      Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
      corrections@akcourts.us.



               THE SUPREME COURT OF THE STATE OF ALASKA

JUSTIN A. FARR,                                )
                                               )        Supreme Court No. S-16629
                      Appellant,               )
                                               )        Superior Court No. 3AN-16-05573 CI
              v.                               )
                                               )        OPINION
BRANDI LITTLE,                                 )
                                               )        No. 7225 – February 23, 2018
                      Appellee.                )
                                               )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Anchorage, Patrick J. McKay, Judge.

              Appearances: John C. Pharr, Law Offices of John C. Pharr,
              Anchorage, for Appellant. Notice of nonparticipation filed
              by Cameron K. Compton, Law Offices of Cameron K.
              Compton, Anchorage, for Appellee.

              Before: Stowers, Chief Justice, Winfree, Maassen, and
              Carney, Justices. [Bolger, Justice, not participating.]

              MAASSEN, Justice.

I.    INTRODUCTION
              Unmarried parents separated and asked the superior court for a custody and
child support order. The father was receiving military disability payments but was
otherwise unemployed. In calculating his child support liability, the superior court
imputed income to him of $40,000 in addition to his military disability payments. The
court also apparently rejected the father’s request to deduct business losses, including
depreciation, incurred by his rental properties. The father appeals.
              We conclude that several aspects of the superior court’s findings of fact are
not sufficiently explained for purposes of our review: (1) the basis of the imputed
income figure; (2) the effect of employment on the father’s disability payments; and
(3) whether the father is entitled to deduct claimed business losses from his income. We
therefore vacate the child support order and remand for the superior court’s further
consideration of these issues.
II.    FACTS AND PROCEEDINGS
       A.     Custody
              Justin Farr and Brandi Little, the parents of two children, separated in
November 2015 following an alleged incident of domestic violence. In March 2016
Little moved for custody of both children, and there was another alleged incident of
domestic violence a few weeks later. In November 2016 the custody case went to trial;
the court ultimately concluded that the domestic violence presumption applied against
Farr, and it therefore awarded physical and legal custody to Little.1
       B.     Child Support
              In July 2016 Little filed a motion for child support. The parties disputed
several distinct issues related to Farr’s income that are relevant to this appeal: his
earning capacity, his claimed loss of income from rental properties, and other deductions
from his income.
              The parties first disputed whether Farr could work at all. He had served in
the Air Force for 16 years in a variety of capacities, including Special Operations and

       1
               Under AS 25.24.150(g) there is a rebuttable presumption that a parent with
a history of perpetrating domestic violence should not have sole or joint legal or physical
custody of a child.
                                            -2-                                      7225

Pararescue. He was medically separated from the Air Force in 2012 after injuring his
back in an explosion near his convoy. The military considered him 80% disabled, and
medical separation resulted in disability payments of $21,185.76 per year. According
to the superior court’s later findings, Farr “[did] not appear to have held a full-time job
since his separation” from the Air Force.
              Little disputed the extent of Farr’s disability. In her motion for child
support she asked the court to impute income to him because he was “working as a
HVAC mechanic for free” and there was “no reason that he should be unemployed.”
Pointing to an average salary for an HVAC mechanic of $61,712, Little asserted that
Farr’s adjusted annual income including his military disability should be $70,134.88.
Farr’s opposition stressed that he was 80% disabled, making any unemployment
involuntary. Apparently in response to Little’s claim that he was working as an HVAC
mechanic, Farr submitted an affidavit from the owner of a carpet-cleaning business
attesting that he “[was] not an employee” and was not being paid for the work he was
doing to help her keep the business afloat after her former husband “became unable to
operate the business.”
              Based on the motion and opposition, the superior court issued an interim
child support order requiring Farr to pay $466.70 total per month for the two children,
including a health insurance adjustment. The court did not impute income to Farr, but
it noted that its final support calculation could be “higher because of imputation or
withheld income sources.”
              Little’s trial brief did not reiterate the claim that Farr could be making
money as an HVAC mechanic, but focused instead on his alleged “opportunity to make
$225,000 a year” as a defense contractor and his “many job offers”; on the basis of these
allegations, Little asked the court to impute income at the $120,000 maximum for child
support purposes. Farr’s trial brief addressed child support only cursorily, saying that

                                            -3-                                      7225

the issue had already been briefed and that he would “present testimony from his parents
about his payment of child support to his parents” for a child of his from an earlier
relationship.
                At the trial, Little did not introduce any evidence that Farr had previously
worked or could work as an HVAC mechanic or provide the estimated salary
information. Instead, Little focused her cross-examination of Farr on custody issues,
Farr’s six-figure job offers, his rental income, and whether he paid child support to his
parents for their care of Farr’s older child.2
                Farr testified that after his injury he had received offers to work for Boeing
for $150,000, $225,000, and $255,000 per year. He also testified that he would try to get
a job but that he did not know whether he could actually get one given his back injury
and history of concussions. The court later summarized Farr’s testimony as admitting
that “he was employable and capable of earning a six figure income.” But the court saw
“a bit of a catch 22”: while it “believe[d] that Mr. Farr is capable of making money
above his current disability pay,” it was “less certain” that Farr could transfer his military
skills to high-paying civilian employment. The court nevertheless found that “Farr has
the ability to have an after-tax income for child support purposes of $40,000 annually
plus his military disability.”
                Farr also raised the issue of losses he claimed to have incurred on two rental
properties he owned in Wasilla. He had not included these on the DR-305 affidavit
submitted for child support purposes. But he had claimed significant deductions for the
properties on his tax returns from 2013 to 2015, including depreciation and other


       2
             Farr testified that he paid over $10,000 annually for the support of two
other children. The court ultimately disregarded these alleged payments because they
were not made pursuant to a court order and one of the two other children was over 18
and not enrolled in a secondary school.
                                              -4-                                       7225

expenses, ultimately amounting to a loss of approximately $40,000 each year. The
superior court appeared skeptical of these losses at trial: “Is he really losing money on
his apartments or is he losing money because of depreciation and things of that nature?”
Ultimately the court made no findings about the Wasilla properties and did not separately
itemize any business losses in its calculation of income. Its final child support order
found Farr’s total adjusted annual income to be $62,207.76, which required Farr to pay
$1,646.37 per month, including a health insurance adjustment.
              On appeal, Farr challenges the court’s imputation of income, blaming Little
for the lack of evidentiary support for the $40,000 figure; he claims that Little “did not
address child support other than to state that Mr. Farr was not paying any and that she
was not the source of his financial strain.” He asserts that her failure to present evidence
precluded the court from imputing income to him. He also challenges the court’s failure
to incorporate into its income calculation his claimed self-employment losses from the
rental properties.
              Little did not participate in this appeal.
III.   STANDARD OF REVIEW
              “We review an award of child support for abuse of discretion.”3 But “[w]e
review the superior court’s factual findings regarding a party’s income for purposes of
calculating child support for clear error.”4 “The trial court’s determination of an
obligor’s imputed income is a factual finding that we review for clear error.”5 “Whether



       3
            Limeres v. Limeres, 320 P.3d 291, 295 (Alaska 2014) (citing Swaney v.
Granger, 297 P.3d 132, 136 (Alaska 2013)).
       4
              Id. (citing Koller v. Reft, 71 P.3d 800, 804 (Alaska 2003)).
       5
            Sawicki v. Haxby, 186 P.3d 546, 550 (Alaska 2008) (citing Dunn v. Dunn,
952 P.2d 268, 270 (Alaska 1998)).
                                            -5-                                       7225

the superior court applied the correct legal standard to its child support determination is
a question of law that we review de novo.”6
IV.	   DISCUSSION
       A.	    The Imputation Of $40,000 In Income To Farr Requires
              Reconsideration On Remand.
              We have explained that under Alaska Civil Rule 90.3(a)(4), “[i]t is
appropriate to impute income to an obligor if a parent’s current situation and earnings
reflect a (1) voluntary and (2) unreasonable decision to earn less than the parent is
capable of earning.”7 “The court must consider the ‘totality of the circumstances’ in
deciding whether an obligor is unreasonably underemployed,”8 including “such factors
as whether the obligor’s reduced income is temporary, whether the change is ‘the result
of economic factors or of purely personal choices,’ the children’s needs, and the parents’
needs and financial abilities.”9 The parent with primary physical custody has the burden
to make a prima facie case that the obligor parent is voluntarily and unreasonably under-
or unemployed; after that initial burden is met, “the burden of persuasion shifts to the
obligor to rebut that claim.”10




       6
              Limeres, 320 P.3d at 295 (citing Koller, 71 P.3d at 804).
       7
              Sawicki, 186 P.3d at 550.
       8
              Id. (quoting Alaska R. Civ. P. 90.3 cmt. III.C).
       9
             Id. (footnotes omitted) (quoting Nunley v. State, Dep’t of Revenue, 99 P.3d
7, 11 (Alaska 2004)).
       10
              Id. at 549.
                                            -6-	                                     7225

               1.	   Little made a prima facie case that Farr was voluntarily and
                     unreasonably unemployed.
               Farr argues that it was inappropriate to impute income to him based on
voluntary and unreasonable unemployment. But the superior court’s implied conclusion
— that Little made a prima facie case that Farr failed to rebut11 — is consistent with our
precedent.12
               In Sawicki v. Haxby, we affirmed a superior court’s determination that a
father carried his preliminary burden to make a prima facie case when the mother
“concede[d] that she voluntarily left her job” and the father showed she did so “to take
a job paying approximately half what she earned before.”13 The prima facie case was
“bolstered by evidence that [the mother’s] reduced income may be temporary, that her
work history and qualifications indicate she could be making substantially more money,
and that she had significant liquid assets at her disposal from which to satisfy her child
support obligation.”14
               In another case, Beaudoin v. Beaudoin, we remanded for an evidentiary
hearing after concluding that the father made a prima facie case by “offer[ing] evidence


       11
               Although the superior court never clearly delineated the parties’ respective
burdens, it did state that “there has been no significant evidence that would approach the
burden of proof to refute a high cap limit on [Farr’s] child support,” implying that Little
met her initial burden and the burden had shifted to Farr.
       12
              We review de novo whether the primary custodian made a prima facie case.
See Sawicki, 186 P.3d at 549; Beaudoin v. Beaudoin, 24 P.3d 523, 530 (Alaska 2001)
(“conclu[ding] that [the father] made a prima facie showing of voluntary
underemployment and that his claim [seeking imputed income] could not be rejected as
a matter of law”).
       13
               186 P.3d at 549.
       14	
               Id.
                                            -7-	                                     7225

indicating that [the mother] had previously held a job, that she was capable of obtaining
gainful employment, and that she was actually working without pay.”15 The mother gave
up employment to be a “full-time mom” but remained unemployed after her custody
changed from full-time custody of three children to half-time custody of two.16
             In Little’s motion for child support she asserted that Farr was “working for
free based on his own admission,” apparently referring to his explanation at the trial
setting conference, the day before, that he was “donat[ing] [his] time” to his neighbor’s
carpet-cleaning business to help her avoid losing it.17 This was evidence that he was
capable of working, at least part time, but was not doing so. And the superior court
found after trial that Farr had testified “he was employable and capable of earning a six
figure income.” Although the court had doubts about this testimony, it was sufficient to
satisfy Little’s burden of making a prima facie case that Farr was voluntarily and
unreasonably unemployed, shifting the burden of persuasion to him.
             2.	    The superior court’s findings are insufficient to support its
                    decision to impute income of $40,000 to Farr.
             It was Farr’s burden to rebut Little’s prima facie case18 and “to establish his
earning capacity.”19 An obligor parent’s potential income should be calculated “based




      15
             24 P.3d at 526-27.
      16
             Id.
      17
            Farr was adamant that he was only a “stay at home dad” and did not receive
any income aside from $1,700 per month in disability.
      18
             Sawicki, 186 P.3d at 549.
      19
             Kowalski v. Kowalski, 806 P.2d 1368, 1372 (Alaska 1991).
                                           -8-	                                       7225

on the parent’s work history, qualifications, and job opportunities.”20 “In determining
a party’s earning capacity for purposes of [Alaska Civil Rule 90.3], the trial court has the
discretion to choose the best indicator of future earning capacity based on the evidence
before it.”21 “This discretion is particularly broad where the reason for [an] incomplete
record is the parent’s own unresponsiveness.”22 “The ultimate goal of a support
determination ‘is to arrive at an income figure reflective of economic reality.’ ”23
              Here, the superior court questioned whether Farr could “make the kind of
money that he boast[ed] that he [could] make with many of the skills that he could or
could not talk about that he acquired during his military career.” The court noted that
Farr had never had that kind of income in the past and that the skills he learned in the
military “do not necessarily relate to a high paying civilian job.” The court nevertheless
found that “Farr has the ability to have an after-tax income for child support purposes of
$40,000 annually plus his military disability.”
              We conclude that this finding was either clearly erroneous or an abuse of
discretion, depending on its basis. The superior court may have made a factual finding
that Farr could make $40,000 from the opportunities available to him; alternatively, it
could have made a discretionary decision to impute the number based on the lack of




       20
              Sawicki, 186 P.3d at 551 (citing Alaska R. Civ. P. 90.3(a)(4)).
       21
             McDonald v. Trihub, 173 P.3d 416, 427 (Alaska 2007) (citing Coghill v.
Coghill, 836 P.2d 921, 926 (Alaska 1992)).
       22
            Rodvik v. Rodvik, 151 P.3d 338, 350 (Alaska 2006) (quoting Byers v. Ovitt,
133 P.3d 676, 682 (Alaska 2006)).
       23
            McDonald, 173 P.3d at 427 (quoting Adrian v. Adrian, 838 P.2d 808, 811
(Alaska 1992)).
                                            -9-                                        7225

specific evidence of something different.24 Either way, we do not find support in the
record for the number the court selected or an explanation of how it was reached. We
therefore vacate the child support order and remand for further findings.
                      a.	    If the $40,000 imputed income figure is based on the
                             allegations of six-figure Boeing salaries or work as an
                             HVAC mechanic, it is clear error.
               The $40,000 imputed income figure is clearly erroneous if its basis is either
Farr’s alleged six-figure job offers or Little’s suggestion that Farr could do HVAC work.
First, Farr’s testimony notwithstanding, there is insufficient evidence to support a finding
that he could earn a six-figure income. He testified that after his injuries he received
three offers to work as a contractor for Boeing for annual salaries of $150,000 or more,
based on Boeing’s knowledge “through word of mouth” of Farr’s qualifications as “a
crash investigator where [he had] done just about everything” during his time in the Air
Force. Farr also testified, however, that he was unsure whether he could get a job with
Boeing currently “because of all the hits” he had taken while in the military, including
“nine concussions.” Although he testified that he “absolutely” wanted to work, he was
not sure Boeing would still want him after seeing the results of a required physical
examination.
               The court appeared to give little credit to Farr’s testimony about lucrative
job offers, characterizing it as a boast. And the court several times noted its concerns
with Farr’s mental stability and his reliance on and overuse of prescription drugs. Farr
testified that he had not “had a [post-traumatic stress disorder] episode in years” and that
he does not “have mental problems,” but the court’s doubts about the alleged job offers



       24
              The superior court is entitled to estimate income if more specific
information is unavailable and has discretion to select the best evidence on which to
rely. See id. (citing Coghill, 836 P.2d at 926).
                                            -10-	                                     7225

from Boeing, combined with questions about Farr’s ability to work at anything other than
a moderate-income job, made the six-figure offers an inadequate evidentiary basis for
any imputed income figure.
              Second, the record lacks evidence that Farr could earn $60,000 as an
HVAC mechanic. Little made this suggestion by affidavit in her motion for child
support but did not refer to it again until closing arguments at trial. At that time her
attorney referred to “the average salary for an HVAC mechanic” and asked that the court
impute that amount at “a minimum.”
              But no evidence had been adduced at trial about Farr’s possible
employment as an HVAC mechanic. Before trial he had said he was working for free
at the carpet-cleaning business; also before trial he submitted an affidavit from the owner
of that business, stating that Farr was “not an employee” and was not being paid for his
help in “keep[ing] the business operational” after her “former husband became unable
to operate the business.” In fact, as the court acknowledged, there was no evidence that
Farr did any income-generating work at all; he even hired someone else to do the
maintenance on his rental properties.25
              We conclude that neither the possibility of HVAC work nor the alleged job
offers from Boeing supported an imputed income figure of $40,000. As a finding of fact,
it is clearly erroneous.




       25
             The superior court found that Farr “[did] not appear to be working on
anything other than his fourplexes, but the number of hours of what he is actually
remodeling is less clear to the court.” Farr testified that his injuries prevented him from
doing that work himself.
                                           -11-                                      7225

                    b.	    If the $40,000 imputed income figure is an estimate, then
                           it is an abuse of discretion.
             If the superior court was not relying on either the Boeing offers or the
HVAC salary for the $40,000 figure, it may have made an estimate based on the lack of
better evidence in the record, which it had discretion to do.26 The superior court said it
did “not doubt that [Farr] is capable of working and making a moderate income,” and
that “[t]he $40,000.00 presumed income is a portion of what he swore he is capable of
making.” This language implies that the court chose the $40,000 figure more as a
discretionary response to a lack of solid evidence than as a finding of fact. If so,
however, we conclude that it was a abuse of discretion.
             “Although ‘courts have broad discretion to impute income based on
realistic estimates of earning potential,’ the court’s imputed income determination must
be based on the four factors listed in [Civil Rule 90.3]: the parent’s work history,
qualifications, job opportunities, and potential income from non-income or low-income
producing assets.”27 “A trial court is required to make specific findings to support a




      26
               Beaudoin v. Beaudoin, 24 P.3d 523, 530 (Alaska 2001) (Rule 90.3(a)
“give[s] courts broad discretion to impute income based on realistic estimates of earning
potential.”); see, e.g., Byers v. Ovitt, 133 P.3d 676, 683 (Alaska 2006) (affirming order
imputing income based on party’s estimated expenses when party was uncooperative and
gave contradictory testimony); Benson v. Benson, 977 P.2d 88, 91-95 (Alaska 1999)
(affirming order imputing income based on party’s bank records when testimony was
non-responsive and contradictory) .
      27
              Horne v. Touhakis, 356 P.3d 280, 282 (Alaska 2015) (quoting Reilly v.
Northrop, 314 P.3d 1206, 1217 (Alaska 2013)); see, e.g., Barlow v. Thompson, 221 P.3d
998, 1003 (Alaska 2009); O’Connell v. Christenson, 75 P.3d 1037, 1041 (Alaska 2003);
Koller v. Reft, 71 P.3d 800, 805 (Alaska 2003).


                                          -12-	                                     7225

determination of adjusted income under Civil Rule 90.3.”28 Because “[f]indings are
meaningless unless the calculations upon which they are based are disclosed,”29 we have
“required that the ‘actual numbers . . . used to calculate the child support award’ be set
forth in findings supporting child support awards.”30 Here the court failed to provide an
explanation for the figure it chose as Farr’s imputed income.
             In a number of cases we have remanded for further findings when the
superior court’s income calculations were not sufficiently explained.31 In Bailey v.
Bailey we remanded when “there [wa]s no way to tell how the superior court arrived at
[the father’s] prospective child support obligation” and “the [c]ourt did not state the
source of its calculations.”32 In Wright v. Gregorio we remanded when the judge had
“failed to make explicit findings as to the income of each party and how she calculated

      28
               Gallant v. Gallant, 882 P.2d 1252, 1255 (Alaska 1994) (citing Wright v.
Gregorio, 855 P.2d 772, 773 (Alaska 1993), opinion modified on reh’g (Sept. 30, 1994);
Terry v. Terry, 851 P.2d 837, 837-38 (Alaska 1993)); see also Adrian v. Adrian, 838
P.2d 808, 811 (Alaska 1992) (“A trial court’s findings must be sufficiently detailed and
explicit to give an appellate court a clear understanding of the ground on which the trial
court reached its decision.” (quoting Sloan v. Jefferson, 758 P.2d 81, 86 (Alaska 1988))).
      29
             Terry, 851 P.2d at 838.
      30
              Carstens v. Carstens, 867 P.2d 805, 809 (Alaska 1994) (alteration in
original) (quoting Terry, 851 P.2d at 838).
      31
              See Hammer v. Hammer, 991 P.2d 195, 201 (Alaska 1999) (remanding for
recalculation of child support when “the superior court did not acknowledge the option
of income averaging in its findings nor did it explain its reasons for relying on [the
father’s] most recent year of earnings”); Gallant, 882 P.2d at 1255 (“The trial court in
this case simply set the adjusted income without explaining its calculation of gross
income or the amounts and types of deductions. We remand for specific findings on the
parties’ adjusted income.”).
      32
             63 P.3d 259, 264 (Alaska 2003).


                                          -13-                                      7225

it” because “[a]dequate findings of fact on such matters are essential” to enable “a
reviewing court [to] clearly understand the grounds on which the lower court reached its
decision.”33 On the other hand, when we have affirmed the superior court’s estimate of
income, it is because there was evidence of the likely wage in a field in which the parent
had actual experience.34
             In this case, there is no evidence of Farr’s competence as an HVAC
mechanic, the number of hours he could work in that field, or his ability to acquire and
maintain a high-paying civilian job with Boeing. Nor is there evidence of any other
paying work on which to base an estimated $40,000 in imputed income. The court found
that Farr was capable of making a “moderate income” but did not explain how it defined
“moderate.” In a December 2016 supplemental order, the court clarified that “[t]he
$40,000.00 presumed income is a portion of what [Farr] is capable of making.” But that
clarification does not state what Farr could be making, or why only a portion of that is
a reasonable estimate of his income for child support purposes. We therefore remand to
give the superior court an opportunity to further clarify its decision. The court may take


      33
              855 P.2d at 773; see also Carstens, 867 P.2d at 809 (remanding when
superior court stated that mother would “earn interest” on cash payout resulting from her
divorce but failed to estimate interest and concluded without further explanation that she
owed $200 per month); Adrian, 838 P.2d at 811-12 (remanding when the superior court
based its child support calculation on a finding of the “parties’ relative financial
positions” without “provid[ing] the raw numbers necessary for a Civil Rule 90.3
calculation”).
      34
              See McDonald v. Trihub, 173 P.3d 416, 426 (Alaska 2007) (“Evidence
established that the mean wage for automotive service technicians and mechanics in
Anchorage was $20.51 per hour” and that the father “owned and operated a business
buying and selling used motor homes, that he worked as an automobile mechanic
repairing and upgrading the motor homes for resale, and that as recently as 2004 he held
a business license for ‘auto repair and sales.’ ”).


                                          -14-                                      7225

any additional evidence it considers necessary to support an estimate of Farr’s imputed
income.
                     c.	    On remand the superior court should also make findings
                            on whether Farr could earn both wages and disability
                            income.
              Farr also challenges the court’s conclusion that he may earn $40,000 in
addition to his disability income; he claims that “he will lose his disability if he works
a job earning after-tax $40,000.” Farr did not raise this issue until about three weeks
after trial, and at that point he failed to provide any support aside from his own affidavit,
which stated simply, “If I work a job, I will lose my disability.”35 We nevertheless
conclude that the issue should be addressed on remand.
              Because disability pay is typically tied to an inability to work, Farr’s claim
has intuitive appeal. Black’s Law Dictionary defines disability as “[a]n objectively
measurable condition of impairment, physical or mental[;] . . . one that prevents a person
from engaging in meaningful work.”36 As noted above, the superior court’s findings
highlighted its concerns about Farr’s disability and his mental health.
              But the military does not consider Farr to be totally disabled, so it is
possible he could do some work without losing his disability pay. And the disability
information Farr received from the Veterans’ Administration indicated that he could
receive assistance “to prepare for, obtain, and maintain suitable employment” without
indicating that this might result in a loss of benefits. Without more information on the
disability requirements, it is not clear whether Farr would be prevented from receiving

       35
              Little’s only response to Farr’s claim was to state that “Farr will not lose
his military disability if he works contrary to his claims.” She provided no supporting
evidence.
       36
              Disability, BLACK’S LAW DICTIONARY (10th ed. 2014).


                                            -15-	                                      7225

any disability income if he took a paying job. On remand, the superior court should
determine whether Farr will lose his disability pay if he finds other employment; it is
Farr’s burden to demonstrate that his disability pay will not continue.37
       B.	    Whether Farr’s Claimed Rental Losses And Depreciation Offset His
              Income Should Also Be Reconsidered On Remand.
              After Farr submitted his child support affidavit, he asked that his overall
income for child support purposes be reduced by his reported losses on the Wasilla
fourplexes. The superior court’s findings of fact and conclusions of law were silent
about these claimed losses, and they were left out of the court’s child support calculation
worksheet. Farr argues that this was error. Because the superior court’s findings do not
explain whether the rental losses were considered and how they were applied, if at all,
we remand this issue for clarification.
              1.	    Rental income and related business expenses may be included in
                     the imputed income calculation.
              The starting point for calculating income under Rule 90.3 — a “parent’s
total income from all sources” — includes income from self-employment, such as rental
income.38 The Rule 90.3 commentary defines self-employment income as “the gross
receipts minus the ordinary and necessary expenses required to produce the income.” 39
We have explained that “necessary expenses” may include straight-line depreciation for



       37
             Cf. Sawicki v. Haxby, 186 P.3d 546, 549 (Alaska 2008) (holding that if
party makes showing that another party is unreasonably underemployed or unemployed,
then burden shifts to other party to make showing that lack of employment is
reasonable).
       38
              Alaska R. Civ. P. 90.3 cmt. III.A.
       39
              Alaska R. Civ. P. 90.3 cmt. III.B.


                                           -16-	                                     7225

business real estate.40 But there is no hard and fast rule on whether “net losses from
self-employment income must or must not be deducted from a parent’s other sources of
income.”41 The court may exclude “business expenses determined by the court to be
inappropriate.”42   For example, “[t]he deduction is not available in the case of
corporations which effectively serve as tax or income shelter devices.”43
             The court’s exclusion of Farr’s claimed business losses in this case may be
supportable. The court may have included rental income, with appropriate offsets, in its
estimate of $40,000 in after-tax income. It may have rejected Farr’s claimed losses as
an income shelter. But without specific findings on the issue we cannot determine
whether the superior court’s treatment of it was an abuse of discretion. We therefore
remand for an explanation.
             2.	    Straight-line depreciation of Farr’s rental properties may be an
                    appropriate business expense.
             During trial the superior court voiced some skepticism about whether Farr
could include depreciation as an expense of his rental business. We have held, however,
that although accelerated depreciation cannot be deducted, “straightline depreciation of




      40
             Eagley v. Eagley, 849 P.2d 777, 781 (Alaska 1993) (“[T]he superior court
should allow, as ordinary and necessary business expenses, a deduction for straightline
depreciation of the parent’s business’ real estate.”).
      41
            Faulkner v. Goldfuss, No. S-13018, 2010 WL 1135745, at *6 (Alaska
Mar. 24, 2010).
      42
             Alaska R. Civ. P. 90.3 cmt. III.B.
      43
             Gallant v. Gallant, 945 P.2d 795, 800 (Alaska 1997).


                                         -17-	                                    7225

business equipment” — including real property44 — may be deducted under Rule 90.3.45
We explained:
              Depreciation is a means of reflecting on an annual basis the
              costs of capital equipment. Such costs are real and should not
              be disregarded unless it appears that equipment was acquired
              in order to avoid or reduce the obligor’s child support
              obligation. Unless that is the case here, on remand, the court
              should allow a realistic deduction for depreciation.[46]
In the court’s determination of Farr’s income, thus, straight-line depreciation should have
been allowed as a business expense unless the court determined that it was otherwise
“inappropriate” under Rule 90.3.47
              Farr asserts that to the “unschooled eye” his claimed depreciation is all
“straight-line depreciation.” But the amount of straight-line depreciation, which assumes
a constant rate of decline in the value of an asset over a fixed period, should be the same
from year to year.48 Farr’s depreciation calculations vary from year to year. Some


       44
              See Eagley, 849 P.2d at 781 (“[T]here is no rational reason for disallowing
straightline depreciation of buildings, fixtures, and other improvements, yet allowing
such depreciation costs for business equipment.”).
       45
             Id. (“Although the committee commentary to Rule 90.3 states that there
should be no deduction for accelerated depreciation, see Rule 90.3 cmt III.B., there is no
similar suggestion with respect to straightline depreciation of business equipment.”
(quoting Ogard v. Ogard, 808 P.2d 815, 819 (Alaska 1991))).
       46
              Ogard, 808 P.2d at 819.
       47
             See Eagley, 849 P.2d at 782 (“[T]he relevant inquiry on remand of this case
to the superior court will be whether Ronald’s claimed depreciation of $54,285.00
contains any element of accelerated depreciation.”).
       48
              Straight-line depreciation method, BLACK’S LAW DICTIONARY (10th ed.
                                                                    (continued...)


                                           -18-                                      7225

variation could be explained by additional assets or “improvements”49 being put into
service in different years. But on remand the burden is on Farr to show that any
depreciation for the improvements was calculated by the straight-line method,50
regardless of the appearance to the “unschooled eye.”
V.    CONCLUSION
             We VACATE the superior court’s child support order and REMAND for
further consideration consistent with this opinion. We do not retain jurisdiction.




      48
             (...continued)
2014) (“A depreciation method that writes off the cost or other basis of the asset by
deducting the expected salvage value from the initial cost of the capital asset, and
dividing the difference by the asset’s estimated useful life.”); INTERNAL REVENUE
SERVICE, PUBLICATION 946: HOW TO DEPRECIATE PROPERTY 43-45 (2017),
https://www.irs.gov/pub/irs-pdf/p946.pdf (example shows straight line method has
constant value of depreciation each year); Obaidullah Jan, Straight-line Method of
Depreciation, ACCOUNTINGEXPLAINED, http://accountingexplained.com/financial/
non-current-assets/straight-line-depreciation (last visited Jan. 8, 2018).
      49
             “Improvement means an addition to or partial replacement of property that
is a betterment to the property, restores the property, or adapts it to a new or different
use.” INTERNAL REVENUE SERVICE, supra note 48 at 13.
      50
             We note that Farr’s 2013 tax documents indicate that he calculated
depreciation for 10-year assets placed into service that year using the “200 DB” (or
200% declining balance) method, which is a form of accelerated depreciation that
“[p]rovides a greater deduction during the earlier recovery years.” INTERNAL REVENUE
SERVICE, supra note 48, at 38. If Farr’s total depreciation in subsequent years included
depreciation for these improvements (calculated with the 200 DB method), his overall
deduction may have included accelerated depreciation, which under Rule 90.3 may not
be deducted from income for child support purposes.


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