was
determined to be his premarital separate property and he was permitted to retain
his undivided interest in the land along with his parents. The house itself was built
by Timothy and Amy during the marriage and was determined to be marital
property. At the time the house was constructed, Timothy was aware of the joint
ownership of the land it was being built upon. After subtracting the mortgage4
from the value of the house alone, the trial court determined the amount of marital
equity. Timothy was awarded the house and was ordered to pay Amy for her half
4
At trial, Timothy testified that he and Amy took out a mortgage on the home, and the monies were used to
pay for the construction of the residence. In his appellate brief, Timothy states that “[t]here is a mortgage
on the property secured by a note which covers the entire property, not just the residential structure.”
Given this argument, if a part of the mortgage is applicable to the land, then the amount of the mortgage
that should be subtracted from the value of the house would be reduced. Therefore, according to the
argument that Timothy appears to be making, the marital equity in the home would be greater and the
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of the marital equity in the house to equalize the distribution. The trial court’s
division was an essentially equal, dollar-for-dollar distribution of the marital asset.
Finding no inequity in the trial court’s division of the marital residence and land,
we overrule Timothy’s first assignment of error.
{¶ 18} In his third assignment of error, Timothy argues that the trial court
erred by not giving him credit for the cost of the home’s septic system, which he
claims he paid for from his separate checking account. Timothy testified that he
had a separate bank account from before the marriage, but he was unable to
specify how much money was in this account before the marriage. He also
testified that, during the marriage, he had used the account for depositing monies
and paying bills. He did not provide any bank statements or records for this
account, nor did he present any records showing the cost of the septic system or
documentation that it was paid for with his separate funds.
{¶ 19} A party who wishes to have a particular asset classified as separate
property has the burden of proving, by a preponderance of the evidence, that the
asset is separate property. Brandon v. Brandon, 3d Dist. No. 10-08-13, 2009-
Ohio-3818, ¶ 18; Peck v. Peck, 96 Ohio App.3d at 734. It was Timothy’s
responsibility to prove that the property existed prior to the marriage and that it
amount of money he would owe to Amy would be greater in order to equalize the distribution. We are
unsure as to whether this is the point Timothy was trying to make.
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was traceable. See Guenther v. Guenther (Oct. 19, 1994), 9th Dist. No. 2827,
1994 WL 577751.
{¶ 20} Timothy did not provide any evidence, other than his own very
general testimony, concerning the money he claimed to be his premarital separate
property. Furthermore, since the account was also used as a marital account, he
could not establish that the funds were not commingled with other marital funds
and the funds from the mortgage proceeds. Timothy did not meet his burden of
proving the existence or traceability of this money. Timothy’s third assignment of
error is overruled.
{¶ 21} In the fifth assignment of error, Timothy claims that the trial court
erred in allocating and dividing the 2008 state and federal income tax refunds.
Although we do not agree with the calculations that Timothy set forth in his brief,
our review of the record finds that the trial court’s calculations did not result in an
equal division of the 2008 income tax liabilities and refunds.
{¶ 22} The parties were living separately in 2008, and they asked their
accountant to prepare their taxes in the manner that would achieve the greatest tax
savings. The accountant determined that they would receive a maximum return if
they utilized the “married filing separately” status and allowed Amy to claim both
of the children on her separate return. As a result, Timothy owed $2,065 in taxes,
and Amy received refunds of $6,021. In order to share equally in the tax benefits,
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the accountant contemplated that each would pay half of Timothy’s liability, or
$1,032.50 each, and Amy would pay Timothy half of the refund, or $3,010.50,
resulting in each party ending up with a net $1,978 “in [their] pocket.”5 Instead of
doing this, Amy paid Timothy’s tax liability at the time it was due, and Timothy
reimbursed her for $1,000, approximately one-half. When Amy received the
$6,021 tax refunds, she held it in escrow, waiting for the court to make a final
determination as to the parties’ property division.
{¶ 23} The trial court allowed Amy to retain all of the incometax refunds,
which the court stated, “results in a net profit to [Amy] of $1,978.” The trial court
then included that “net profit” of $1,978 in the marital-property calculations when
equalizing the property division.
{¶ 24} Although it appears that it was the trial court’s intention to equally
distribute all of the marital property, including the 2008 tax refund, the court’s
calculation resulted in an unequal division of the tax refund. The parties would
have each realized a return of $1,978 only if Amy had paid Timothy the $3,010.50,
as originally contemplated by their tax accountant. She did not do this. Instead,
the parties split the tax liability between them, but Amy kept the entire refund.
Therefore, the full amount of the $6,021 tax refund, less $32.50 extra Amy
overpaid for Timothy’s taxes due, or $5,988.50, should have been included as a
5
These notes and calculations were taken from defendant’s Exhibit A, which was a memo from the income
tax preparer. The main amounts calculated included federal and state income taxes; there were also de
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marital asset in the trial court’s recapitulation of assets prior to
minimus amounts for school and city taxes.
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ordering the equalization payment.
{¶ 25} While a property division need not always be equal in order to be
equitable, it appears that the trial court did intend to equally divide all the marital
property and inadvertently failed to do so. Therefore, Timothy’s fifth assignment
of error is well taken and is sustained.
Second and Fourth Assignments of Error
{¶ 26} In these assignments of error, Timothy states that the trial court erred
in its valuation of the residential real estate and the hog-finishing business. He
maintains that the trial court should have followed his appraiser’s valuation for the
residence, and that it should not have believed Amy’s agricultural expert’s
valuation of the hog-finishing partnership.
{¶ 27} A trial court enjoys broad discretion in determining the value of a
marital asset and is not required to adopt any particular method of valuation.
James v. James (1995), 101 Ohio App.3d 668, 680, 656 N.E.2d 399. It is not an
abuse of discretion when the trial court assigns value to real estate in an amount
that is supported by competent, credible evidence. Osting v. Osting, 3d Dist. No.
1-03-88, 2004-Ohio-4159, ¶ 21. “[W]hen the parties present substantially
different valuations of an asset,” it may believe all, part, or none of any witness's
testimony. Covert v. Covert, 4th Dist. No. 03CA778, 2004-Ohio-3534, ¶ 29.
Furthermore, “[a] reviewing court should be guided by a presumption that the
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findings of a trial court are correct, since the trial judge is best able to view the
witnesses and observe their demeanor, gestures, and voice inflections, and use
those observations in weighing the credibility of the testimony.” DeWitt v.
DeWitt, 3d Dist. No. 9-02-42, 2003-Ohio-851, ¶ 11, citing Barkley v. Barkley
(1997), 119 Ohio App.3d 155, 159, 694 N.E.2d 989.
{¶ 28} In his second assignment of error, Timothy states that the trial court
was correct in finding that Amy’s appraiser’s methodology was flawed, but that it
should have found that Timothy’s appraiser’s valuation was accurate. He also
criticizes the trial court’s use of the county property-tax records to determine the
value of the real estate.
{¶ 29} Timothy and Amy presented two professional appraisers who used
two different methods of valuation to arrive at their appraisals. Amy’s appraiser
found the value of the home along with a “hypothetical 2.5 acres of land” to be
$195,000. He then subtracted the value of the land to come up with a value on the
house of $165,000, leaving marital equity of $59,360.40, after subtracting the
$105,639.60 mortgage balance. Timothy’s appraiser utilized a “use value”
approach to come up with a value on the house alone to be $135,000, resulting in a
marital equity of $29,360.40 after subtracting the mortgage balance.
{¶ 30} The trial court rejected both appraisals, finding one was computed
using a “fiction” and the other utilized “flawed” methodology. Instead, the trial
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court valued the property in accordance with the county tax-appraisal record,
which separated the land and building values and was utilized by both appraisers
in coming to their conclusions. The tax appraisal valued the buildings on the
property at $145,770, leaving a marital equity of $40,130.40.
{¶ 31} We find that the trial court’s valuation of the marital residence was
supported by competent and credible evidence and that its conclusion was not
unreasonable, arbitrary, or unconscionable. The trial court’s decision was based
upon the county tax records that were admitted before the court with the
appraisers’ exhibits. The valuation fell within a range between Amy’s higher
appraisal and Timothy’s lower appraisal, and no one presented any evidence that
they had ever contested this valuation as being inaccurate. The trial court clearly
articulated its reasons for rejecting both of the parties’ appraisals. Timothy’s
appraiser himself admitted that in all of his many years of appraising homes, he
had never before appraised a residence under a use-value methodology. He also
acknowledged that he had no opinion as to the market value of the dwelling or the
land. Timothy’s second assignment of error is overruled.
{¶ 32} Timothy’s fourth assignment of error asserts that the trial court erred
when it adopted Amy’s expert witness’s valuation of the hog-finishing partnership
owned in conjunction with Timothy’s brother. Timothy claims that the expert’s
valuation was based upon flawed assumptions, especially concerning who owned
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the building and whether they could expect the contract to be renewed in the
future.
{¶ 33} Amy’s expert, David Fortney, testified that he was a CPA with the
firm of McCrate, DeLaet & Co. and he had extensive past experience in valuing
agricultural operations, including hog-finishing businesses. Fortney was found by
the court to be an expert witness in the area of “agriculture accounting,” with no
objections from the parties. He provided detailed testimony to the trial court
setting forth the specific steps that he took to evaluate the hog-finishing business
and also the evidence that he reviewed concerning the operation of the business.
When questioned on cross-examination as to the accuracy of some of his
assumptions, Fortney testified that his valuation would still be the same because it
was based upon cash flow and expenses.
{¶ 34} In its decision, the trial court stated:
The Court finds Mr. Fortney’s testimony to be credible and based on
many years of experience with agricultural operations including hog
finishing. The Court accepts his value of [Timothy’s] portion of the
business at $34,870 which is entirely marital subject to division.
{¶ 35} The trial court found Fortney to be a credible witness and found his
methodology to be sound. More importantly, the trial court had no other evidence
or expert testimony to rely upon other than the testimony and evidence presented
by Fortney. Timothy did not present any expert testimony or reports in support of
a different valuation. The trial court did not abuse its discretion in relying upon
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Fortney’s expert testimony in establishing the marital value of the hog-finishing
partnership. Timothy’s fourth assignment of error is overruled.
Sixth Assignment of Error
{¶ 36} In his sixth assignment of error, Timothy asserts that the trial court
erred when it failed to consider the tax consequences concerning the division of
the marital property. Specifically, he complains that it is impossible for him to
obtain the $30,170.70 to pay Amy for her share of the marital property without
suffering tax consequences for selling a capital asset. He claims that he would
have to sell off part of the property or a portion of the hog-finishing business in
order to raise the necessary cash, and that he would suffer negative tax
consequences as a result.
{¶ 37} Tax consequences of property division may be proper considerations
for the court, so long as those consequences are not speculative. Fisher v. Fisher
(Mar. 22, 2002), 3d Dist. No. 7-01-17, citing Day v. Day (1988), 40 Ohio App.3d
155, 159, 532 N.E.2d 201; R.C. 3105.171(F)(6). When the tax consequences are
found to be speculative, a court need not consider them. See, e.g., Thomas v.
Thomas, 171 Ohio App.3d 272, 2007-Ohio-2016, 870 N.E.2d 263, ¶ 6-11 (finding
that tax consequences of a payment of $4.5 million to husband for his share of
business were speculative because the trial court’s order did not specifically
require wife to sell half of the business); Teaberry v. Teaberry, 7th Dist. No. 07
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MA 168, 2008-Ohio-3334, ¶ 39-40 (although husband did not have liquid assets to
meet his obligation, he did hold substantial assets and might be able to obtain a
loan); Fergus v. Fergus (1997), 117 Ohio App.3d 432, 436-37, 690 N.E.2d 949(finding that the sale of an asset may result in tax consequences, but not
consequences of any unusual nature).
{¶ 38} We find that Timothy’s assertions as to the possibility of negative
tax consequences are purely speculative. The trial court did not order the sale or
transfer of any particular asset and, therefore, it did not affirmatively impose an
order that would necessitate a taxable event. There may be options available to
Timothy to raise the money other than through the sale of capital assets. Just
recently (and contrary to the standing orders of the court not to modify finances),
Timothy and his brother refinanced the partnership business. Also, Timothy now
holds considerable equity in the marital residence and surrounding property. Even
if the sale of an asset may be required, Timothy has failed to specify what, if any,
tax consequences might result. The sixth assignment of error is not well taken.
Seventh Assignment of Error
{¶ 39} In this assignment of error, Timothy argues that the trial court should
not have included his federal income tax deductions for depreciation on his
business as part of his income for purposes of child-support calculations. In
calculating Timothy’s child-support obligations, the trial court found that he had
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earnings of $33,280 per year from his employment at Hume Supply. The trial
court also noted that the hog-finishing business did not show any income but that
Timothy depreciated $17,537 on his tax return, which was not an ordinary and
necessary business expense under R.C. 3119.01(C)(9)(b). Therefore, the trial
court calculated Timothy’s child-support obligations based upon a gross income of
$50,817.
{¶ 40} Depreciation is normally included in the calculation of gross income
unless it is shown to be an ordinary and necessary cost of business. Buening v.
Buening, 3d Dist. No. 10-08-04, 2008-Ohio-6579, ¶ 8; R.C. 3119.01(C)(9).
Pursuant to R.C. 3119.01, gross income includes self-generated income for the
purposes of child-support calculations and such income is defined as “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.” R.C. 3119.01(C)(13). The same statute defines
“ordinary and necessary expenses” as “actual cash items expended by the parent or
the parent's business [including] depreciation expenses of business equipment as
shown on the books of a business entity.” R.C. 3119.01(C)(9)(a). However, R.C.
3119.01(C)(9)(b) excludes “depreciation expenses and other noncash items that
are allowed as deductions on any federal tax return of the parent or the parent's
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business” as ordinary and necessary expenses. In re Sullivan, 167 Ohio App.3d
458, 2006-Ohio-3206, 855 N.E.2d 554, ¶ 22.
{¶ 41} In Buening v. Buening, the video-rental company’s accountant
testified that the depreciation of the establishment’s video tapes was an ordinary
and necessary cost of the business of renting the tapes to the consumer, and was
not merely for income tax purposes. 2008-Ohio-6579 at ¶ 9-10. The business’s
financial statements included the depreciation of the video tapes, and then
reflected the gross sales price as a capital gain after the tapes were sold. Id. at ¶ 9.
This court held that the father’s gross income should be reduced by the
depreciation for the tapes because to “not allow the depreciation would be to
ignore the necessary costs of doing business and to allow for the sale of items
without considering the cost of obtaining those items that were subsequently sold.”
Id. at ¶ 10.
{¶ 42} However, in many cases, a company depreciates buildings and
equipment that it owns solely for the purpose of reducing its income taxes. See,
e.g., Foster v. Foster, 150 Ohio App.3d 298, 2002-Ohio-6390, 780 N.E.2d 1041, ¶
23 (the exclusion of depreciation deductions is designed to ensure that a parent's
gross income is not reduced by any sum that was not actually expended); Combs v.
Walsh, 12th Dist. No. CA2005-07-198, 2006-Ohio-7026, ¶ 22 (income for child-
support purposes is not equivalent to the parent's taxable income, and court did not
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abuse its discretion by including rental business’s real estate depreciation in
calculating income for child support).
{¶ 43} Furthermore, “[a] party claiming a business expense has the burden
of providing suitable documentation to establish the expense. A trial court is not
required to blindly accept all of the expenses an appellant claims to have deducted
in his tax returns as ordinary and necessary expenses incurred in generating gross
receipts.” Ockunzzi v. Ockunzzi, 8th Dist. No. 86785, 2006-Ohio-5741, ¶ 53.
When evidence to support a claim for depreciation expenses is absent from the
record, it is not an abuse of discretion for a trial court to disallow those expenses
and include them as income. Sullivan, 167 Ohio App.3d 458, 2006-Ohio-3206, ¶
27.
{¶ 44} In the present case, Timothy states that the depreciation listed on the
tax returns represents the building and equipment for the hog-finishing business.
He claims that the partnership does not own the building or equipment, but that
they make the payments due on the property instead of paying rent to their father.
He maintains that the business “did not deduct a rental value as the rent was the
payment of the principal and interest due which equals interest and which equals
depreciation.”
{¶ 45} The only records Timothy provided to the court were the IRS
Schedule F forms (Profit or Loss from Farming) for his 2006 and 2007 federal
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income tax returns, which simply list a line 16 “depreciation and section 179
expense deduction” of approximately $17,000 for each year. There is also a line
23 interest deduction for each year, and nothing is listed for rent. There was no
backup paperwork explaining how the depreciation expense was computed or
what it represents, nor was there any proof that it was part of the ordinary and
necessary expenses of doing business. Timothy has not provided any
documentation that any of this money was actually paid out, nor does he explain
how his business is able to take a depreciation deduction under the IRS regulations
for assets that it claims it does not own. There was no evidence before the court
that would indicate this money was actually expended as an ordinary and
necessary business expense. It appears to be a deduction taken for federal income
tax purposes, and Timothy has not provided a proper basis for excluding this
depreciation write-off from his income.
{¶ 46} The trial court did not abuse its discretion in disallowing the
exclusion of the depreciation deduction from Timothy’s income. The seventh
assignment of error is overruled.
Eighth Assignment of Error
{¶ 47} In his final assignment of error, Timothy claims that the trial court
abused its discretion in finding that a shared-parenting plan was not in the best
interest of the children. Timothy argues that because he and Amy filed shared-
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parenting plans and the guardian ad litem recommended shared parenting, the trial
court erred in not adopting any of the plans.
{¶ 48} A trial court has broad discretion in determining whether to order
shared parenting. Lopez v. Coleson, 3d Dist. No. 12-05-24, 2006-Ohio-5389, ¶ 6;
R.C. 3109.04(D)(1)(b). An appellate court will presume that a trial court's
decision regarding child custody is correct and will not reverse the decision absent
an abuse of discretion. Bechtol v. Bechtol (1990), 49 Ohio St.3d 21, 23, 550
N.E.2d 178.
{¶ 49} R.C. 3109.04(D) sets forth standards and procedures for allocation
of parental rights and responsibilities using a shared-parenting plan. Under R.C.
3109.04(D)(1)(a)(i), the trial court may deny a motion for shared parenting and
proceed as if the motion had not been made if it determines that such a plan is not
in the best interest of the children. In further discussing shared-parenting plans,
the statute states:
The approval of a plan under division (D)(1)(a)(ii) or (iii) of this
section is discretionary with the court. The court shall not approve
more than one plan under either division and shall not approve a
plan under either division unless it determines that the plan is in the
best interest of the children. If the court, under either division, does
not determine that any filed plan or any filed plan with submitted
changes is in the best interest of the children, the court shall not
approve any plan.
(Emphasis added.) R.C. 3109.04(D)(1)(b).
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{¶ 50} Although both Timothy and Amy filed shared-parenting plans, Amy
made it very clear at trial that she did not feel shared parenting was appropriate.
The parties’ plans were very different, and Amy’s plan, although labeled a
“shared-parenting plan,” more closely followed the typical plan associated with
the allocation of a residential parent and traditional visitation schedule.
{¶ 51} The testimony at trial indicated that the parties had great difficulty
cooperating with each other. There was considerable testimony about the
derogatory and demeaning language that Timothy used in reference to Amy in the
presence of the children. Amy had been the children’s primary caretaker ever
since their birth. It was only recently that Timothy began to take a more active
role in the children’s lives.
{¶ 52} Although the guardian ad litem recommended shared parenting, the
primary rationale for that recommendation was to allow the children to spend time
with each parent. The guardian ad litem’s report also stated, “I am not confident
Tim and Amy are at a point emotionally they can work together,” and “the
parents’ disparate emotional states * * * will make Shared Parenting difficult.”
The guardian ad litem even recommended exchanges at a public place due to the
relationship of the parties.
{¶ 53} The trial court found:
The very crux of shared parenting requires the parties to cooperate
with one another in the daily lives of the children. The Court does
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not believe that these parties can cooperate to the extent necessary to
implement any type of shared parenting plan. Such a forced
cooperation would not be in the best interests of the children.
Accordingly, the Court rejects the shared parenting plans of the
parties.
{¶ 54} Although the trial court designated Amy as the residential parent and
legal custodian, it addressed the guardian ad litem’s concerns and awarded
Timothy more time with the children than normally allotted under standard
visitation orders. Based upon the testimony and evidence before the trial court, we
do not find that the court abused its discretion when it declined to order a shared-
parenting plan. Timothy’s eighth assignment of error is overruled.
{¶ 55} Based on the foregoing, we find that seven of Timothy’s
assignments of error are overruled and the judgment of the trial court pertaining to
those assignments of error is affirmed. Timothy’s fifth assignment of error is
sustained, and the matter is remanded to the trial court for further consideration
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consistent with this opinion.
Judgment affirmed in part
and reversed in part,
and cause remanded.
PRESTON, P.J., and SHAW, J., concur.
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