[Cite as In re Shugert, 2012-Ohio-1805.]


                                       COURT OF APPEALS
                                    GUERNSEY COUNTY, OHIO
                                   FIFTH APPELLATE DISTRICT


                                              :   JUDGES:
IN THE MATTER OF:                             :   William B. Hoffman, P.J.
                                              :   Sheila G. Farmer, J.
               KYLA SHUGERT                   :   Julie A. Edwards, J.
                                              :
                                              :   Case No. 11CA08
                                              :
                                              :
                                              :   OPINION




CHARACTER OF PROCEEDING:                           Civil Appeal from Guernsey County
                                                   Court of Common, Juvenile Division,
                                                   Pleas Case No. 10JG00227

JUDGMENT:                                          Affirmed

DATE OF JUDGMENT ENTRY:                            April 18, 2012

APPEARANCES:

For Plaintiff-Appellee                             For Defendant-Appellant

ANITA NEWHART                                      LINDSEY K. DONEHUE
103 Hillside Way                                   116 Southgate Parkway
Marietta, Ohio 43750                               P.O. Box 464
                                                   Cambridge, Ohio 43725
[Cite as In re Shugert, 2012-Ohio-1805.]


Edwards, J.

        {¶1}     Appellant Robert Shugert, appeals from the March 2, 2011, Journal Entry

of the Guernsey County Court of Common Pleas, Juvenile Division ordering him to pay

$1,885.55 in child support.

                                STATEMENT OF THE FACTS AND CASE

        {¶2}     Kyla Shugert (DOB 9/12/06) is the biological child of appellant Robert

Shugert and appellee Katie Shugert. While appellant and appellee were married at one

point, Kyla was born after the parties’ divorced in 2005. In the divorce case, pursuant to

the agreement of the parties, appellant was named residential parent and legal

custodian of the parties’ oldest child.

        {¶3}     On April 29, 2010, appellant filed a Complaint for Determination of

Parental Rights and Responsibilities, seeking legal custody of Kyla. On July 30, 2011, a

Notice of Paternity was filed indicating that DNA testing had been completed and had

shown that appellant was Kyla’s father.

        {¶4}     A hearing on appellant’s motion commenced on September 22, 2010 and

was continued to November 18, 2010 and February 10, 2011. At the hearing, testimony

was adduced that appellee’s 2006 1040 showed that she received $48,650.00 in

spousal support from appellant. Appellee testified that she wrote off $10,407.00 of such

amount as a business loss using her spousal support. Appellee had an art and design

business at the time. Appellee also testified that, in 2007, she received $60,000.00 in

spousal support and that, in 2008, she received $45,000.00 in spousal support. When

asked if there was a time when she might have received more spousal support than

what she had declared on her tax returns, appellee indicated that it was possible.
Guernsey County App. Case No. 11CA08                                                   3


       {¶5}   At the hearing, appellee’s tax returns for 2007 through 2009 were admitted

into evidence. The tax returns show that appellee claimed a business loss of

$12,881.00 in 2007 and that her adjusted gross income for that year was $47,118.92.

Appellee’s 2008 tax return shows that she claimed a $20,726.40 business loss and

adjusted gross income for 2008 of $26,571.60. Finally, appellee’s 2009 tax return

indicates a business loss of $10,292.00 and adjusted gross income of $35,965.51.

       {¶6}   At the hearing on November 18, 2010, appellee testified that she was an

income tracker with American Income, an insurance company, and worked on

commission. She testified that she had been with American Income Life for about a

month and that she had received two weeks of pay. When asked, appellee testified that

she had earned $4,000.00 before taxes in those two weeks which was above average.

The following is an excerpt from appellee’s testimony:

       {¶7}   “Okay. And is this what you expect to make every two months - - I’m

sorry, every two weeks - - strike that - - every week?

       {¶8}   “A. The average could be about - - about 11 to $1500, I believe, but I’ve

been above average to this point. And I have no reason to believe that I would fall

below average.” Transcript from November 18, 2010 hearing at 396. Appellee testified

that she was on probation for the first ninety (90) days of her employment.

       {¶9}   At the continuation of the hearing on February 10, 2011, appellee testified

that her average income so far from her job with American Income Life varied greatly

and averaged approximately $1,000.00 a week before taxes. She indicated that she

was scheduled for a promotion on the following Monday.
Guernsey County App. Case No. 11CA08                                                     4


       {¶10} Appellant testified that he operated a beef cattle operation and was self-

employed with three employees. He testified that he had been self-employed since he

graduated from college in 1988. Appellant’s tax returns for 2007 through 2009 were

admitted into evidence. His 2007 tax return indicates that appellant’s adjusted gross

income was $12,749.00 and that he had a depreciation/section 179 expense deduction

of $173,736.00, for a total of $186,485.00. Appellant’s 2008 tax return shows that

appellant’s    adjusted   gross    income   was   $73,997.00   and     that   he   had   a

depreciation/section 179 expense deduction of $143,636.00 for a total of $217,633.00.

Finally, appellant’s 2009 tax return states that appellant’s adjusted gross income was

$74,673.00 that he had a depreciation/section 179 expense deduction of $286,296.00

for a total of $360,969.00.

       {¶11} The following testimony was adduced when appellant was questioned

about his tax returns:

       {¶12} “Q. Could you please identify A, B, and C specifically?

       {¶13} “A. A are the - - my 2007 tax returns. B is the 2008. C is 2009.

       {¶14} “Q. Okay.        And you’ve had the opportunity to look through them.       It

appears, though, that there are no Schedule K’s. Now, you have a partnership interest,

do you not, in one of your businesses?

       {¶15} “A. Which one?

       {¶16} “Q. I don’t know which one. I believe that may actually be a K & S Limited

Partnership.

       {¶17} “A. I own ground in a K & S Limited Partnership, and that - -
Guernsey County App. Case No. 11CA08                                                        5


       {¶18} “Q. And is there any reason why you didn’t provide all the documents and

all the pages?

       {¶19} “A. Page 13 - - no. Wait a minute. It says Page 2, income or loss from

partnerships and S corporations. And then it lists the partnerships that I own part of.

       {¶20} “Q. Okay. And do you have the K-1’s anywhere in there? And which - -

which particular tax return is that? ’07? ’08?

       {¶21} “A. 2009.

       {¶22} “Q. ’09, okay.

       {¶23} “A. I think the K-1’s are - - are transferred, the income from the K-1, onto

the column right below where you list - - where the partnerships are listed.

       {¶24} “Q. Okay. And what other partnerships do you have?

       {¶25} “A. Other than the –

       {¶26} “Q. Other than the K & S.

       {¶27} “A. - - the K & S.

       {¶28} “Q. Uh-huh.

       {¶29} “A. I have one called Profitable Sire, LLC. I have an Eagle Creek Landing

Cattle Company. And there’s one listed on here, United States Natural Gas fund, which

was simply an investment.

       {¶30} “Q. Okay. So you’re not an active - - you’re not active in U.S. Gas?

       {¶31} “A. I sold my interest in that.

       {¶32} “Q. The other two, could you tell us a little bit more about what those are.

       {¶33} “A. The Profitable, LLC, is a partnership with other cattlemen that owns

interest in herd sires.
Guernsey County App. Case No. 11CA08                                                    6


      {¶34} “Q. And how many partners - - how many individual partners are there?

      {¶35} “A. I don’t know for sure, but probably a dozen.

      {¶36} “Q. Okay. Okay.

      {¶37} “A. It’s since been dissolved.

      {¶38} “Q. that’s been dissolved?

      {¶39} “A. Yep.

      {¶40} “Q. Do you know when that was dissolved?

      {¶41} “A. Sometime in 2010.

      {¶42} “Q. Okay. And you said you sold off the U.S. Natural Gas Fund?

      {¶43} “A. Yeah.

      {¶44} “Q. So tell me about Eagle Creek.

      {¶45} “A. Eagle Creek is a partnership with myself and a partner of mine now,

Steve Harris, that was formed to buy real estate basically, buy - - buy land to run cattle

on. He’s my partner that owns cattle and I work with every day, and we’ve decided to

buy some real estate together.

      {¶46} “Q. Okay. That’s instead of renting real estate for - -

      {¶47} “A. Right.

      {¶48} “Q. - - grazing area or - -

      {¶49} “A. Correct.

      {¶50} “Q. Okay. And is that - - do you know when that one was created?

      {¶51} “A. I’m going to guess four or five years ago. I’m not sure of the exact

date.” Transcript of February 10, 2011 hearing at 524-526.
Guernsey County App. Case No. 11CA08                                                      7


       {¶52} Pursuant to a Journal Entry filed on March 2, 2011, the trial court ordered

appellant to pay child support for Kyla in the amount of $1,885.55 per month plus

administrative charges of $37.74 per month for a total of $1,923.26 without medical

insurance or $1,815.67 per month plus administrative charges of $36.31 for a total of

$1,851.98 for support plus insurance. The trial court, in its Journal Entry, used an

average adjusted gross income for child support purposes of $255,029.00 for appellant

and $36,552.00 for appellee.

       {¶53} Appellant now raises the following assignment of error on appeal:

       {¶54} “THE TRIAL COURT’S CALCULATION OF CHILD SUPPORT IS AN

ABUSE OF DISCRETION.”

                                                 I

       {¶55} Appellant, in his sole assignment of error, argues that the trial court

abused its discretion in its calculation of child support. We disagree.

       {¶56} An appellate court reviews child support issues under an abuse-of-

discretion standard. See Pauly v. Pauly, 80 Ohio St.3d 386, 390, 686 N.E.2d 1108

(1997). The term ‘abuse of discretion’ connotes more than an error of law or judgment, it

implies that the court's attitude is unreasonable, arbitrary or unconscionable.”

Blakemore v. Blakemore, 5 Ohio St.3d 217, 219, 450 N.E.2d 1140 (1983). Moreover,

as long as the decision of the trial court is supported by some competent, credible

evidence, the reviewing court will not disturb it. Masitto v. Masitto, 22 Ohio St.3d 63, 488

N.E.2d 857 (1983).

       {¶57} Appellant initially argues that the trial court erred in failing to include

appellee’s employment income as gross income in determining child support. Appellant
Guernsey County App. Case No. 11CA08                                                      8


notes that appellee, at the November 18, 2010 hearing, testified that she had been

employed for one month as of such date and that her earnings were $4,000.00 for two

weeks pay, which was above average. Appellant also notes that appellee testified that

her average pay could be $1,100.00 a week to $1,500.00 a week, but that she had been

above average and did not expect to fall below average. Finally, appellant emphasizes

that appellee, at the February 10, 2011 hearing, testified that she was earning

$1,000.00 a week and was expecting a promotion. As is stated above, the trial court

used an average adjusted gross income for child support purposes of $36,552.00 for

appellee. Such figure was arrived at by averaging appellee’s adjusted gross incomes for

the years from 2007 through 2009. As is stated above, her adjusted gross income for

2007 was $47,118.92, her adjusted gross income for 2008 was $26,571.60, and her

adjusted gross income for 2009 was $35,965.51.

       {¶58} R.C. 3119.01(C)(7) defines gross income, in relevant part, as follows:

“(7) “Gross income” means, except as excluded in division (C)(7) of this section, the

total of all earned and unearned income from all sources during a calendar year,

whether or not the income is taxable, and includes income from salaries, wages,

overtime pay, and bonuses to the extent described in division (D) of section 3119.05 of

the Revised Code; commissions; royalties; tips; rents; dividends; severance pay;

pensions; interest; trust income; annuities; social security benefits, including retirement,

disability, and survivor benefits that are not means-tested; workers' compensation

benefits; unemployment insurance benefits; disability insurance benefits; benefits that

are not means-tested and that are received by and in the possession of the veteran who

is the beneficiary for any service-connected disability under a program or law
Guernsey County App. Case No. 11CA08                                                   9


administered by the United States department of veterans' affairs or veterans'

administration; spousal support actually received; and all other sources of income…”

      {¶59} We find that the trial court did not abuse its discretion in not including

appellee’s employment income as gross income because such decision was not

arbitrary, unconscionable or unreasonable. As noted by appellee, appellee only worked

six to eight weeks in the 2010 calendar year. Moreover, as of the date of the final

hearing date on February 10, 2011, appellee had only been employed for four months.

Appellee’s tax returns for 2007 through 2009 show that the only income she claimed for

such years, with the exception of $2,298.00 in “other income” for 2007 and $1,258.37

for “other income” for 2009, was spousal support.       Appellee, therefore, lacked a

continuous work history.

      {¶60} Appellant next maintains that the trial court erred in including appellant’s

business depreciation as income. When determining the gross income of a self-

employed parent, such as appellant, the trial court is to deduct ordinary and necessary

expenses from the parent's gross receipts.     R.C. 3119.01(C)(13). Pursuant to R.C.

3119.01(C)(9)(b), ordinary and necessary expenses “[do] not include depreciation

expenses and other noncash items that are allowed as deductions on any federal tax

return of the parent or the parent's business,” except as “specifically included in

‘ordinary and necessary expenses incurred in generating gross receipts' by division

(C)(9)(a) of this section[.]”   In turn, R.C. 3119.01(C)(9)(a) defines ordinary and

necessary expenses as “actual cash items expended * * * and includes depreciation

expenses of business equipment.” As noted by the court in Foster v. Foster, 150 Ohio

App.3d 298, 2002-Ohio-6390, 780 N.E.2d 104 at ¶ 23 (12th Dist.), “Absent evidence
Guernsey County App. Case No. 11CA08                                                    10


that the depreciation deduction represents actual cash expenses incurred in the year

that the deduction was taken, R.C. 3119.01(C)(9) mandates that the depreciation

deduction be included in the parent's gross income for that year.”

      {¶61} Appellant maintains that the depreciation listed on his tax returns should

not have been included as income. However, in the case sub judice, appellant admits

that he did not present any evidence backing up the depreciation information contained

on his tax returns and did not present any testimony or evidence to the trial court to

show what expenses were “ordinary and necessary.” As noted by appellees “[t]here was

no testimony offered on behalf of the appellant for any purchases of new equipment or

for ‘actual ordinary and necessary expenses.’” We find, therefore, that the trial court did

not abuse its discretion in including appellant’s business depreciation as income. See

Brown v. Brown, 5th Dist. No. 2008 CA 0111, 2009-Ohio-4913.

      {¶62} Appellant finally argues that the trial court erred in categorizing appellant’s

income as employment income as opposed to self-employment income. Appellant, who

testified that he had been self-employed since 1988, specifically contends that such

error caused him not to receive the 5.6% self-employment deduction permitted by R.C.

3119.022.   The child support worksheet provided in R.C. 3119.022 provides for a

deduction from gross income for self-employed individuals in the amount of 5.6% of

adjusted gross income or the actual marginal difference between the actual tax rate

paid by the self-employed individual and the F.I.C.A. rate. It is clear from the child

support guideline worksheet in R.C. 3119.022 that this deduction applies only to the

adjusted gross income received from self-employment.           It is not intended to be
Guernsey County App. Case No. 11CA08                                                  11


deducted from capital gains income and/or depreciation expenses reported on a tax

return but added back into income by a trial court for child support purposes.

       {¶63} Appellant only reported profit from self-employment on his 2007 tax return

and not on his 2008 and 2009 tax returns. (The trial court calculated his income for

child support purposes using an average of his incomes for the years 2007, 2008 and

2009.) On his 2007 Schedule SE he reports $10,538.00 in net earnings from self-

employment and calculated his self-employment tax at $1,612.00 which is a tax rate of

15.3%. Half of $1,612.00, which is $806.00, was subtracted from the 2007 income of

appellant on his tax return to give him his adjusted gross income for 2007. That 2007

adjusted gross income figure was what the trial court used in calculating child support.

$806.00 is what he was entitled to deduct from his net self employment earnings on the

child support guideline worksheet. On the worksheet, he was entitled to deduct the

actual marginal difference between the actual rate paid by him and the F.I.C.A. rate.

The actual rate paid by him was 15.3%. The F.I.C.A. rate for 2007 was 7.65% (6.2% for

Social Security and 1.45% for Medicare). The marginal difference is 7.65%. 7.65% of

$10,538.00 is $806.00.       In other words appellant, in the trial court’s calculations,

received the deduction he was entitled to under R.C. 3119.022.

       {¶64} Appellant did not attach a Schedule SE to either his 2008 or 2009 tax

return and did not take a deduction from his income for such years for any self-

employment taxes, nor is he entitled to take any such deduction from the figures used

by the trial court in calculating child support.
Guernsey County App. Case No. 11CA08                                          12


       {¶65} Appellant’s sole assignment of error is, therefore, overruled.

       {¶66} Accordingly, the judgment of the Guernsey County Court of Common

Pleas, Juvenile Division is affirmed.




By: Edwards, J.

Hoffman, P.J. and

Farmer, J. concur

                                                   ______________________________



                                                   ______________________________



                                                   ______________________________

                                                                JUDGES

JAE/d1129
[Cite as In re Shugert, 2012-Ohio-1805.]


             IN THE COURT OF APPEALS FOR GUERNSEY COUNTY, OHIO

                                   FIFTH APPELLATE DISTRICT


IN THE MATTER OF:                             :
                                              :
               KYLA SHUGERT                   :
                                              :
                                              :
                                              :       JUDGMENT ENTRY
                                              :
                                              :
                                              :
                                              :       CASE NO. 11CA08




    For the reasons stated in our accompanying Memorandum-Opinion on file, the

judgment of the Guernsey County Court of Common Pleas, Juvenile Division, is

affirmed. Costs assessed to appellant.




                                                  _________________________________


                                                  _________________________________


                                                  _________________________________

                                                               JUDGES
