                   IN THE COURT OF APPEALS OF IOWA

                                  No. 18-1491
                              Filed July 24, 2019


IN RE THE MARRIAGE OF DEORA LYNNE OLSEN
AND JAMES ALFRED OLSEN

Upon the Petition of
DEORA LYNNE OLSEN,
      Petitioner-Appellee,

And Concerning
JAMES ALFRED OLSEN,
     Respondent-Appellant.
________________________________________________________________


      Appeal from the Iowa District Court for Wapello County, Myron L. Gookin,

Judge.



      James Olsen appeals the district court’s award of alimony to Deora Olsen.

AFFIRMED.



      Steven Gardner of Denefe, Gardner & Zingg, P.C., Ottumwa, for

appellant.

      Cynthia D. Hucks of Box & Box Attorneys at Law, Ottumwa, for appellee.



      Considered by Potterfield, P.J., and Doyle and Tabor, JJ.
                                           2


POTTERFIELD, Presiding Judge.

       James Olsen appeals the decree dissolving his marriage to Deora Olsen,

arguing the district court improperly calculated both his and Deora’s incomes and

improperly awarded Deora alimony of $300 per month for five years and then

$250 per month for another five years. Deora requests appellate attorney fees.

   I. Background Facts & Proceedings.

       James and Deora married on November 29, 1993. The two have one

child, now an adult. Deora has one adult child from a previous marriage. The

parties separated in November 2016, and the dissolution trial was held in June

2018. James and Deora were married for approximately twenty-four years.

       At the time of the dissolution, James was fifty-seven. James owns and

operates a tree trimming, maintenance, and removal business known as

“Aubrey’s Tree Maintenance,” which he has done since before he and Deora

were married. James has a problem with his right hip which causes him some

pain and difficulties, but it does not impede his ability to work.    At trial he

described his health as “[f]airly good.”

       Deora was fifty-six at the time of the dissolution. She has a GED and is

trained and licensed as a physical therapy assistant. She has been employed as

a physical therapy assistant for around twenty-seven years with various

companies. At her current position, she works thirty to forty hours per week,

depending on patient demand. Thirty hours per week is considered full-time.

She earns twenty-seven dollars per hour. She receives dental insurance through

her employment but does not receive health insurance. Deora also regularly

worked on-call at another healthcare provider from 2007 until early 2018. She
                                          3


stopped working at the other healthcare provider because the company “got into

some trouble and could not take any new patients.” Deora also assisted James

with his business by doing the bookkeeping, including preparing financial

documents for tax preparation by their accountant. The record does not contain

detailed information about Deora’s health. The record does reflect that she broke

her foot in 2015 and could not work most of that year, and that she has a

condition called tumid lupus. No evidence was presented of the impact of tumid

lupus on Deora’s health or her ability to work, although she testified at trial it was

a condition that required health insurance to manage properly.

       The district court filed its findings of fact, conclusions of law, and decree of

dissolution on August 16, 2018. In its determination of spousal support, the court

first concluded it was necessary to take the average of the parties’ income from

2014–17 because both parties had variable income over that period. The court

determined Deora’s average four-year income was $38,513 per year, based on

her taxable wages and $10,816 in unemployment compensation she received in

2015 due to her broken foot. The district court next determined James’s four-

year average income to be $45,161. The district court calculated this figure by

taking the average of his net income plus the depreciation he took on his federal

income taxes from 2014–17.        The court concluded the $45,161 figure more

accurately reflected James’s “minimum earnings capacity,” rather than his actual

income.
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       The district court awarded Deora alimony, based on James’s larger

income and the greater amount of debt Deora assumed in the dissolution.1 The

district court based the monthly alimony amount partially on the mortgage

payments for the parties’ home, which Deora received in the dissolution. The

balance on the mortgage at the time of the dissolution was $8614, and the

monthly service was $281.69.         The court determined it was “reasonable to

provide an alimony payment slightly in excess of the mortgage payment in the

first five years and an alimony payment slightly less than the mortgage payment

in the second five years” to account for of the amount of short-term debt—like

credit card debt—Deora assumed.

       James appeals the award of alimony.

    II. Standard of Review.

       Trials of marriage dissolutions are equitable proceedings.          Iowa Code

§ 598.3 (2016). We review equitable proceedings de novo. In re Marriage of

McDermott, 827 N.W.2d 671, 676 (Iowa 2013); Iowa R. App. P. 6.907. “We give

weight to the findings of the district court, particularly concerning the credibility of

witnesses; however, those findings are not binding upon us.” McDermott, 827

N.W.2d at 676. But “we will disturb a district court determination only when there

has been a failure to do equity.” In re Marriage of Mauer, 874 N.W.2d 103, 106

(Iowa 2016).




1
  Deora assumed $36,060 in liabilities from the dissolution; James assumed $7000. The
district court also awarded James most of the parties’ joint assets and ordered James to
pay a property equalization payment of $25,980.50 to achieve equal equity between
them. James does not appeal the division of assets and liabilities.
                                         5


   III. Discussion.

       James makes two arguments. He argues awarding Deora alimony was

inequitable in light of their similar earning capacities. He also argues the court

erred in calculating both his and Deora’s incomes. We address each argument

in turn.

           a. Award of Alimony.

       James argues the district court erred by granting an award of any amount

of alimony to Deora. To award alimony under Iowa Code section 598.21A(1), we

consider the following factors:

               a. The length of the marriage.
               b. The age and physical and emotional health of the parties.
               c. The distribution of property made pursuant to section
       598.21.
               d. The educational level of each party at the time of marriage
       and at the time the action is commenced.
               e. The earning capacity of the party seeking maintenance,
       including educational background, training, employment skills, work
       experience, length of absence from the job market, responsibilities
       for children under either an award of custody or physical care, and
       the time and expense necessary to acquire sufficient education or
       training to enable the party to find appropriate employment.
               f. The feasibility of the party seeking maintenance becoming
       self-supporting at a standard of living reasonably comparable to
       that enjoyed during the marriage, and the length of time necessary
       to achieve this goal.
               g. The tax consequences to each party.
               h. Any mutual agreement made by the parties concerning
       financial or service contributions by one party with the expectation
       of future reciprocation or compensation by the other party.
               i. The provisions of an antenuptial agreement.
               j. Other factors the court may determine to be relevant in an
       individual case.

We must examine all the factors in section 589.21(A)(1) when determining

whether to award alimony. Gust, 858 N.W.2d at 408. The factors “cannot be

considered in isolation from each other.” Id. The most heavily weighted factors
                                           6

are the length of the marriage and the earning capacities of the spouses. Mauer,

874 N.W.2d at 107. In assessing these factors, we recognize the trial court is “in

the best position to balance the parties’ needs, and we should intervene on

appeal only where there is a failure to do equity.” Gust, 858 N.W.2d at 416.

       Applying these factors, we conclude the district court’s award of alimony is

equitable.   The parties were married for over twenty-four years.           “Generally

speaking, marriages lasting twenty or more years commonly cross the durational

threshold and merit serious consideration for traditional spousal support.” Id. at

410–11. While they were married, Deora received her health insurance through

James. She cannot receive health insurance through her work and now must

pay for it herself. She has also assumed most of the parties’ liabilities while

James received most of parties’ assets, some of which have retained

considerable value over the time James took substantial depreciation deductions

for them. In light of these facts, we see no inequity in the amount or duration of

spousal support awarded to Deora.2




2
  We note that the amount and duration of alimony awarded by the district court is less
than that which would have been awarded under the American Academy of Matrimonial
Lawyers (AAML) formula for calculating spousal support. See Mary Kay Kisthardt, Re-
Thinking Alimony: The AAML’s Considerations for Calculating Alimony, Spousal Support
or Maintenance, 21 J. Am. Acad. Matrim. Law. 61 app. A at 80–81 (2008). Applying the
AAML formula using the district court’s calculation of parties’ annual incomes, Deora
would receive alimony of $487.14 per month indefinitely. Applying the AAML formula
and adjusting Deora’s average income as we have done here, Deora would recieve
alimony of $400.56 per month indefinitely. We are not obligated, however, to increase
the alimony award based on the AAML guidelines. Gust, 858 N.W.2d at 416 n.2 (“While
clearly not binding on an Iowa court, the AAML guidelines nonetheless provide a useful
reality check with respect to an award of traditional spousal support.”). Nor does Deora
request more alimony on appeal.
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          b. Calculation of Income.

      James also argues the district court improperly calculated Deora’s 2014–

17 income by including 2015 in the average. This was error, he argues, because

she was injured and unable to work for most of the year and received

unemployment compensation at a rate less than her customary compensation

during that year. James argues the district court should have instead taken an

average of Deora’s income from only 2014, 2016, and 2017. On our de novo

review, we agree.    When we consider awarding alimony, “we focus on the

earning capability of the spouses, not necessarily on actual income.”        In re

Marriage of Gust, 858 N.W.2d 402, 411 (Iowa 2015). Deora’s broken foot in

2015 did not stop her from working full-time in 2016 and 2017, and the record

does not suggest it will reduce her earning capacity going forward. We conclude

the proper average of Deora’s income is an average of her income in the years

2014, 2016, and 2017, which calculates to $43,708 annually. While we agree

with James that an average of Deora’s income for 2014, 2016 and 2017 is higher

than the amount computed by the district court, we find that the amount of

alimony ordered serves the intended purpose and is equitable.

      James further argues the district court improperly calculated his earning

capacity by adding the amount of depreciation he claimed on the equipment used

in his tree business to his available income. He contends the district court should

have taken an average of his net profit over 2014–17 and not add the

depreciation he claimed in each of those years to his income. While we agree

there may have been a more finely tuned approach to determining James’s
                                         8


income, we, like the district court, do not have the benefit of evidence on which to

calculate an appropriate amount of depreciation to deduct from taxable income.

       The Iowa Supreme Court has addressed depreciation in the context of

child support computations:

       Depreciation is a mere book figure which does not either reduce the
       actual dollar income of the defendant or involve an actual cash
       expenditure when taken. On the contrary, it represents additional
       cash available to the defendant by permitting substantial tax
       deductions and, ultimately, tax savings. The fact that the defendant
       may use some or all of the cash represented by depreciation to pay
       off principal indebtedness on the property is of no consequence
       since such payments, in effect, increase his net worth and estate by
       increasing his equity.

In re Marriage of Gaer, 476 N.W.2d 324, 328 (Iowa 1991) (quoting Stoner v.

Stoner, 307 A.2d 146, 151 (Conn. 1972)). In Gaer, the court adopted a flexible

approach to assessing depreciation:

       In formulating a workable and flexible approach . . . we hold that the
       amount of depreciation, if any, to be considered in determining the
       availability of net income for the purposes of alimony and support
       awards is best left to the court’s discretion “determined from all the
       circumstances including the amount of depreciation claimed and
       the property depreciated.”

476 N.W.2d at 328 (quoting Stoner, 307 A.2d at 151). To fairly account for

depreciation, we recalculate depreciation under the straight-line method of

depreciation.3   McDermott, 827 N.W.2d at 685.         But no depreciation will be

deducted from a party’s income where the asset depreciated is “a hobby or a tax

shelter.” In re Marriage of Starcevic, 522 N.W.2d 855, 857 (Iowa Ct. App. 1994).

We have applied the principles from the Gaer line of cases to alimony disputes



3
   Straight line depreciation each year = (Cost of asset – salvage value)/Serviceable
lifetime.
                                              9

before. See, e.g., In re Marriage of Jenks, No. 01-0018, 2002 WL 575574, at *2

(Iowa Ct. App. Mar. 13, 2002).

       Between 2014 and 2017, James claimed $67,233 in depreciation

deductions on a variety of assets he used in the course of operating Aubrey’s

Tree Maintenance.        That the assets were used solely for business-related

activities is not disputed. The district court calculated James’s income by adding

the total depreciation deducted between 2014 and 2017 to his net income over

that same period, for a total income of $180,642 and an average income of

$45,161 per year. While our case law suggests we should recalculate James’s

depreciation under the straight-line method and deduct that amount from his net

profit, the record does not permit us to do so. The first step to calculate an

asset’s depreciation under the straight-line method is to deduct the salvage value

from the asset’s basis.       James claims each of the assets for which he took

depreciation deductions in 2014 and 2015 had a salvage value of $0. When he

submitted valuations for these assets to the district court, however, he valued

many assets considerably more than $0.4 Without evidence providing accurate

salvage values for the depreciated assets, we, like the district court, are unable

to accurately determine the amount of depreciation to deduct from James’s net

profit under the straight-line method. We affirm the district court’s calculation of

James’s income.        Furthermore, it was reasonable for the district court to



4
  For instance, James claimed the useful life of his clam truck was five years on all of his
tax returns from 2014 to 2017. The truck was placed in service in July 2013, and the
five-year useful life had run at the time of trial. Despite claiming it had a salvage value of
$0, he valued the clam truck at $25,000 at the time of trial. The district court adopted
James’s valuation of all the couple’s business-related assets, citing his “significant
expertise in the value of such equipment.”
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conclude the average income calculated reflected James’s minimum earning

capacity rather than his actual earnings. James testified at trial that he was

unable to invest in his business since he and Deora separated, due to expenses

related to this litigation.   Despite bearing these additional costs, James’s net

business profit has increased substantially since he began filing individual tax

returns in 2016, even when depreciation deductions are entirely excluded from

his net profit.5

           c. Attorney Fees.

       Finally, Deora argues we should award her attorney fees and costs on

appeal, in the amount of $2500. “Appellate attorney fees are not a matter of right

but rather rest in this court’s discretion.” McDermott, 827 N.W.2d at 687 (quoting

In re Marriage of Okland, 699 N.W.2d 260, 270 (Iowa 2005)). “In determining

whether to award appellate attorney fees, we consider ‘the needs of the party

seeking the award, the ability of the other party to pay, and the relative merits of

the appeal.’”      Id. (quoting Okland, 699 N.W.2d at 270).           After carefully

considering each of the factors, we decline to grant appellate attorney fees.

Costs shall be taxed equally to both parties.

       AFFIRMED.




5
 Excluding depreciation deductions, James reported a net profit of $24,352.00 for 2014
and 2015 collectively. He reported a net profit of $89,057.00 for 2016 and 2017
collectively.
