This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).

STATE OF MINNESOTA

IN COURT OF APPEALS

C8-96-1721

In Re the Marriage of:

Gary Gene Falteisek, petitioner,

Appellant,

vs.

Elaine Marie Falteisek,

Respondent.

Filed February 25, 1997

Affirmed as modified

Lansing, Judge

Washington County District Court

File No. F4955301

Lawrence H. Crosby, Crosby & Associates, 25 Empire Drive, St. Paul, MN 55103-1800 (for Appellant)

Tracey A. Galowitz, Lawson, Marshall, McDonald & Galowitz, P.A., 3880 Laverne Avenue North, Lake Elmo, MN 55042 (for Respondent)

Considered and decided by Lansing, Presiding Judge, Crippen, Judge, and Peterson, Judge.

U N P U B L I S H E D O P I N I O N

LANSING, Judge

This is an appeal from the property division in a marriage dissolution action. We conclude that the district court effected an equitable division well within its discretion, but made one calculation error. We affirm as modified.

FACTS

Gary Falteisek (Falteisek) and Elaine Carlson were married in 1977. They separated on October 1, 1994, and in the dissolution judgment, Elaine Falteisek resumed her former name of Elaine Carlson (Carlson). The couple had no children. The only disputed issue at the time of their marriage dissolution was the division of their real and personal property.

The issues disputed on appeal relate to: (1) division of the couple's 41-acre farm/homestead; (2) the capital gains tax on the sale of the farm/homestead; (3) a 30-acre tract of land near Highway 96 and $30,000 allegedly due Falteisek for work performed on the 30-acre tract to prepare it for sale; (4) an amount borrowed from Janis Falteisek after the separation for payments on the 30-acre tract to prevent foreclosure; and (5) the allocation of the individual pensions.

D E C I S I O N

The district court has broad discretion in dividing property upon marriage dissolution and absent an abuse of discretion will not be reversed. Rutten v. Rutten, 347 N.W.2d 47, 50-51 (Minn. 1984). A "clearly erroneous conclusion that is against logic and the facts on record" constitutes an abuse of discretion. Id.

I

The division of marital property from non-marital property is governed by the "clearly erroneous" standard when reviewing findings of fact and a de novo standard when reviewing questions of law. Freking v. Freking, 479 N.W.2d 736, 739 (Minn. App. 1992). Property acquired as a gift to one of the spouses during the marriage qualifies as non-marital property. Minn. Stat. § 518.54, subd. 5(a) (1994). The party claiming a non-marital interest in property must prove his or her interest by a preponderance of the evidence. Kottke v. Kottke, 353 N.W.2d 633, 636 (Minn. App. 1984).

Falteisek contends that the district court erred in allocating twenty-four percent of the dollar value of the farm/homestead as his non-marital interest in the property instead of allocating 31.07 acres of the total 41-acre parcel. In addition he contends that even if the twenty-four percent allocation is correct, the court abused its discretion by awarding him twenty-four percent of the proceeds after sale rather than twenty-four percent of the gross value of the property.

The record contains no convincing evidence that Falteisek's parents gifted him the actual land, as opposed to its value. The 31.07 acres had never been surveyed free from the remaining ten acres. The 1980 contract for deed and 1986 amended contract for deed both refer to the entire 41-acre parcel as if it were a unified farm/homestead.

Based on the testimony of Carlson and Falteisek's parents, the court awarded Falteisek a non-marital interest in the farm/homestead arising from a parental gift of approximately $26,000 toward the value of the property. Twenty-six thousand dollars is twenty-four percent of the value of the property at the time it was purchased ($108,914). The court based this calculation on figures in a Schmitz calculation, Schmitz v. Schmitz, 309 N.W.2d 748 (Minn. 1981), which was accepted into evidence without objection or comment from Falteisek's counsel. We conclude that the district court did not abuse its discretion in allotting Falteisek a twenty-four percent non-marital interest in the farm/homestead.

Falteisek asserts that the district court erred by allowing him twenty-four percent of the proceeds after sale of the farm/homestead rather than twenty-four percent of its gross value. We have made clear that, when property is encumbered by outstanding debts or mortgages, the Schmitz calculation must be based on the gross value rather than the net equity value of the property at the time of dissolution. See Nolden v. Nolden, 448 N.W.2d 892, 894 (Minn. App. 1989). But the principle underpinning that rule does not apply to the actual costs of selling unencumbered property. Falteisek has a twenty-four percent non-marital interest in the property's real worth, which is reflected in the actual value of the property in light of the costs of sale. We therefore affirm the district court's determination that the twenty-four percent non-marital interest be taken from the sale proceeds after costs of sale are paid out.

II

The district court may consider tax consequences in a dissolution action when the sale of real estate is required or likely to result from the dissolution. Aaron v. Aaron, 281 N.W.2d 150, 153 (Minn. 1979). The district court ordered that Falteisek is responsible for seventy-four percent of the capital gains tax on the sale of the farm/homestead.

We believe the seventy-four percent is a miscalculation. An accurate allocation of tax burden based on the percentage of interest in the property accounting for Falteisek's twenty-four percent individual interest would be calculated by totalling the sum of his twenty-four percent interest and his interest in one-half of the remaining interest (1/2 x 76% = 38%; 24% + 38% = 62%). Thus, his portion of the tax obligation should be sixty-two percent rather than seventy-four percent. We therefore modify the district court's judgment and decree to reflect an accurate calculation: Falteisek will assume responsibility for sixty-two percent of the capital gains liability from the sale of the farm/homestead.

III

Evidence was presented at trial that the parties had agreed to allocate $30,000 of the proceeds from the sale of the 30-acre parcel to Falteisek in consideration of his efforts to prepare the land for sale. This allocation was included in the district court's December 20, 1995 Order for Temporary Relief. A temporary order is not binding on the court and may be modified in the final resolution of a disputed dissolution. See Minn. Stat. § 518.131, subd. 9 (1994).

The district court obviously considered the agreement to pay Falteisek $30,000. The court presided over the initial motion that led to the temporary order, there was testimony on the issue at trial, and Falteisek raised the issue specifically in his posttrial motion. The court declined to award the $30,000 to Falteisek and, in its order denying reconsideration, specifically stated that the proceeds from the sale of the 30-acre parcel would be distributed as outlined in the judgment and decree.

Taken as a whole, the record demonstrates Falteisek's unwillingness to proceed with the sale of the parcel. Although the property was a significant burden that Falteisek admitted he did not have the resources to maintain, his refusal to assist in the sale led to the order for temporary relief. At trial, Falteisek admitted that the value of the land was $112,000 and that he would be willing to sell the land to his sister for $111,000. But he also admitted that absent a court order he would not list the parcel for less than $189,000. And, while Carlson conceded at trial that she had agreed to allocate $30,000 to Falteisek for the completed work, she testified that she was "forced into agreeing with it otherwise we wouldn't be able to sell it, in which case if we didn't sell it we'd lose it because I couldn't make the payments and Gary couldn't make the payments and wouldn't sell things to make the payment. He had all my assets." Falteisek submitted no evidence at trial of the actual expenses he incurred completing the clean-up.

We conclude that the district court considered and rejected Falteisek's arguments and that the court's determination was supported in fact and principle by the record. The district court did not abuse its discretion in refusing to allocate $30,000 to Falteisek. See Rohling v. Rohling, 379 N.W.2d 519, 522 (Minn. 1986) (district court's decision must be affirmed if it has acceptable basis in fact and principle).

IV

Falteisek contends that the district court erred in determining that he was responsible for any money borrowed from Janis Falteisek to cover payments on the 30-acre parcel after the October 1994 separation. But the court actually ordered Carlson to reimburse Falteisek for nearly half the amount he would have had to have borrowed to cover the payments. Because Falteisek's refusal to list the property resulted in the need for the loan, and because a just and equitable division of property does not require mathematical equality, the district court did not abuse its discretion when it ordered Falteisek to repay his sister for any money borrowed after the October 1994 separation. See Reynolds v. Reynolds, 498 N.W.2d 266, 270 (Minn. App. 1993) ("An equitable division of marital property * * * is not necessarily an equal division.").

V

We likewise conclude that the district court's division of pensions and life insurance policies was equitable and within its discretion. However, because we have determined that the district court erred in its calculation of the capital gains tax, we believe Falteisek's posttrial motion was reasonable, and we therefore reverse the court's award of $500 in attorneys' fees.

Affirmed as modified.