Koscho v. Hill

2021 Ohio 110

• Court: Ohio Court of Appeals
• Decided: January 14, 2021
• Docket: 19CA3699
• Status: Published

Opinion

[Cite as Koscho v. Hill, 2021-Ohio-110.]

IN THE COURT OF APPEALS OF OHIO FOURTH APPELLATE DISTRICT ROSS COUNTY

CHRISTOPHER A. KOSCHO, : Case No. 19CA3699

Plaintiff-Appellant, :

v. : DECISION AND JUDGMENT ENTRY RYLIE HILL, :

Defendant-Appellee. : RELEASED 1/14/2021 ______________________________________________________________________ APPEARANCES:

Bradley S. Nicodemus, The Nicodemus Law Office, LPA, Baltimore, Ohio, for appellant. ______________________________________________________________________ Hess, J.

{¶1} Christopher Koscho appeals from a judgment of the Ross County Common

Pleas Court, Juvenile Division, increasing his child support obligation. Koscho contends

that the trial court abused its discretion when it found that his annual income from

employment was $88,050, that there was insufficient evidence to support his assertion

that the child’s mother had an ownership interest in a business, and that he was not

entitled to a child support deviation for benefits the child’s mother receives from sharing

living expenses with her boyfriend. Because Koscho failed in his burden to show that the

trial court’s decision was unreasonable, arbitrary, or unconscionable, we overrule his

assignments of error and affirm the trial court’s judgment.

I. FACTS AND PROCEDURAL HISTORY

{¶2} In 2012, Christopher Koscho and Rylie Hill had a child together. In July

2018, the Ross County Child Support Enforcement Agency conducted an administrative

review of a court support order which required that Koscho pay child support of $656.06 Ross App. No. 19CA3699 2

per month plus a processing fee. The agency recommended that as of August 1, 2018,

Koscho pay $814.54 per month plus a processing fee when private health insurance is

provided for the child or $886.60 per month when private health insurance is not

provided. Koscho requested an administrative hearing, and the hearing officer

recommended that the court revise the current support order to $909.14 per month plus

a processing fee when private health insurance is provided or $944.10 per month plus a

processing fee when private insurance is not provided. Koscho challenged the hearing

officer’s findings and recommendations and moved the court for a modification of his

support obligation.

{¶3} A magistrate conducted a hearing at which Hill testified that she lives with

her boyfriend, Kenny Adkins, in a home he owns that is situated on about 40 acres of

land. She testified that the property has “been paid for for a long time” and that she does

not pay Adkins rent. When asked whether Adkins provides for her and her child, Hill

stated, “Eh, normal, how normal couples provide, I guess.” Hill testified that she does

part-time sales work for Performance Motors, which is one of the businesses Adkins

owns. She indicated that Performance Motors does not withhold taxes from her checks

because she is classified as a subcontractor. The record includes copies of checks

made payable to Hill that were drawn on a Performance Motors account and contain

blank memo lines and illegible signatures. The record also includes copies of Hill’s 2017

federal and state individual income tax returns which indicate that they were prepared by

an individual at H&R Block. On her federal tax return, Hill reported $0 in wages, salaries,

and tips, and she reported $4,015 in business income. She included the $4,015 on

Schedule C-EZ, which is titled “Net Profit From Business” and includes the phrase “(Sole Ross App. No. 19CA3699 3

Proprietorship)” under the title. On the schedule, she identified herself as a proprietor,

identified the principal business or profession as a motorcycle, ATV, and all other motor

vehicle dealer, and identified the business name as Kenny Adkins. In addition, she

included the $4,015 on Schedule SE, which is titled “Self-Employment Tax.” Hill also

reported the $4,015 as “Schedule C – Profit or Loss From Business (Sole

Proprietorship)” on the 2017 Ohio Schedule IT BUS form. On that form, she used her

own name as the name of the business entity and indicated that her percentage of

ownership was 100%. When Koscho’s attorney questioned why Hill had filed an

“ownership tax form” even though she testified that she did not have an ownership

interest in Performance Motors, Hill testified, “I don’t really understand what you’re

asking, because I don’t really know how taxes work but I know that I have no ownership

whatsoever in his business. Its [sic] his business. I am just an employee, * * * I don’t

how it’s all [sic], I guess it’s a subcontractor for his car lot * * * which is Performance

Motors.” Hill indicated that if her tax returns showed that she had an ownership interest,

it was because her “accountant made a mistake.”

{¶4} Koscho testified that he is a widower and has two minor children in addition

to the child with Hill. He is the sole provider for the other children and incurs about

$4,200 a year in child-care costs for them so that he can work for the Department of

Veterans Affairs. Koscho testified that he works from home and needs a hardline phone

and high-speed internet to do his job, which cost him about $160 a month. The record

includes Koscho’s tax returns and W-2s for 2016, 2017, and 2018, and leave and

earnings statements from his last two paychecks from 2018 and first two paychecks from

2019. According to the earnings statements, his hourly rate is $42.19 and his adjusted Ross App. No. 19CA3699 4

basic pay is $88,050. Koscho testified that his hourly rate is $42.19 but that he does not

earn $88,050 a year and that one could look at his earnings statements for “every single

year since 2002,” i.e., when he started working for the Department of Veterans Affairs,

and see he has never received his adjusted basic pay. He could not explain why his

earnings statements state that his adjusted basic pay is $88,050. According to his last

earnings statement for 2018, his gross pay that year was $79,578.48.

{¶5} The magistrate overruled Koscho’s objections to the hearing officer’s

findings and recommendations and ordered him to pay $909.14 per month plus a

processing fee for the period from August 1, 2018, to March 27, 2019, and based on a

statutory amendment, ordered him to pay $774.63 per month plus a processing fee

beginning March 28, 2019. The trial court adopted the magistrate’s decision. However,

Koscho filed objections asserting the magistrate had erred in finding that his income from

employment was $88,050, finding Hill did not have an ownership interest in Performance

Motors, not granting a deviation from the amount of child support that would otherwise

result from the basic child support schedule and applicable worksheet under R.C.

3119.23(J) for his work-related expenses (phone and internet), not granting a deviation

under R.C. 3119.23(M) or (Q) based on his responsibility for his other children for whom

he incurs child-care costs in order to work, and not granting a deviation under R.C.

3119.23(G) and (K) because Hill benefited from sharing living expenses with her

boyfriend.

{¶6} The trial court found that the magistrate’s factual findings were accurate

and overruled the objections. The court found that Koscho’s income from employment

was $88,050 per year and that there was “insufficient evidence” to support the assertion Ross App. No. 19CA3699 5

that Hill had an ownership interest in Performance Motors. In addition, the court found

that the evidence did not support a finding that the amount of child support calculated

pursuant to the basic child support schedule and applicable worksheet would be unjust

or inappropriate. The court found most of Koscho’s requests for a deviation were

“speculative and not supported by the record.” The court also found that Hill was

“essentially the sole and primary care giver” for the parties’ child and Koscho does

receive some credit for his other children on the child support worksheet. The court

ordered him to pay the child support amounts in the magistrate’s decision.

II. ASSIGNMENTS OF ERROR

{¶7} Koscho presents the following assignments of error:

I. The trial court erred when determining appellant, Christopher Koscho’s, income.

II. The trial court erred when determining appellee, Rylie Hill, does not have an ownership interest in a business and thereby additionally erred in determining appellee’s income.

III. The trial court erred in determining that appellee, Rylie Hill, does not receive benefits from shared living expenses and thus appellant, Mr. Koscho is entitled to a deviation of his child support obligation.

III. LAW AND ANALYSIS

{¶8} “In general, appellate courts will not reverse trial court decisions that relate

to child support matters unless the court abused its discretion.” In re Z.C., 4th Dist. Ross

No. 19CA3693, 2020-Ohio-3635, ¶ 13. An abuse of discretion is “an unreasonable,

arbitrary, or unconscionable use of discretion, or * * * a view or action that no

conscientious judge could honestly have taken.” State v. Brady, 119 Ohio St.3d 375,

2008-Ohio-4493, 894 N.E.2d 671, ¶ 23. Ross App. No. 19CA3699 6

A. Employment Income

{¶9} In the first assignment of error, Koscho contends that the trial court abused

its discretion when it determined his income. Koscho asserts that “[t]here is competent

and credible evidence” that his income from employment is not $88,050 because he

testified that he has never earned his adjusted basic pay, that he does not know how the

government arrives at that amount, and that his actual pay appears in a different section

of his earnings statements which shows his gross pay for 2018 was $79,578.48, which is

consistent with information on his W-2 for 2018.

{¶10} The trial court’s finding that Koscho’s annual income from employment is

$88,050 was not unreasonable, arbitrary, or unconscionable. Koscho’s earnings

statements state that his adjusted basic pay is $88,050. Although Koscho testified that

one could look at his earnings statements since 2002 and see that he has never earned

his adjusted basic pay, he failed to substantiate that testimony with documentary

evidence. Koscho is correct that his earnings statements reflect that his gross income in

2018 was $79,578.48. However, he did not present any evidence that his hourly rate

was $42.19 for the entirety of 2018. If it had been, he would have only earned 1,886.19

hours of regular pay that year ($79,578.48/$42.19) even though the 2018 earnings

statements he submitted indicate he earns 80 hours of regular pay every two weeks, and

his hourly rate is based on a 2087-hour work year. See generally 5 U.S.C. 5504(b)(1)

(“When, in the case of an employee, it is necessary for computation of pay under this

subsection to convert an annual rate of basic pay to a basic hourly * * * rate * * * [t]o

derive an hourly rate, divide the annual rate by 2,087”); 5 U.S.C. 5504(c)(1)(A)

(“employee” includes “an employee in or under an Executive agency”); 5 U.S.C. 105 Ross App. No. 19CA3699 7

(“For the purpose of this title, ‘Executive agency’ means an Executive department * * *”);

5 U.S.C. 101 (Department of Veterans Affairs is an Executive department). The two

2019 earnings statements Koscho submitted indicate that he was on track to earn over

$88,050 for work performed in 2019. Those statements show he earns 80 hours of

regular pay every two weeks at a rate of $42.19 an hour. If he received eight hours of

regular pay for each of the 261 weekdays in 2019 (including federal holidays), his gross

pay for those 2088 hours would have been $88,092.72. ($42.19 x 8 x 261).

{¶11} Koscho has not shown the trial court abused its discretion when it found

that his annual income from employment is $88,050. Accordingly, we overrule the first

assignment of error. In doing so, we observe that in the argument for this assignment of

error, Koscho mentions his testimony about his child-care costs and work-related

expenses. However, he does not explain how those expenses are relevant to the trial

court’s finding that his income from his employer is $88,050 a year. In his objections to

the magistrate’s decision, Koscho argued that these expenses warranted a child support

deviation under R.C. 3119.23(J) (extraordinary work-related expenses), R.C. 3119.23(M)

(responsibility for the support of others), and R.C. 3119.23(Q) (any other relevant factor).

However, he did not assign as error the trial court’s rejection of those arguments, so we

do not address those issues.

B. Business Ownership

{¶12} In the second assignment of error, Koscho contends that the trial court

abused its discretion when it found that there was insufficient evidence to show that Hill

had an ownership interest in Performance Motors and therefore erred when it

determined her income. Koscho maintains that Hill’s checks from Performance Motors Ross App. No. 19CA3699 8

and tax returns clearly establish her ownership interest. He asserts that Hill did not

produce any documentary evidence to show that she was a subcontractor and claims the

checks “provided an indicia of ownership withdrawals” because “[t]hey are handwritten

checks without any tax withholdings or other deductions consistent with paychecks” and

lack “any indication of payment for contract services.” He asserts that it would be

inconsistent for Hill to be a subcontractor and file Schedule C-EZ because it is used to

report business income from a sole proprietorship. He states that “[i]t stresses credulity

to believe that a court can ignore a federally promulgated and nationally recognized tax

form, with the purpose of reporting business income on personal income taxes, and

determine a Form 1040 Schedule C – which speaks for itself as the trial court noted – is

not competent and credible evidence of business ownership.” He asserts that Hill

claimed a business tax credit on her Ohio tax return and claimed 100% ownership of

Performance Motors on her 2017 Ohio Schedule IT BUS form. Koscho asserts we

would have to “ignore common sense” to believe that Hill’s accountant would mistakenly

“identify an employee or contractor as a business owner.” Koscho also claims the

magistrate prevented him from making a full inquiry into Hill’s ownership interest, and we

should reverse and remand for him to conduct further inquiry and investigation into Hill’s

“ownership in Performance Motors for determination of her true income.”

{¶13} The trial court’s determination that there was insufficient evidence to show

that Hill had an ownership interest in Performance Motors was not unreasonable,

arbitrary, or unconscionable. Hill testified that she does not have an ownership interest

in Performance Motors and indicated that the business does not withhold taxes from her

checks because she is a subcontractor. See generally United States v. Floyd, 740 F.3d Ross App. No. 19CA3699 9

22, 26 (1st Cir.2014) (“Employers are required to withhold Social Security, Medicare, and

federal income taxes from their employees’ paychecks and to remit those payroll taxes to

the IRS, along with matching contributions for Social Security and Medicare,” but these

“withholding requirements generally apply only with respect to employees, not with

respect to independent contractors”). Nothing on the face of the checks from

Performance Motors shows that they were ownership withdrawals as opposed to

payments for services rendered.

{¶14} Hill’s tax returns do not mandate a finding that she has an ownership

interest in Performance Motors. None of the cases Koscho cites stand for the

proposition that income earned as a subcontractor cannot be reported as business

income on the schedules Hill’s accountant used, and our research has revealed caselaw

that suggests it can be if Hill qualifies as an independent contractor. See Rodriguez v.

Commr. of Internal Revenue, T.C. Memo. 2012-286, 104 T.C.M. (CCH) 425, 2012 WL

4795576, *5 (Oct. 9, 2012) (“Independent contractors * * * may report their compensation

less related expenses as business income on Schedule C * * *”). In any event, even if

Hill’s tax returns suggest she has an ownership interest in the business, Hill testified that

she has “no ownership whatsoever” in the business, so her accountant must have made

a mistake. Koscho only speculates that an accountant would not make such an error

and that additional questioning of Hill, which the magistrate purportedly prevented, would

have revealed beneficial information about her income.

{¶15} For the foregoing reasons, we conclude the trial court did not abuse its

discretion when it found that there was insufficient evidence to show that Hill had an

ownership interest in Performance Motors. We overrule the second assignment of error. Ross App. No. 19CA3699 10

C. Benefits from Sharing Living Expenses

{¶16} In the third assignment of error, Koscho contends the trial court erred when

it found he was not entitled to a child support deviation under R.C. 3119.23(G) because

Hill benefits from sharing living expenses with her boyfriend. Koscho asserts that Hill

and their child “receive great benefit from their living arrangements” because they live in

her boyfriend’s home on 40 acres of land, she does not pay rent, her boyfriend owns a

number of businesses the court precluded Koscho’s counsel from inquiring about, her

boyfriend provides for her and the minor child, and they share expenses as a normal

couple would. Koscho claims that if Hill truthfully testified about her income, she would

not be able to “expense-share with her boyfriend on a 40-acre farm.” He asserts that “it

is evident that she receives great benefit and has a high standard of living, given her

living situation with her boyfriend, who also owns other businesses.”

{¶17} R.C. 3119.22 states:

The court may order an amount of child support that deviates from the amount of child support that would otherwise result from the use of the basic child support schedule and the applicable worksheet if, after considering the factors and criteria set forth in section 3119.23 of the Revised Code, the court determines that the amount calculated pursuant to the basic child support schedule and the applicable worksheet would be unjust or inappropriate and therefore not be in the best interest of the child.

Under R.C. 3119.23(G), one of the factors the court “may consider * * * in determining

whether to grant a deviation” under R.C. 3119.22 is “[b]enefits that either parent receives

from * * * sharing living expenses with another person.”

{¶18} The trial court’s decision to not grant a deviation based on R.C. 3119.23(G)

was not unreasonable, arbitrary, or unconscionable. It is unclear from the record how

much of a benefit Hill gets from sharing living expenses with her boyfriend. Although Hill Ross App. No. 19CA3699 11

testified that she does not pay rent to Adkins, the record does not contain any other

evidence about Hill’s living expenses except summer child care, and her testimony that

Adkins provides for her and the child “as normal couples provide, I guess” is vague.

Koscho only speculates that because Hill’s boyfriend owns property and multiple

businesses, she and the child enjoy a standard of living that makes the amount

calculated pursuant to the basic child support schedule and the applicable worksheet

unjust or inappropriate. Under these circumstances, we cannot conclude that the trial

court abused its discretion when it declined to grant a deviation based on R.C.

3119.23(G). Accordingly, we overrule the third assignment of error.

IV. CONCLUSION

{¶19} Having overruled the assigned errors, we affirm the trial court’s judgment.

JUDGMENT AFFIRMED. Ross App. No. 19CA3699 12

JUDGMENT ENTRY

It is ordered that the JUDGMENT IS AFFIRMED and that Appellant shall pay the costs.

The Court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this Court directing the Ross County Common Pleas Court, Juvenile Division to carry this judgment into execution.

Any stay previously granted by this Court is hereby terminated as of the date of this entry.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.

Abele, J. & Wilkin, J.: Concur in Judgment and Opinion.

For the Court

BY: ________________________________ Michael D. Hess, Judge

NOTICE TO COUNSEL

Pursuant to Local Rule No. 14, this document constitutes a final judgment entry and the time period for further appeal commences from the date of filing with the clerk.