6. Welcome back! We are still trying to figure out how to determine Father's Monthly Gross Income. It is complicated because he and his cousin Eddy are partners in a lucrative landscaping business and Eddy is known for creative bookkeeping.
So, the question for this Lesson is:
What about income from self-employment or business income?
As you may suspect, KRS 403.212 gives us guidance here, but as we saw in Lesson 5, the needle may be hidden deep within the haystack.
That statute gives us some direction: "For income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, 'gross income' means gross receipts minus ordinary and necessary expenses required for self-employment or business operation."
Easy enough, right? Not really! What type of depreciation is to be used? What about investment tax credits and expense reimbursement for items such as the use of a business car, free housing, reimbursed meals or club dues? The statute does describe the evidence to be considered, but its application frequently requires the expertise of a CPA or a financial analyst.
The only real solution here is to submit a formal discovery request requiring the spouse to produce specified business records and tax returns and to identify his or her contention about "gross income" under KRS 403.212. Then, unless the party has a strong business background, an expert will likely need to be utilized to sort it all out and offer an opinion to the court as to the "monthly gross income" to be put on the worksheet.
Obviously, many cases will not justify the expense required to ascertain with any degree of certainty the actual "monthly gross income" of the other parent, so alternative dispute resolution may be appropriate.
Again, I apologize for the fact that not all of this is black and white, at least to those of us who are not accountants by trade, but now you know a little bit about how to gross income from self-employment or any other business enterprise for child support calculations. So, don't get discouraged. Now you know there is a definite answer to your questions about your spouse's income, and you can decide whether it is worth it to spend the money to find it out.
So, the question for this Lesson is:
What about income from self-employment or business income?
As you may suspect, KRS 403.212 gives us guidance here, but as we saw in Lesson 5, the needle may be hidden deep within the haystack.
That statute gives us some direction: "For income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, 'gross income' means gross receipts minus ordinary and necessary expenses required for self-employment or business operation."
Easy enough, right? Not really! What type of depreciation is to be used? What about investment tax credits and expense reimbursement for items such as the use of a business car, free housing, reimbursed meals or club dues? The statute does describe the evidence to be considered, but its application frequently requires the expertise of a CPA or a financial analyst.
The only real solution here is to submit a formal discovery request requiring the spouse to produce specified business records and tax returns and to identify his or her contention about "gross income" under KRS 403.212. Then, unless the party has a strong business background, an expert will likely need to be utilized to sort it all out and offer an opinion to the court as to the "monthly gross income" to be put on the worksheet.
Obviously, many cases will not justify the expense required to ascertain with any degree of certainty the actual "monthly gross income" of the other parent, so alternative dispute resolution may be appropriate.
Again, I apologize for the fact that not all of this is black and white, at least to those of us who are not accountants by trade, but now you know a little bit about how to gross income from self-employment or any other business enterprise for child support calculations. So, don't get discouraged. Now you know there is a definite answer to your questions about your spouse's income, and you can decide whether it is worth it to spend the money to find it out.
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