Houston v. Smith

Wyoming Supreme Court · Evidence

EvidenceChild supportStatutory interpretationIncome calculationincomenet incomechild supportfederal tax return

Facts

Houston and Smith were divorced in 1981, and Smith was ordered to pay child support for their two children. In 1992, Houston petitioned to modify support, and the district court used Smith’s 1992 joint federal income tax return to determine his net income for presumptive child support purposes. That return included a loss from Smith’s current wife’s retail business and depreciation deductions on Smith’s rental properties. Using those federal tax figures, the district court found Smith’s net income to be $31,330 and set support accordingly.

Issue

Whether, in calculating a parent’s income and net income for Wyoming presumptive child support, a court may rely on figures from a joint federal income tax return, including the current spouse’s business loss, depreciation deductions, standard deductions, and personal exemptions. Also, whether depreciation qualifies as a reasonable unreimbursed legitimate business expense under the Wyoming statute.

Rule

Under Wyo. Stat. § 20-6-301(a), child support income must be based on the individual parent’s income, not joint or spousal income, and net income must be calculated using only the deductions specifically authorized by the statute. Federal income tax concepts such as adjusted gross income and taxable income cannot be substituted for the statutory definitions, and depreciation does not qualify as a reasonable unreimbursed legitimate business expense for this purpose.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Cheyenne, a Wyoming court is modifying Leo Garner’s child support obligation. The judge takes Leo’s federal Form 1040, starts with his taxable income after the standard deduction and personal exemptions, and uses that figure as Leo’s net income under the Wyoming child support statute.

If Leo appeals, how should the reviewing court rule on the income calculation?

Explanation. The majority held that federal tax computations differ fundamentally from the Wyoming statutory scheme. A court may not use federal taxable income as the equivalent of statutory net income. Instead, it must determine income under the statute and then subtract only the deductions specifically authorized by the statute. (Derived from Houston v. Smith (n.d.).)