                IN THE COURT OF APPEALS OF TENNESSEE
                           AT KNOXVILLE
                                  June 17, 2014 Session

              JENICA DEBOER HALL v. JEFFREY GLEN HALL

                  Appeal from the Circuit Court for Bradley County
                     No. V-10-358     Lawrence Puckett, Judge




              No. E2013-01984-COA-R3-CV-FILED-AUGUST 14, 2014


This post-divorce matter presents the primary issue of whether the trial court properly
calculated, for child support purposes, the obligor parent’s income from self-employment.
The trial court held that mortgage payments made by the obligor’s business with respect to
a commercial building solely owned by the obligor should not be added to the obligor’s other
income for the purpose of calculating child support. The obligee parent appeals that ruling
to this Court. We affirm on that issue, concluding that such payments were already included
in the obligor parent’s income calculation. We reverse the trial court’s finding concerning
the obligor’s income, however, due to insufficient evidence regarding the nature of the
depreciation deduction taken with respect to the commercial building. We remand for further
proof regarding the depreciation deduction. The obligee parent also appeals the trial court’s
failure to award attorney’s fees. Having concluded that the trial court must reconsider its
determination of the obligor’s income, we also remand for the trial court to determine
whether an award of attorney’s fees to the obligee parent is appropriate. We conclude that
this is not an appropriate case for an award of attorney’s fees on appeal.

        Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
                Affirmed in Part, Reversed in Part; Case Remanded

T HOMAS R. F RIERSON, II, J., delivered the opinion of the Court, in which C HARLES D.
S USANO, J R, C.J., and J OHN W. M CC LARTY, J., joined.

Joshua H. Jenne, Cleveland, Tennessee, for the appellant, Jenica DeBoer Hall.

Randy Sellers, Cleveland, Tennessee, for the appellee, Jeffrey Glen Hall.
                                         OPINION

                          I. Factual and Procedural Background

       Jenica DeBoer Hall (“Mother”) and Jeffrey Glen Hall (“Father”) were married in
Kentucky in September 2001 and divorced in Tennessee in November 2010. During the
marriage were born two children, who were ages seven and two at the time of the divorce.
The parties had been living in Chattanooga, where Father maintained his chiropractic
practice. The parties agreed upon the terms of their divorce, which included that Father
would retain the commercial building titled in his name wherein his professional practice,
Chattanooga Family Sports Medicine Clinic (“CFSMC”), operated. Further, he was
responsible for paying the attendant mortgage indebtedness. The parties also agreed upon
the provisions of a permanent parenting plan, naming Mother as the primary residential
parent and awarding Father co-parenting time with the children. Under this plan, Father was
ordered to pay Mother child support in the amount of $1,088.00 per month. Pursuant to the
parties’ marital dissolution agreement, Mother and the children relocated to Kentucky after
the divorce to be near Mother’s family.

        In September 2011, Mother filed a petition for contempt and for modification of the
permanent parenting plan. Mother alleged, inter alia, that Father had failed to exercise his
co-parenting time with the children and had failed to fulfill his financial responsibilities
initially agreed upon and ordered by the court. Mother further asserted that an increase in
the amount of child support was warranted due to an improvement in Father’s income.
Father counter-petitioned, alleging that Mother was not allowing him the allotted co-
parenting time. The parties again reached an agreement with regard to the co-parenting
issues, which agreement was memorialized in a modified permanent parenting plan. That
order reserved issues regarding child support for further hearing.

        A hearing respecting child support was conducted on May 20, 2013. The majority of
evidence introduced at the hearing addressed Father’s income and expenses. The proof
demonstrated that Father still owned the commercial building that housed his practice and
that the respective real property was titled solely in his name. First National Bank as lender
held the mortgage on this commercial property, which debt was also solely in Father’s name.

       Father’s accountant, Deborah Collins, was questioned at length regarding the expenses
of the business, including the rent and property tax expense, as well as “automobile” and
telephone expenses. Ms. Collins testified that when she became Father’s accountant in
February 2012, she had to devote a significant amount of time to remedying problems created
by Father’s former bookkeeper. As the business was about to fail because Father could not
afford to pay the mortgage payments on the building, Ms. Collins negotiated with the bank

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and achieved a lower monthly payment amount. According to Ms. Collins, to create
additional income, the business also began renting space in the building to two other
professionals who in turn paid rent.

        Ms. Collins presented the 2012 income and expense statement for the business, which
demonstrated that the rent paid by others was treated as rental income. In lieu of paying rent
to Father as owner of the building, the business paid the mortgage payments on the building
directly to the lender. Ms. Collins categorized these payments as a rent expense for the
company on the business’s income and expense statement. Ms. Collins testified that the
business likewise paid the real property taxes on the building, which were also treated as an
expense of the business. According to Ms. Collins, the automobile expenses represented
payments made to someone other than Father for the purpose of running business errands,
such as going to the bank. Although the phone expense included both the office telephone
and Father’s personal cellular telephone, Father’s cellular telephone was used by the business
to contact Father when he was away from the office.

       Following the hearing, the trial court concluded that the mortgage payments regarding
the commercial building should not be considered as additional income to Father. The court
established Father’s annual income at $79,535.00, based on Ms. Collins’s testimony. The
court reserved Mother’s request for an award of attorney’s fees for further hearing in
conjunction with post-trial motions. Mother filed a motion to amend the trial court’s ruling
regarding Father’s income, which was denied by the court. The court failed to rule on
Mother’s request for attorney’s fees. Father’s child support was modified to $1,383.00 per
month, a $295.00 increase, based upon the trial court’s finding regarding his income and
calculation under the applicable guidelines. Mother timely appealed.

                                    II. Issues Presented

       Mother presents the following issues for our review, which we have restated slightly:

       1.     Whether the trial court erred in its calculation of Father’s income for
              child support purposes.

       2.     Whether the trial court erred in failing to grant Mother an award of
              attorney’s fees at trial.

       3.     Whether Mother should receive an award of attorney’s fees on appeal.




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                                         III. Standard of Review

      This Court has described the proper standard of review for child support
determinations as follows:

       Setting child support is a discretionary matter. Accordingly, we review child
       support decisions using the deferential “abuse of discretion” standard of
       review. This standard requires us to consider (1) whether the decision has a
       sufficient evidentiary foundation, (2) whether the court correctly identified and
       properly applied the appropriate legal principles, and (3) whether the decision
       is within the range of acceptable alternatives. While we will set aside a
       discretionary decision if it rests on an inadequate evidentiary foundation or if
       it is contrary to the governing law, we will not substitute our judgment for that
       of the trial court merely because we might have chosen another alternative.

State ex rel. Vaughn v. Kaatrude, 21 S.W.3d 244, 248 (Tenn. Ct. App. 2000). See also
Massey v. Casals, 315 S.W.3d 788, 798 (Tenn. Ct. App. 2009) (“We note that determinations
of child support lie within the discretion of the trial court.”).

                                           IV. Father’s Income

       The trial court made the following findings of fact with regard to Father’s income for
the purpose of setting his child support obligation amount:

              Mr. Hall’s income shall be set as is shown on Exhibit No. 2 in the
       amount of $83,444.00, plus $6,000.00, which Mr. Hall got to deduct as
       depreciation on a machine that he purchased for his business, minus []15.3%
       self-employment tax as it relates to that portion of the $83,444.00 attributable
       to Ocoee Clinic1 of $27,304.00, and $37,432.00 as it relates to C.F.S.M.C.,
       which 15.3% thereon is $9,909.00, making his adjusted income for child
       support purposes $79,535.00.

               The Court does not include as income Mr. Hall’s payments on the
       business building titled in his name, because he is not actually generating any
       kind of equity in paying these payments. The Court finds that such is a
       liability and not an asset.

(Paragraph numbering omitted.) Utilizing the income amount of $79,535.00 annually, the

       1
           Ocoee Clinic is a second location of Father’s practice, which operates from a rental property.

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trial court, employing the child support worksheet, calculated Father’s support obligation to
be $1,383.00 per month.

       Any rental income Father receives from this commercial property should clearly be
included as income for child support purposes. See Jennette v. Jennette, No. 01A01-9810-
CH-00549, 1999 WL 732519 at *4 (Tenn. Ct. App. Sept. 21, 1999); Creson v. Creson, No.
02A01-9801-CH-00002, 1999 WL 65055 at *6 (Tenn. Ct. App. Feb. 12, 1999); Lazenby v.
Lazenby, No. 01A01-9708-GS-00432, 1998 WL 195973 at *2 (Tenn. Ct. App. Apr. 24,
1998). Pursuant to the respective definition provided in the Child Support Guidelines:

       Gross income of each parent shall be determined in the process of setting the
       presumptive child support order and shall include all income from any source
       (before deductions for taxes and other deductions such as credits for other
       qualified children), whether earned or unearned, and includes, but is not
       limited to, the following:

       (i) Wages;

       (ii) Salaries;

       (iii) Commissions, fees, and tips;

       (iv) Income from self-employment; . . . .

Tenn. Comp. R. & Regs., ch. 1240-02-04-.04(3)(a)(1) (emphasis added). The Guidelines
provide, inter alia, that “[i]ncome from self-employment includes income from, but not
limited to, business operations, work as an independent contractor or consultant, sales of
goods or services, and rental properties, etc., . . . .” Tenn. Comp. R. & Regs., ch.
1240-02-04-.04(3)(a)(3)(i) (emphasis added). The Guidelines further provide, however, that
“ordinary and reasonable expenses necessary to produce such income” should be deducted
and that “[e]xcessive promotional, excessive travel, excessive car expenses or excessive
personal expenses, or depreciation on equipment,” as well as “[a]mounts allowed by the
Internal Revenue Service for accelerated depreciation or investment tax credits,” shall not
be considered reasonable expenses.               Tenn. Comp. R. & Regs., ch.
1240-02-04-.04(3)(a)(3)(ii)(I) and (II).

       The evidence at trial demonstrated that in 2012, Father’s business paid mortgage
payments totaling $44,461.32 relative to Father’s commercial building, which the business
deducted as a rental expense. Further, Exhibit 2, relied upon by the trial court for
establishing Father’s income, showed that Ms. Collins utilized this same amount in

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determining whether Father claimed an income or loss on the building for the purpose of
calculating his personal income tax. On Exhibit 2, the amount of $44,461.32 is reflected as
rental income to Father. In corresponding fashion, mortgage interest of $31,723.57 and
depreciation of $19,611.00 are shown as deductions, thereby attributing a loss to Father with
regard to the building of $6,873.57. Ms. Collins deducted this loss figure when calculating
Father’s total income for the year, as detailed on Exhibit 2:

                   Income from C.F.S.M.C.                    $37,432.00
                   Loss from Jeff Hall, Inc.2                  -1,927.00
                   Loss from building                          -6,874.00
                   Income from W-2                            27,509.00
                   Income from Ocoee                          27,304.00

                   Total                                     $83,444.00

As stated above, the trial court accepted this total, along with Ms. Collins’s testimony that
self-employment taxes had not yet been deducted with regard to the income from CFSMC
and Ocoee. Upon deducting the respective amount of self-employment taxes and adding
back $6,000.00 in equipment depreciation that Ms. Collins had deducted,3 the trial court
arrived at an amount for Father’s annual income of $79,535.00.

        We agree with the trial court that the mortgage payments made on Father’s behalf
should not have been added to this income figure.4 These payments were already included
in Ms. Collins’s calculations with regard to any income or loss from the building. At trial,
however, the parties failed to address whether the depreciation amount of $19,611.00 was
properly deducted to create a loss regarding the building, thereby reducing Father’s income.
As previously explained, Ms. Collins testified that she deducted depreciation on the building,
which created a respective loss of $6,873.57. As the trial court accepted those calculations,
this loss was deducted from Father’s income. However, Ms. Collins was not questioned
regarding whether this depreciation was an amount “allowed by the Internal Revenue Service
for accelerated depreciation,” which, according to the Guidelines, shall not be considered a
reasonable expense to be deducted from self-employment income. See Tenn. Comp. R. &


        2
            Jeff Hall, Inc., appears to be a separate corporation that leases equipment and employees to CFSMC.
        3
          Pursuant to Tenn. Comp. R. & Regs., ch. 1240-02-04-.04(3)(a)(3)(ii)(I), depreciation on equipment
is not a reasonable expense.
        4
        Although we do not agree with the trial court’s stated reason for excluding the mortgage payments
as income to Father, we do agree that the result is correct. See Int’l House of Talent, Inc. v. Alabama, 712
S.W.2d 78, 88 (Tenn. 1986); Hopkins v. Hopkins, 572 S.W.2d 639, 641 (Tenn. 1978).

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Regs., ch. 1240-02-04-.04(3)(a)(3)(ii)(II); see also 26 U.S.C. § 168 (addressing depreciation
generally).

        Lacking the benefit of having Father’s tax return or any additional proof on this issue
in the record, this Court is without adequate evidentiary foundation to determine whether the
depreciation on the commercial property was properly deducted from Father’s income. As
such, we must remand this case to the trial court to consider further evidence regarding this
issue pursuant to Tennessee Code Annotated § 27-3-128, which states:

       The court shall also, in all cases, where, in its opinion, complete justice cannot
       be had by reason of some defect in the record, want of proper parties, or
       oversight without culpable negligence, remand the cause to the court below for
       further proceedings, with proper directions to effectuate the objects of the
       order, and upon such terms as may be deemed right.

Tenn. Code Ann. § 27-3-128 (2000). We therefore remand this action to the trial court for
further proceedings regarding whether depreciation on Father’s commercial property was
properly deducted from his income. After making such determination, the trial court shall
make an appropriate finding regarding Father’s income for child support purposes.

       Mother similarly asserts that the real property taxes paid by the business on Father’s
commercial building should be included as income to Father. We agree that the tax expense
paid on Father’s behalf by the business, which inures to his benefit, should be included as
rental income on the building to Father, similar to the mortgage payments. We note,
however, that this expense could also properly be deducted as an “ordinary and reasonable
expense[] necessary to produce such [rental] income” in that same calculation. Tenn. Comp.
R. & Regs., ch. 1240-02-04-.04(3)(a)(3)(i). See also Lazenby, 1998 WL 195973 at *2.
Therefore, the end result would be a “wash” regarding Father’s income calculation. The trial
court did not err in failing to add the property taxes paid by the business to Father’s income
amount for child support purposes.

        As to the automobile and telephone expenses Mother now seeks to dispute, there was
no demonstration or argument at trial that these business expenses were unreasonable. Ms.
Collins explained the nature of these expenses and established that they were legitimate
expenses of the business. As no proof was introduced to the contrary, Mother did not take
issue with these expenses at the trial court level. We therefore conclude that any issue
regarding these expenses has been waived. See Simpson v. Frontier Cmty. Credit Union, 810
S.W.2d 147, 153 (Tenn. 1991) (“issues not raised in the trial court cannot be raised for the
first time on appeal.”)



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                                    V. Attorney’s Fees

        Mother contends that the trial court erred in failing to award her attorney’s fees at
trial. A trial court’s decision regarding whether to award attorney’s fees is reviewed by this
Court under an abuse of discretion standard. See In re Estate of Greenamyre, 219 S.W.3d
877, 885-86 (Tenn. Ct. App. 2005). In this case, however, the trial court failed to make a
ruling on Mother’s request for an award of attorney’s fees.

       Inasmuch as we are remanding this case to the trial court for further proceedings
regarding Father’s income, we also direct the trial court to consider the issue of whether
Mother is due an award of attorney’s fees for pursuing an increase in child support pursuant
to relevant authority, including, inter alia, Tennessee Code Annotated § 36-5-103(c). See
also Massey, 315 S.W.3d at 799 (holding that this statute gives trial courts the power to
award attorney’s fees in child support modification cases).

      We also determine that this is not an appropriate case for an award of attorney’s fees
on appeal. As this Court has stated:

       [I]t is in the sole discretion of this court whether to award attorney’s fees on
       appeal. As such, when this Court considers whether to award attorney’s fees
       on appeal, we must be mindful of “the ability of the requesting party to pay the
       accrued fees, the requesting party’s success in the appeal, whether the
       requesting party sought the appeal in good faith, and any other equitable factor
       that need be considered.”

Parris v. Parris, No. M2006-02068-COA-R3-CV, 2007 WL 2713723 at *13 (Tenn. Ct. App.
Sept. 18, 2007) (quoting Dulin v. Dulin, No. W2001-02969-COA-R3-CV, 2003 WL
22071454 (Tenn. Ct. App. Sept. 3, 2003)) (other internal citations omitted).

                                      VI. Conclusion

       For the reasons stated above, we affirm the judgment of the trial court holding that
mortgage payments made by Father’s business on a commercial building solely owned by
Father should not be added to his income for the purpose of calculating child support. We
reverse the trial court’s finding with regard to Father’s income, however, due to an
inadequate evidentiary foundation regarding the nature of the depreciation deduction taken
with regard to the commercial building. We remand for further proof relevant to the
depreciation deduction and for the trial court to determine the amount of Father’s income for
child support purposes. We also remand for the trial court to determine whether an award
of attorney’s fees to Mother is appropriate. We deny Mother’s request for an award of

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attorney’s fees on appeal. Costs on appeal are taxed equally between the parties.




                                                 _________________________________
                                                 THOMAS R. FRIERSON, II, JUDGE




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