In TN Child Support Retained Earnings Must Be Manipulated to Be Income

Tennessee law case summary on income determination. Absent a showing that the retained earnings were excessive or that an obligor was actually manipulating his or her income, the retained earnings of an S corporation should not be imputed as income to the sole or majority shareholder in calculating a child support obligation. Tennessee child support law from the Tennessee Court of Appeals.

Taylor v. Fezell – Tennessee child support case summary on retained earnings as income.

Douglas Fezell and Angela Daniels were married in 1986, and had two children. The couple divorced in 1999.  In their Marital Dissolution Agreement (MDA), Mrs. Fezell was designated as the primary residential custodian of the two minor children. The MDA also provided that Mr. Fezell was to have visitation time greater than the standard amount contemplated by the Tennessee Child Support Guidelines (guidelines).  In consideration of Mr. Fezell’s additional visitation and the establishment of a trust fund for the children, the parties agreed that Mr. Fezell would pay child support in the amount of $1,000 per month until July 31, 1999; after that it would increase to $1,300.  The MDA also provided a method to calculate Mr. Fezell’s contribution to the trust.

Mr. Fezell’s child support obligation was based, in part, on his income from Professional Vending Services (PVS).  At the time of the divorce, Mr. and Mrs. Fezell were the sole shareholders of the company, each owning a 50% interest.  The Fezells agreed in the MDA that Mr. Fezell would continue to run PVS as the sole shareholder and president, and that he would pay his ex-wife $310,000 in exchange for her half of the company.  Mr. Fezell completed the purchase of this stock and was the sole shareholder of the corporation at the time of the appeal to the Tennessee Supreme Court. Continue reading

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Tenn. Child Support on Business Owner’s Earnings Less Certain Expenses

Tennessee law case summary on income determination and deductions for income determination of a business owner under Tennessee divorce and family law from the Tennessee Court of Appeals.

Presson v. Presson – Tennessee Child Support Case Summary – forrestry services business

Michael and Joan Presson were married in September of 1974. They had one child.  Mr. Presson sued for divorce in 1991, and the Pressons entered into a Marital Dissolution Agreement (MDA) three days after the divorce complaint was filed.  The MDA set Mr. Presson’s monthly child support obligation at $700.  Mrs. Presson subsequently consulted two attorneys before retaining a third in an attempt to invalidate the MDA.  The parties entered into an Amended and Re-stated MDA in July 1991.  This second Agreement provided that Mr. Presson was to pay monthly child support of $800.

In June 1992, the Mrs. Presson filed a petition to set aside the final decree regarding the child support.  At an evidentiary hearing in the trial court.  Both parties presented expert testimony touching upon Mrs. Presson’s mental and emotional state during the period of negotiations leading up to the execution of the Amended and Restated MDA.  The trial court entered a nine page order on June 18, 1993, in which it denied the Mrs. Presson’s Petition to Set Aside Final Decree, but increased her child support entitlement to $1,000 per month plus $300 per month to be placed in an educational trust fund. Continue reading

TN Father Claimed Income Down from $700K/yr Sought Child Support Lowered

Tennessee law case summary on child support and income determination for modification in Tennessee divorce and family law from the Tennessee Court of Appeals.

Thomas James Milam, Jr v Donna Lisa Vinson Milam – Tennessee Child Support Income Determination

Donna Milam, Mother, and Thomas Milam, Jr, Father, divorced in August of 1997. The Mother was named primary residential parent of the two minor children. The Father was ordered to pay $4,500 per month in child support. He was also required to pay $2,500 per month in rehabilitative alimony for 48 months. In 2000, the Father filed a petition to modify the child support, which was denied by the trial court.

In June of 2010, the Father filed a petition for modification of support and for criminal contempt. He alleged his gross monthly income had decreased as a result of a pay off agreement concerning his place of employment. He wanted the child support payments reduced to $2,182 per month. He also alleged the Mother was in contempt due to failing to return the children in a timely fashion on May 8, 2010. The mother filed a motion to dismiss and the trial court denied it. The Mother and Father then filed various motions related to discovery including a protective order, which was granted by the court. Continue reading