ANOTHER ASPECT OF IMPUTED INCOME
December 20, 2011 § Leave a comment
We’ve discussed imputed income here before. In essence, income can be imputed where the payor claims reduced income or incapacity in certain situations.
Another situation for imputed income arises where the judge finds that the payor has greater income than is reported on the financial statement and in the testimony. Such was the case in Brooks v. Brooks, decided by the COA on December 13, 2011.
In Brooks, at ¶ 9, the COA upheld the trial court’s decision not to accept the husband’s testimony about his income. The husband, Brandon, was a self-employed attorney who reported fluctuating income. The chancellor relied on Brandon’s 2007 income tax return to determine income because that was the only tax return he provided; he did not offer his 2008 or 2009 returns into evidence. In the absence of the two subsequent returns, the COA ruled, it was reasonable for the court to rely on and draw conclusions from the information submitted.
Brandon also contended that his income was insufficient to pay alimony to his former wife, Dawn, in the amount ordered, but the COA rejected that argument, at ¶ 22:
The chancellor found that Dawn could not meet her expenses without assistance from Brandon. Even working part time, she would not be able to meet her obligations. Further, we agree with the chancellor’s finding that Brandon failed to show evidence that he was unable to pay alimony. In awarding the alimony, the chancellor noted:
“. . . Brandon, who has been paying the court-ordered support since June 22, 2009, has been able to pay support to Dawn in the amount of $250 per week, plus the house note, plus household expenses, without any increase in debt. Exhibit 2 shows debt only for the home mortgage, a car note for a vehicle Brandon purchased after the separation, and a student loan. Since neither party has reported any sizeable cash on hand, it is obvious that Brandon could manage to pay Dawn’s support from either of only two sources: current income; or newly-acquired debt. Since he reports no new debt the conclusion is inescapable that Brandon has been paying Dawn from current income, and that he is managing to pay his other expenses in like manner. In addition, Brandon testified at trial that he would be willing to pay the house note for Dawn and the children’s benefit if he could have extra visitation, which the court finds to be a curious position for a person who claims to be unable to meet his expenses with the amount of income he has.”
From the payor’s standpoint, the more accurate and credible evidence you offer the court to establish income, the better off your client will be. Explain and document discrepancies and inconsistences, or run the risk that the court will construe them against your client.
From the recipient’s standpoint, attack income information and don’t take it at face value. You might persuade the judge to find that there is more income there than is being reported.
IMPUTING INCOME
November 28, 2011 § 1 Comment
In these unsettled economic times, it’s a fairly common phenomenon that the party who will be ordered to pay child support is working a reduced schedule, or has taken a job with a significant pay cut, or has lost employment. The paying parent wants child support set at the low rate, and the recipient parent wants the court to consider earning capacity.
The law is that “income will be imputed to a child support payor who, in bad faith, voluntarily worsens his financial position.” Howard v. Howard, 968 So.2d 961, 972 (Miss. App. 2007). “[A]n obligor’s financial position cannot be voluntarily worsened in an attempt to lessen his [or her] child support obligation.” Swiderski v. Swiderski, 18 So.3d 280, 286 (Miss. App. 2009). Where a chancellor is not convinced of the honesty or veracity of the parent concerning the parent’s ability to abide by his or her financial obligations, the chancellor is not precluded from factoring this skepticism in the equation when determining the amount of the child support award. Dunn v. Dunn, 695 So.2d 1152, 1156-57 (Miss.1997); see also Grogan v. Grogan, 641 So.2d 734, 741 (Miss.1994). Furthermore, “[t]he chancellor can base child support on the parent’s potential earning capacity.” Suber v. Suber, 936 So.2d 945, 949 (Miss. App. 2006); White v. White, 722 So.2d 731, 734 (Miss. App. 1998).
The key elements are bad faith and voluntariness. Bad faith involves an intent to evade one’s obligation, whether voluntarily or not. For example, it is unquestionably bad faith to ask for a job assignment that will reduce pay; that is voluntary. It is also bad faith to take a job assignment that one knows will lead to a reduction in hours or pay, even though someone else will make the pay-cut decision; that may not appear voluntary, but the intent is to place oneself in a position to evade the obligation via someone else’s decision. Voluntariness, of course, is evident from the facts.
In the case of Wells v. Wells, 35 So.3d 1250, 1260 (Miss. App. 2010), the COA rejected the custodial father’s argument that income should be imputed to the mother, finding no evidence that the mother had reduced her work hours in bad faith to reduce her child-support obligation. The chancellor had found that the mother’s intent in reducing her work hours was to spend more time with the children. The COA also pointed out that the chancellor’s decision whether or not to impute income is discretionary.
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