may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
Lisa J. Cremers, n/k/a Lisa J. Waltzing,
Jeffry J. Cremers,
Stearns County District Court
File No. F5942051
Thomas W. Lies, 1111 First Street North, P.O. Box 1756, St. Cloud, MN 56302-1756 (for respondent Lisa Cremers n/k/a Lisa J. Waltzing)
Roger S. Van Heel, Stearns County Attorney, Jacqueline M. Schuh, Assistant County Attorney, Administration Center, Room 448, 705 Courthouse Square, St. Cloud, MN 56303 (for respondent County of Stearns)
Considered and decided by Randall, Presiding Judge, Toussaint, Chief Judge, and Foley, Judge.**
Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
Appellant argues that the administrative law judge committed error when he failed to consider various business expenses and deductions in determining appellant's gross and net income and that the ALJ abused his discretion in refusing to modify appellant's child support obligation. We affirm.
Appellant was laid off from his position at CBS in October 1995. In November 1995, appellant requested respondent Stearns County review his child support obligation because he had been laid off work and he intended to start his own business. Because the child support order was less than three years old, his request was denied. In February 1997, appellant requested a second review with Stearns County that was also denied.
On March 25, 1997, appellant served and filed a motion for modification of child support. Appellant offered to pay child support in the amount of $195.05 per month, alleging that this was the amount due under the guidelines based on his income. At the time, appellant was self-employed doing interior remodeling on a contract basis at the rate of $18 an hour. On May 1, 1997, a cost of living adjustment was implemented, raising appellant's obligation from $484.84 per month to $513 per month. On June 26, 1997, a hearing was held before an administrative law judge (ALJ) on appellant's motion for modification. On July 29, 1997, the ALJ issued his decision, denying appellant's motion. Appellant's notice of appeal was filed on September 11, 1997.
Appellant argues the ALJ committed reversible error when calculating his net income for the purposes of determining his child support obligation because the ALJ failed to consider various business deductions and expenses. We disagree. Pursuant to the guidelines, child support obligations are based on the obligor's monthly net income. Minn. Stat. § 518.551, subd. 5(b) (1996). Under the guidelines, net income is defined as total monthly income minus federal and state income tax, social security and pension deductions, health insurance, union dues, and child support or maintenance currently being paid. Minn. Stat. § 518.551, subd. 5(b). Net income specifically includes payments in-kind "received by the obligor in the course of employment, self-employment, or the operation of a business if the payments reduce the obligor's living expenses." Minn. Stat. § 518.551, subd. 5(b)(1) (1996).
Minnesota courts have held that "[l]egitimate business expenses must be considered by the trial court in determining an obligor's net income." County of Nicollet v. Haakenson, 497 N.W.2d 611, 615 (Minn. App. 1993); see also Preussner v. Timmer, 414 N.W.2d 577, 580 (Minn. App. 1987) (holding when record contains evidence of legitimate depreciation deductions court should consider those deductions in determining obligor's net income). Business deductions and expenses may be deducted from an obligor's gross income to determine net income for the purposes of child support. See Martin v. Martin, 364 N.W.2d 475, 478 (Minn. App. 1985) (holding district court did not abuse discretion by finding that traveling salesperson may properly deduct business deductions for food and lodging in determining net income under guidelines even though there may have been some duplication between such expenses and obligor's allowance for "basic living needs"). The decision to credit such expenses or deductions is within the discretion of the district court. Keil v. Keil, 390 N.W.2d 36, 39 (Minn. App. 1986).
Here, a reading of the ALJ's decision shows that appellant's 1996 income tax returns were considered along with deductions for supplies and other expenses, including depreciation, travel, meals, vehicle lease payments, and a capital loss on the sale of property. The ALJ found that the lease payment on appellant's 1994 GMC 4x4 supercab truck, which is used for both business and personal purposes, is claimed as a deduction from income by his business. The ALJ found that appellant was able to make payments on his house of $380 per month, a $186 payment on a 1990 bass boat, and $396 loan payments on a 5th wheel camper. In addition, the ALJ specifically stated that he considered appellant's affidavit that contained appellant's claimed income and in which appellant explained his business deductions and depreciation deductions. The ALJ acknowledged that because respondent is able to claim many of his business and personal expenses as deductions to income, appellant only pays "nominal" income taxes. The ALJ considered the evidence presented by appellant and concluded that appellant was not entitled to credit all his business expenses and deductions in determining his net income for the purposes of child support.
There is a difference between a court failing to consider legitimate business expenses and depreciation deductions and a court considering such items, but then concluding that the obligor is not entitled to receive credit for those expenses. Contrary to appellant's assertion, the ALJ did consider his business expenses and deductions, but concluded some were personal expenses. We cannot say as a matter of law that the ALJ abused his discretion.
Finally, appellant argues that the ALJ abused his discretion in refusing to modify his child support obligation because his net income is significantly lower than that calculated by the ALJ. However, appellant's argument is premised on the assumption that he is entitled to a credit for his various business expenses and deductions. The ALJ, in his discretion, concluded that he was not entitled to such a credit and found that appellant's monthly net income was $2,161. Under the guidelines this results in a monthly child support obligation of $540. Appellant is currently paying $513 per month. The current child support obligation is not unfair or unreasonable. The ALJ did not abuse his discretion in denying appellant's motion.