[Cite as In re B.P., 2015-Ohio-4352.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
IN RE: B.P. C.A. Nos. 27541 G.P. 27542
APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE Nos. DN 09-02-0103 DN 09-02-0104
DECISION AND JOURNAL ENTRY
Dated: October 21, 2015
WHITMORE, Judge.
{¶1} Appellant Gregory P. (“Father”) appeals from the Summit County Juvenile
Court’s award of child support. We affirm.
I
{¶2} Father and Jennifer P. (“Mother”) are the parties to this appeal. They are the
divorced parents of minor children B.P. and G.P.
{¶3} Mother filed a motion in domestic relations court for child support after a
voluntary transfer of custody to her. The case was transferred to juvenile court while the motion
for child support was pending.
{¶4} The primary issue at trial in juvenile court was Father’s income available for child
support. Father is the sole shareholder of a closely-held towing company, Greg’s Towing, Inc.
(“Greg’s Towing”). At trial, the parties stipulated to submitting the tax returns of the parties and 2
of Greg’s Towing as the sole evidence for the court to consider in determining child support,
thus resolving discovery disputes between the parties.
{¶5} Following trial, the magistrate journalized a proposed decision. The magistrate
included depreciation expenses for Greg’s Towing in Father’s income for support and awarded
child support accordingly.
{¶6} Father objected to the magistrate’s decision. Thereafter, the magistrate issued an
amended decision to correct an erroneous award of child support during certain years when
Mother did not have custody of the children.
{¶7} Father filed objections to the magistrate’s amended decision. The trial court
overruled Father’s objections and adopted the magistrate’s decision. Father now raises two
assignments of error for our review.
Assignment of Error Number One
THE TRIAL COURT ERRED TO THE PREJUDICE OF THE APPELLANT FATHER AND ABUSED ITS DISCRETION IN SETTING CHILD SUPPORT BY: [1] FAILING TO CONSIDER THE BEST INTERESTS OF THE MINOR CHILDREN[;] [2] FAILING TO DEDUCT DEPRECIATION EXPENSES IN DETERMINING FATHER’S INCOME AND BY FAILING TO CONSIDER THE LOANS FOR TRUCKS PURCHASED FOR THE BUSINESS AS ORDINARY AND NECESSARY BUSINESS EXPENSES; AND [3] FAILING TO CONDUCT A CASE-BY-CASE ANALYSIS INCLUDING A CONSIDERATION OF THE NEEDS AND STANDARD OF LIVING OF THE CHILDREN AS REQUIRED BY R.C. 3119.04(B).
{¶8} In his first assignment of error, Father makes two arguments. First, he claims that
the trial court erred when it included depreciation expenses for Greg’s Towing in the calculation
of Father’s gross income instead of deducting them from income as ordinary and necessary
business expenses. Second, Father contends that the trial court erred because it did not conduct a
case-by-case analysis of the children’s needs and standards of living under R.C. 3119.04. We
disagree. 3
{¶9} Decisions regarding child support obligations are within the discretion of the trial
court and will not be disturbed without an abuse of discretion. Rock v. Cabral, 67 Ohio St.3d 108
(1993), syllabus. An abuse of discretion is “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 (1983). When applying the abuse-of-discretion standard, an appellate court
may not substitute its judgment for that of the trial court. Id.
{¶10} Father has failed to show that the trial court abused its discretion by including
depreciation expenses on the tax returns for Greg’s Towing in the calculation of Father’s gross
income for child support, instead of deducting them from income as ordinary and necessary
business expenses. Father argues that he purchases trucks and equipment for his towing business
on a regular basis, and that depreciation expenses associated with the trucks and equipment
should be deducted from his gross income. Under the circumstances, he is mistaken.
{¶11} In general, a trial court “must deduct ordinary and necessary expenses from a
parent’s gross receipts when calculating the gross income of that self-employed parent.” Wenger
v. Wenger, 9th Dist. Wayne No. 02CA0065, 2003-Ohio-5790, ¶ 29, citing Foster v. Foster, 150
Ohio App.3d 298, 2002-Ohio-6390, ¶ 19 (12th Dist.). Ordinary and necessary expenses include
depreciation expenses of business equipment. Wenger at ¶ 19, citing R.C. 3119.01(C)(9)(a).
However, “to exclude the depreciation deduction from the calculation of gross receipts under
R.C. 3119.01(C)(9)(b), the actual cash expenditure must be incurred in the same tax year.”
Wenger at ¶ 30, citing Foster at ¶ 20. Absent evidence illustrating that the depreciation
deduction represents actual cash expenses (and not noncash items) in the year the deduction was
taken, “R.C. 3119.01(C)(9) requires the court to include the depreciation deduction when
computing the parent’s gross income for that year.” Id. 4
{¶12} Depreciation deductions on tax returns are, by themselves, insufficient evidence
to show that money actually was expended as an ordinary and necessary business expense in the
year the deduction was taken. Huelskamp v. Huelskamp, 185 Ohio App.3d 611, 2009-Ohio-
6864, ¶ 45 (3d Dist.). This is in part because “in many cases, a company depreciates buildings
and equipment that it owns solely for the purpose of reducing its income taxes.” Id. at ¶ 42,
citing Foster at ¶ 23. Moreover, trial courts must be wary of “’the possible manipulation of the
numbers contained on the [tax] return to conceal income which, as a practical matter, may be
available for child support purposes.’” In re Custody of Harris, 168 Ohio App.3d 1, 2006-Ohio-
3649, ¶ 50 (2d Dist.), quoting Offenberg v. Offenberg, 8th Dist. Cuyahoga Nos. 78885, 78886,
79425, and 79426, 2003-Ohio-269, ¶ 30. Accordingly, a parent claiming ordinary and necessary
expenses for business equipment must present evidence demonstrating those purchases beyond
the tax return itself. Neu v. Neu, 3d Dist. Putnam No. 12-12-11, 2013-Ohio-221, ¶ 19; In re K.P.,
2d Dist. Clark No. 2011-CA-68, 2012-Ohio-1094, ¶ 19-20. This evidence may include, among
other things, business records and backup documentation explaining how the depreciation
deduction was calculated, and what it represents. See Huelskamp at ¶ 45.
{¶13} It was Father’s burden, as the party claiming the business expense, to provide
“suitable documentation to establish the expense.” Id. at ¶ 43, quoting Ockunzzi v. Ockunzzi, 8th
Dist. Cuyahoga No. 86785, 2006-Ohio-5741, ¶ 53. Here, Father did not provide any evidence
beyond tax returns to show that depreciation expenses for Greg’s Towing for trucks or other
equipment were cash expenses in the tax years during which the depreciation was claimed. The
record is devoid of evidence to show that the vehicles and equipment were purchased with cash
belonging to the business instead of loans. Father did not introduce any evidence regarding loan
payments or interest payments, or any other evidence that the business incurred cash expenses 5
related to the depreciation deductions during years when the deductions were taken. Without
such evidence, the trial court was “’not required to blindly accept all of the expenses [Father]
claims to have deducted in his tax returns as ordinary and necessary expenses incurred in
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[Cite as In re B.P., 2015-Ohio-4352.]
STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )
IN RE: B.P. C.A. Nos. 27541 G.P. 27542
APPEAL FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF SUMMIT, OHIO CASE Nos. DN 09-02-0103 DN 09-02-0104
DECISION AND JOURNAL ENTRY
Dated: October 21, 2015
WHITMORE, Judge.
{¶1} Appellant Gregory P. (“Father”) appeals from the Summit County Juvenile
Court’s award of child support. We affirm.
I
{¶2} Father and Jennifer P. (“Mother”) are the parties to this appeal. They are the
divorced parents of minor children B.P. and G.P.
{¶3} Mother filed a motion in domestic relations court for child support after a
voluntary transfer of custody to her. The case was transferred to juvenile court while the motion
for child support was pending.
{¶4} The primary issue at trial in juvenile court was Father’s income available for child
support. Father is the sole shareholder of a closely-held towing company, Greg’s Towing, Inc.
(“Greg’s Towing”). At trial, the parties stipulated to submitting the tax returns of the parties and 2
of Greg’s Towing as the sole evidence for the court to consider in determining child support,
thus resolving discovery disputes between the parties.
{¶5} Following trial, the magistrate journalized a proposed decision. The magistrate
included depreciation expenses for Greg’s Towing in Father’s income for support and awarded
child support accordingly.
{¶6} Father objected to the magistrate’s decision. Thereafter, the magistrate issued an
amended decision to correct an erroneous award of child support during certain years when
Mother did not have custody of the children.
{¶7} Father filed objections to the magistrate’s amended decision. The trial court
overruled Father’s objections and adopted the magistrate’s decision. Father now raises two
assignments of error for our review.
Assignment of Error Number One
THE TRIAL COURT ERRED TO THE PREJUDICE OF THE APPELLANT FATHER AND ABUSED ITS DISCRETION IN SETTING CHILD SUPPORT BY: [1] FAILING TO CONSIDER THE BEST INTERESTS OF THE MINOR CHILDREN[;] [2] FAILING TO DEDUCT DEPRECIATION EXPENSES IN DETERMINING FATHER’S INCOME AND BY FAILING TO CONSIDER THE LOANS FOR TRUCKS PURCHASED FOR THE BUSINESS AS ORDINARY AND NECESSARY BUSINESS EXPENSES; AND [3] FAILING TO CONDUCT A CASE-BY-CASE ANALYSIS INCLUDING A CONSIDERATION OF THE NEEDS AND STANDARD OF LIVING OF THE CHILDREN AS REQUIRED BY R.C. 3119.04(B).
{¶8} In his first assignment of error, Father makes two arguments. First, he claims that
the trial court erred when it included depreciation expenses for Greg’s Towing in the calculation
of Father’s gross income instead of deducting them from income as ordinary and necessary
business expenses. Second, Father contends that the trial court erred because it did not conduct a
case-by-case analysis of the children’s needs and standards of living under R.C. 3119.04. We
disagree. 3
{¶9} Decisions regarding child support obligations are within the discretion of the trial
court and will not be disturbed without an abuse of discretion. Rock v. Cabral, 67 Ohio St.3d 108
(1993), syllabus. An abuse of discretion is “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 (1983). When applying the abuse-of-discretion standard, an appellate court
may not substitute its judgment for that of the trial court. Id.
{¶10} Father has failed to show that the trial court abused its discretion by including
depreciation expenses on the tax returns for Greg’s Towing in the calculation of Father’s gross
income for child support, instead of deducting them from income as ordinary and necessary
business expenses. Father argues that he purchases trucks and equipment for his towing business
on a regular basis, and that depreciation expenses associated with the trucks and equipment
should be deducted from his gross income. Under the circumstances, he is mistaken.
{¶11} In general, a trial court “must deduct ordinary and necessary expenses from a
parent’s gross receipts when calculating the gross income of that self-employed parent.” Wenger
v. Wenger, 9th Dist. Wayne No. 02CA0065, 2003-Ohio-5790, ¶ 29, citing Foster v. Foster, 150
Ohio App.3d 298, 2002-Ohio-6390, ¶ 19 (12th Dist.). Ordinary and necessary expenses include
depreciation expenses of business equipment. Wenger at ¶ 19, citing R.C. 3119.01(C)(9)(a).
However, “to exclude the depreciation deduction from the calculation of gross receipts under
R.C. 3119.01(C)(9)(b), the actual cash expenditure must be incurred in the same tax year.”
Wenger at ¶ 30, citing Foster at ¶ 20. Absent evidence illustrating that the depreciation
deduction represents actual cash expenses (and not noncash items) in the year the deduction was
taken, “R.C. 3119.01(C)(9) requires the court to include the depreciation deduction when
computing the parent’s gross income for that year.” Id. 4
{¶12} Depreciation deductions on tax returns are, by themselves, insufficient evidence
to show that money actually was expended as an ordinary and necessary business expense in the
year the deduction was taken. Huelskamp v. Huelskamp, 185 Ohio App.3d 611, 2009-Ohio-
6864, ¶ 45 (3d Dist.). This is in part because “in many cases, a company depreciates buildings
and equipment that it owns solely for the purpose of reducing its income taxes.” Id. at ¶ 42,
citing Foster at ¶ 23. Moreover, trial courts must be wary of “’the possible manipulation of the
numbers contained on the [tax] return to conceal income which, as a practical matter, may be
available for child support purposes.’” In re Custody of Harris, 168 Ohio App.3d 1, 2006-Ohio-
3649, ¶ 50 (2d Dist.), quoting Offenberg v. Offenberg, 8th Dist. Cuyahoga Nos. 78885, 78886,
79425, and 79426, 2003-Ohio-269, ¶ 30. Accordingly, a parent claiming ordinary and necessary
expenses for business equipment must present evidence demonstrating those purchases beyond
the tax return itself. Neu v. Neu, 3d Dist. Putnam No. 12-12-11, 2013-Ohio-221, ¶ 19; In re K.P.,
2d Dist. Clark No. 2011-CA-68, 2012-Ohio-1094, ¶ 19-20. This evidence may include, among
other things, business records and backup documentation explaining how the depreciation
deduction was calculated, and what it represents. See Huelskamp at ¶ 45.
{¶13} It was Father’s burden, as the party claiming the business expense, to provide
“suitable documentation to establish the expense.” Id. at ¶ 43, quoting Ockunzzi v. Ockunzzi, 8th
Dist. Cuyahoga No. 86785, 2006-Ohio-5741, ¶ 53. Here, Father did not provide any evidence
beyond tax returns to show that depreciation expenses for Greg’s Towing for trucks or other
equipment were cash expenses in the tax years during which the depreciation was claimed. The
record is devoid of evidence to show that the vehicles and equipment were purchased with cash
belonging to the business instead of loans. Father did not introduce any evidence regarding loan
payments or interest payments, or any other evidence that the business incurred cash expenses 5
related to the depreciation deductions during years when the deductions were taken. Without
such evidence, the trial court was “’not required to blindly accept all of the expenses [Father]
claims to have deducted in his tax returns as ordinary and necessary expenses incurred in
generating gross receipts.’” Id. Accordingly, the trial court did not abuse its discretion in
including the depreciation expenses in Father’s income. See Huelskamp at ¶ 43.
{¶14} Father’s argument that the trial court abused its discretion because it did not
conduct a case-by-case analysis of the children’s needs and standards of living under R.C.
3119.04(B) also is not persuasive. Father failed to properly raise an objection on this ground to
the magistrate’s amended decision, and thus forfeited the issue on appeal.
{¶15} An objection to a magistrate’s decision must be “specific and state with
particularity all grounds for objection.” Juv.R. 40(D)(3)(b)(ii). Further, the objection must be
filed within 14 days of the filing of the magistrate’s decision. Juv.R. 40(D)(3)(b)(i). A party
may seek leave of court to supplement the objection after a transcript is prepared. Juv.R.
40(D)(3)(b)(iii).
{¶16} Here, Father did not raise a specific objection to the magistrate’s alleged failure to
analyze child support under R.C. 3119.04(B). Instead, Father raised four unrelated objections,
claiming that the magistrate erred by: (1) failing to deduct depreciation expenses from gross
receipts; (2) failing to consider the principal and interest of Father’s truck loans as ordinary and
necessary business expenses; (3) failing to include the son’s social security benefits in Mother’s
income; and (4) failing to impute income to Mother. Although Father stated that he would
“supplement his objection within [14] days of the filing date of the transcript”, he did not request
leave to supplement his objections, nor did he supplement them. 6
{¶17} Instead of requesting leave to supplement his objections, Father raised an
argument under R.C. 3119.04(B) for the first time in a memorandum in support of his objections
filed pursuant to Local Rule 3.03(F) of the Summit County Juvenile Court.1 This was improper.
A memorandum is an improper means of objection, when a specific objection was not raised in
the original objections to the magistrate’s decision, and the court did not otherwise grant leave to
file supplemental objections. See Mustard v. Mustard, 12th Dist. Warren Nos. CA2009-06-078
and CA2009-09-118, 2010-Ohio-2175, ¶ 31 (applying Civ.R. 53(D)).2
{¶18} “Except for a claim of plain error, a party shall not assign as error on appeal the
court’s adoption of any factual finding or legal conclusion * * * unless the party has objected to
that finding or conclusion as required by Juv.R. 40(D)(3)(b).”3 Juv.R. 40(D)(3)(b)(iv). Thus,
because Father failed to preserve his argument through a proper objection, he has forfeited the
right to challenge on appeal the trial court’s alleged failure to conduct a case-by-case analysis
under R.C. 3119.04(B). Tawney v. Tawney, 9th Dist. Medina No. 02CA0018–M, 2002-Ohio-
6122, ¶ 15; In re M.C., 9th Dist. Summit Nos. 27116 and 27117, 2015-Ohio-1627, ¶ 58.
{¶19} Father’s first assignment of error is overruled.
Assignment of Error Number Two
THE TRIAL COURT ERRED TO THE PREJUDICE OF THE DEFENDANT/FATHER, ABUSED ITS DISCRETION BY MODIFYING THE TEMPORARY CHILD SUPPORT ORDER RETROACTIVELY WHEN
1 Local Rule 3.03(F) provides, “Once a transcript has been requested, all parties are permitted to file a Memorandum in Support or Opposition to the Objection within [14] days of the filing of the transcript with the Court without filing a Motion for Extension.”
2 This Court has held that, because Civ.R. 53(D) and Juv.R. 40(D) are analogous, it is appropriate to rely on case law examining Civ.R. 53(D) when addressing an issue under Juv.R. 40(D). In re T.S., 9th Dist. Medina No. 11CA0033-M, 2012-Ohio-858, ¶ 8.
3 Father has not asserted plain error. 7
MOTHER HAD NEITHER MOVED TO SET ASIDE NOR FILED A MOTION TO MODIFY THE TEMPORARY ORDER.
{¶20} In his second assignment of error, Father alleges that the trial court erred in
setting a retroactive effective date for the child support order. However, Father did not raise this
argument in his objections to the magistrate’s amended decision. It is the trial court’s entry
adopting the magistrate’s amended decision that presently is before this Court. The trial court’s
effective dates for child support are identical to the effective dates in the magistrate’s amended
decision.
{¶21} As discussed, a party shall not assign an issue as error on appeal unless the party
raised the issue in a specific objection to the magistrate’s decision as required by Juv.R.
40(D)(3)(b). Juv.R. 40(D)(3)(b)(iv). Because Father did not object to the effective date of child
support set forth in the magistrate’s amended decision, Father has forfeited this argument on
appeal. Tawney, 2002-Ohio-6122 at ¶ 15; In re M.C., 2015-Ohio-1627 at ¶ 58.
{¶22} Father’s second assignment of error is overruled.
III
{¶23} Father’s assignments of error are overruled. The judgment of the Summit County
Court of Common Pleas, Juvenile Division, is affirmed.
Judgment affirmed.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27. 8
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
BETH WHITMORE FOR THE COURT
CARR, P. J. MOORE, J. CONCUR.
APPEARANCES:
SUSAN K. PRITCHARD, Attorney at Law, for Appellant.
CHARLES M. BUDDE, Attorney at Law, for Appellee.