Hein v. HeinAnnotate this Case
In this marital dissolution case, mother contends that the trial court did not properly determine father's annual gross income under Family Code section 4058 and thus erred in calculating the amount of child support owed. After the trial court issued its decision, the Court of Appeal decided the question of statutory construction involving depreciation in In re Marriage of Rodriguez (2018) 23 Cal.App.5th 625, 635. In Rodriguez, the court held that a self-employed parent's depreciation deductions for motor vehicles did not constitute expenditures required for the operation of the business for purposes of section 4058, subdivision (a)(2).
The court now extends the statutory interpretation for motor vehicles to depreciation deductions for equipment and other assets used in the self-employed parent's businesses. The court explained that the term "expenditure" describes an actual outlay of cash. The court held that claiming a depreciation deduction on an income tax return does not require an outlay of cash and thus does not reduce the funds available for child support. The court also held that the burden of proving that the expenses claimed on the tax returns constitute expenditures required for the operation of the businesses is properly allocated to the self-employed parent who controls the corporations. Accordingly, the court reversed and remanded for further proceedings.