Patrick v. Britt
613 S.E.2d 541, 364 S.C. 508, 2005 S.C. App. LEXIS 132 (2005)
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Rule of Law:
For child support calculations involving a self-employed parent, a court may impute income by adding back business tax deductions for accelerated depreciation to the parent's gross income. Courts may also consider personal expenses paid by the business to determine the actual income available to the parent, especially when the parent purposefully obscures their finances.
Facts:
- Keith Britt and Jane Patrick divorced in 1991, and Britt was ordered to pay child support for their two children.
- The divorce decree stipulated that support payments would be reduced once the oldest child turned eighteen.
- After the oldest child turned eighteen in June 2002, Patrick sought an increase in child support for the remaining minor child.
- Britt, the owner of a trucking and construction business that grossed over $430,000 in 2002, claimed on his financial declaration that his personal monthly income was only $66.01.
- Britt's business paid for numerous personal expenses, including previous child support payments, church tithes, a stepchild's private school tuition, his personal truck payments, gas, and phone bills.
- An accountant testified that Britt's company spent approximately $100,000 a year on equipment and was able to take an equivalent amount in tax depreciation.
- The accountant also identified at least $17,000 of company money that was spent on Britt's personal expenses but could not provide a complete figure or finalize the company's tax returns before the hearing.
Procedural Posture:
- Jane Patrick filed an action in the Dorchester County Family Court (trial court) seeking an increase in child support from Keith Britt.
- The family court conducted a final hearing where it considered financial declarations and testimony from both parties and Britt's accountant.
- The family court found that Britt had deliberately misrepresented his income, imputed to him an annual income of $100,000, and ordered an increase in his monthly child support obligation to $987.00.
- The family court also ordered Britt to pay Patrick's attorney's fees.
- Keith Britt (appellant) appealed the family court's order to the South Carolina Court of Appeals (intermediate appellate court), with Jane Patrick as the appellee.
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Issue:
Did the family court abuse its discretion by imputing income to a self-employed parent for child support purposes based on the business's tax depreciation, especially when the parent paid numerous personal expenses through the business and failed to provide a clear accounting of his actual earnings?
Opinions:
Majority - Williams, J.
No, the family court did not abuse its discretion. A court may determine a self-employed parent's actual income for child support purposes, which can differ from income reported for tax purposes. The South Carolina Child Support Guidelines explicitly allow courts to add back amounts for accelerated depreciation to determine a parent's gross income. Given that Britt used his business to pay a plethora of personal expenses and was uncooperative in helping the court determine his true income, the family court was justified in imputing his income based on the $100,000 depreciation figure provided by his own accountant.
Analysis:
This decision solidifies the authority of family courts to look behind the formal financial statements and tax returns of self-employed parents in child support proceedings. It establishes that business practices, like taking large depreciation deductions and paying personal expenses from company funds, can be used as evidence to impute a higher income than what the parent claims. The case serves as a precedent against parents who attempt to use corporate structures to shield their true income, ensuring that child support obligations are based on the actual financial resources available. Future litigants are put on notice that a lack of transparency and cooperation with the court may result in an income determination unfavorable to them.
