                 IN THE COURT OF APPEALS OF TENNESSEE
                              AT JACKSON
                                  January 23, 2002 Session

            STACY MOLTER TURNEY v. RONALD ROSS TURNEY

                Direct Appeal from the Chancery Court for Madison County
                          No. 55204    Joe C. Morris, Chancellor



                  No. W2001-00492-COA-R3-CV - Filed February 15, 2002


This appeal from a divorce decree raises issues concerning the classification and distribution of the
parties’ property, and the determination of income for the purposes of setting child support. We
modify the distribution of property and remand for determination of child support.

   Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed as
                                modified; and Remanded

DAVID R. FARMER , J., delivered the opinion of the court, in which ALAN E. HIGHERS and HOLLY K.
LILLARD , J.J., joined.

Michael B. McWherter, Jackson, Tennessee, for the appellant, Stacy Molter Turney.

C. Timothy Crocker and Michael A. Carter, Milan, Tennessee, for the appellee, Ronald Ross Turney.

                                            OPINION

       The parties were married on December 24, 1987, and have one minor child. Wife is 38 years
old, does not have a college degree, and has not worked outside the home since 1990 or 1991.
Husband is 45 years old, has a college degree, and has a successful career as a pharmaceutical sales
representative for Phizer, Inc.

        Parties filed for divorce in September of 1998. The marital residence in Tennessee was sold
and the proceeds divided equally, with Husband and Wife both receiving $12,800. The parties
moved to Ohio, where Wife bought a home with the financial assistance of Husband. Husband paid
one-half of the down-payment and closing costs on the home, contributing $4,602.33, and
subsequently received partial reimbursement of this amount from Wife. The Ohio home was valued
as having an equity value of $9,097.95, and was retained by Wife by agreement of the parties. The
trial court classified this property as marital property.

       When the parties separated, they each retained the vehicles they were driving at the time.
Wife kept a 1991 GMC van valued at $5,500, and Husband retained a 1968 Datsun valued at $2,000.
Wife subsequently traded-in the van for a 1993 Saturn, purchased for a total of $6,500 (trade-in plus
$1,000), and valued by the court at $6,000. The additional $1,000 was contributed by Wife’s
mother. Although not specifically stated as such in the final decree, the court below appears to have
classified Wife’s Saturn as marital property.

        The parties’ personal property was divided between them. The court classified some
financial accounts as Husband’s separate property, and divided marital accounts equally between the
parties.1 The court found that the division of marital property resulted in Wife receiving $32,436.66
more than Husband, and accordingly awarded Husband $16,218.33 as an equalization of assets.

        The court below set Husband’s child support obligation at $980.00 per month. The court set
the child support amount in accordance with the provisions of the Tennessee Child Support
Guidelines. In so doing, the court based its determination of Husband’s income on his 1999 Federal
Income Tax Return, rather than on income amounts shown on 1998 and 2000 pay vouchers. The
court also awarded Wife 9.76% of Husband’s U.S. Navy Reserve disposable retired pay (military
retirement).
                                                Issues

       Wife/Appellant presents the following issues for our review:

               (1) Did the trial court err in setting child support at $980.00 per month rather
       than at $1,678.00 per month pursuant to the child support guidelines?

              (2) Did the trial court err in classification and/or division of the following
       property:

                   (a) [Real property in Youngstown, Ohio], and Wife’s 1993 Saturn
                   automobile acquired post-separation by Wife?

                   (b) Award to husband of $16,218.33 as an “equalization of assets”?

                   (c) Division of marital component of Husband’s military retirement?

               (3) Did trial court err in certain findings of fact contained in Item 22 of the
       final divorce decree when the preponderance of evidence does not support those
       findings?



                                                Standard of Review



       1
           The classification and division of this property and these accounts are not raised as issues on appeal here.

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       This Court’s review of the trial court’s findings of fact is de novo with a presumption of
correctness. Tenn. R. App. P. 13(d). See Berryhill v. Rhodes, 21 S.W.3d 188, 190 (Tenn. 2000).
We may not reverse the trial court’s factual findings unless they are contrary to the preponderance
of the evidence. There is no presumption of correctness with regard to the trial court’s legal
conclusions, however. Tenn. R. App. P. 13(d); Bowden v. Ward, 27 S.W.3d 913, 916 (Tenn. 2000).
The interpretation and application of statutes and regulations such as the Child Support Guidelines
present questions of law which this Court reviews de novo with no presumption of correctness.
Hobbs v. Hobbs, 27 S.W.3d 900, 903 (Tenn. 2000).

                                 Determination of Child Support

       Wife contends that the court below erred by basing its determination of Husband’s income
on Husband’s 1999 Federal Income Tax Return, rather than on Husband’s pay vouchers for the first
eight months of 1998 and 2000. She submits that the pay vouchers more accurately reflect
Husband’s income for the purposes of determining child support. We agree.

        The Tennessee Child Support Guidelines (“the Guidelines”) employ a mathematical formula
to calculate the amount of child support to be awarded by the court. See Tenn. Comp. R. & Regs.
ch. 1240-2-4; Hobbs, 27 S.W.3d at 902. Under the Guidelines, child support is based on a flat
percentage of the obligor’s net income. Tenn. Comp. R. & Regs. ch. 1240-2-4-.03(2). In
determining the child support award, the court first must compute the obligor parent’s gross income.
Hobbs, 27 S.W.3d at 902. Gross income under the guidelines is broadly defined as “all income from
any source (before taxes and other deductions), whether earned or unearned . . . .” Tenn. Comp. R.
& Regs. ch. 1240-2-4-.03(3)(a). Income which may be excluded from this definition is limited to
that excepted by the guidelines themselves. Hobbs, 27 S.W.3d at 902 n.2; see Tenn. Comp. R. &
Regs. ch. 1240-2-4-.03(3)(c). The Internal Revenue Code (“I.R.C.”) also defines income broadly,
but then provides exemptions for income that is not subject to tax. See Hobbs, 27 S.W.3d at 902
n.2. The exceptions enumerated in the Guidelines and those provided by the I.R.C. are not in every
instance the same. Id. For example, the I.R.C. excludes workers’ compensation benefits from gross
income. Id. (citing I.R.C. § 104(a)(1)). The Child Support Guidelines, however, make no exception
for workers’ compensation benefits. Id. (citing Tenn. Comp. R. & Regs. ch. 1240-2-4-.03(3)(c)).
Under the Guidelines, “[v]ariable income such as commissions, bonuses, overtime pay, dividends,
etc., should be averaged and added to the obligor’s fixed salary” in computing gross income. Tenn.
Comp. R. & Regs. ch. 1240-2-4-.03(3)(b). After determining the obligor’s gross income, the court
must calculate his net income. Net income is calculated by subtracting the obligor’s FICA tax,
income tax, and child support ordered pursuant to a previous order from gross income. See Tenn.
Comp. R. & Regs. ch. 1240-2-4-.03(4). For one child, child support is then set at 21% of the
obligor’s net income. Tenn. Comp. R. & Regs. ch. 1240-2-4-.03(5).

        Although the Guidelines present a straightforward formula, the calculation of gross income
is more difficult where, as here, it includes variable income. The Guidelines provide that variable
income should be averaged and added to the obligor’s fixed income, but it does not prescribe how
it should be averaged. Gore v. Gore, No. M2000-02412-COA-R3-CV, 2001 WL 1660827, at *8


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(Tenn. Ct. App. Dec. 28, 2001). The most appropriate method of determining variable income such
that an obligor’s income may be determined as accurately as possible is done on a case-by-case basis.
See id. In general, courts have tended to average variable income over as long a time period as
circumstances permit. See id.

         In the present case, the court based its determination of Husband’s income on Husband’s
1999 Federal tax return, rather than on amounts reflected in his August 1998 and August 2000 pay
vouchers. Husband argues that the gross income reported on his tax return is a more accurate
reflection of his income than the pay vouchers. We disagree. Although income tax returns can be
used in some circumstances to reflect an obligor’s income (see Fillmore v. Fillmore, No. M1999-
00714-COA-R3-CV, 2000 WL 1294314, at *6 (Tenn. Ct. App. Sept. 14, 2000) (no perm. app.
filed)), given the significant amount of variable and incentive-based income reflected in Husband’s
pay vouchers, we believe in this case Husband’s income is most accurately reflected by the pay
vouchers. We therefore remand this cause for a determination of child support based on Husband’s
income as reflected in the pay vouchers. The trial court may, in its discretion, consider additional
evidence regarding Husband’s FICA and income tax liability in determining what constitutes net
income for the purposes of fixing child support in accordance with the Guidelines.

                           Classification and Distribution of Property

        The court below ordered Wife to pay $16,218.33 to Husband as an “equalization of assets.”
This award was based on a finding that the Wife received $385,536.32 in assets from the division
of marital property, while Husband received $353,099.66. The court split the difference and
awarded the equalization of assets in order to “achieve parity” between the parties. At oral
argument, counsel for both Husband and Wife agree that neither understands just how the court
arrived at this figure. Wife submits, however, that the discrepancy results from the court’s erroneous
classification of the Ohio real property and her 1993 Saturn as marital property.

       Marital property is defined by the legislature as:

       (1)(A) “Marital property” means all real and personal property, both tangible and
       intangible, acquired by either or both spouses during the course of the marriage up
       to the date of the final divorce hearing and owned by either or both spouses as of the
       date of filing of a complaint for divorce . . . .
               (B) “Marital property” includes income from, and any increase in value
       during the marriage of, property determined to be separate property in accordance
       with subdivision (b)(2) if each party substantially contributed to its preservation and
       appreciation, and the value of vested and unvested pension, vested and unvested
       stock option rights, retirement or other fringe benefit rights relating to employment
       that accrued during the period of the marriage.
               (C) “Marital property” includes recovery in personal injury, workers’
       compensation, social security disability actions, and other similar actions for the



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       following: wages lost during the marriage, reimbursement for medical bills incurred
       and paid with marital property, and property damage to marital property.

Tenn. Code Ann. § 36-4-121(b) (2001).

       Separate property is defined as:

              (A) All real and personal property owned by a spouse before marriage;
              (B) Property acquired in exchange for property acquired before the marriage;
              (C) Income from and appreciation of property owned by a spouse before
       marriage except when characterized as marital property under subdivision (b)(1);
              (D) Property acquired by a spouse at any time by gift, bequest, devise or
       descent;
              (E) Pain and suffering awards, victim of crime compensation awards, future
       medical expenses, and future lost wages; and
              (F) Property acquired by a spouse after an order of legal separation where the
       court has made a final disposition of property.

Tenn. Code Ann. § 36-4-121(b)(2) (2001).

         Since the Ohio real property and Wife’s Saturn were purchased during the marriage with
assets from marital property, they are properly characterized as marital property. However, the court
found the total value of this property to be approximately $15,000. Thus an equalization of assets
would amount to $7,500. We note, furthermore, that when the parties sold the marital residence in
Tennessee, each received $12,800. It is not clear to us from the court’s order whether the amount
received by Husband was also considered marital property, and therefore calculated into the division
of assets.

        When dividing marital assets, courts are required to divide property equitably. See Ellis v.
Ellis, 748 S.W.2d 424, 427 (Tenn 1988). An equitable division of property does not require that the
property be divided equally, penny for penny. Id. After reviewing the entire record in this case, we
are satisfied that the parties’ marital property was equitably divided, and that no equalization of
assets was necessary to achieve parity. Husband retained several accounts as separate property,
financial accounts established during the marriage were equally divided between the parties, and the
proceeds from the sale of the marital home were equally divided at the time of sale. On the whole,
an equitable division was achieved. We therefore vacate the award of $16,218.33 which Wife was
ordered to pay to Husband.




                               Division of Military Retirement Pay



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        Wife submits that the court erred in awarding her 9.76% of Husband’s military retirement
pay, and argues that she is entitled to 22.5% of this amount. Wife asserts that the court improperly
admitted evidence that Husband’s retirement pay is based on points, rather than on years of service,
in determining the amount of pay that is marital property. She argues that documents provided by
Quadro Services regarding Husband’s retirement benefits are hearsay, and that if this evidence is
excluded, the only other proof in the record available to make this determination is Wife’s
calculation, which is based on time served rather than on points.

        We decline to reach the issue of whether the Quadro documents were properly admitted into
evidence because we find ample evidence in the record to support the court’s determination of this
award notwithstanding the documents. Any error by the trial court regarding admission of these
documents would therefore be harmless. Husband’s testimony regarding his military service and his
retirement benefits suffice as proof that his retirement pay is based on points rather than on years
served. We further note that no objection to Husband’s testimony was made by Wife at trial. The
issue thus becomes one of witness credibility. The factual findings of the trial court which rest on
determinations of credibility are accorded great weight. Randolph v. Randolph, 937 S.W.2d 815,
819 (Tenn. 1996). Absent clear and convincing evidence to the contrary, a trial judge’s assessment
of the credibility of a witness will not be reevaluated by this Court. See Wells v. Tennessee Bd. of
Regents, 9 S.W.3d 779, 783 (Tenn. 1999). The division of Husband’s military retirement pay is
affirmed.

                                         Findings of Fact

        Wife contends that the court below erred in making several findings of fact in paragraph 22
of the divorce decree because such findings are not supported by a preponderance of the evidence.
We note that these findings are made in the context of determining an award of alimony, a
determination which Wife has not appealed. We therefore find appeal of these findings to be without
merit and decline to address the issue.

                                            Conclusion

       In light of the foregoing, we remand this cause for a determination of child support based on
Husband’s income as reflected in the 1998 and 2000 pay vouchers, vacate that part of the distribution
of marital property awarding $16,218.33 to Husband, and affirm the division of Husband’s military
retirement pay. Costs of this appeal are taxed one-half to the appellant, Stacy Molter Turney, and
her surety, and one-half to the appellee, Ronald Ross Turney, for which execution may issue if
necessary.


                                                      ___________________________________
                                                      DAVID R. FARMER, JUDGE




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