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Mead v. Holzman8/29/2000
AFFIRMED AND REMANDED
Deborah M. Mead appeals from the trial court's order establishing the amount of child support she must pay to James C. Holzmann for the care of their children. We must determine whether the trial court erred in failing to impute a pre-tax income to Holzmann, whose income consists solely of non-taxable disability insurance benefits, for purposes of calculating his monthly gross income. We conclude that the trial court did not err by its calculation of Holzmann's gross income under section 4(a) of the Arizona Child Support Guidelines ("Guidelines"), but we remand the case to the trial court for consideration of the issue under section 17 of the Guidelines.
Facts and Procedural Background
Upon the dissolution of the parties' marriage on November 13, 1995, Mead was awarded custody of their three minor children and Holzmann was ordered to pay child support. After Holzmann petitioned for a change of custody in 1998, the parties stipulated that he would have primary custody of the children and Mead would pay the amount of child support, if any, ordered by the trial court.
Holzmann is not employed, but instead receives a non- taxable monthly disability insurance payment of $6,656.00. Mead earns $2,642.00 each month as a legal secretary and must pay taxes on that income. Mead argued to the trial court, as she does on appeal, that section 4(a) of the Guidelines requires that a "pre- tax" income of $9,842.00 be imputed to Holzmann for purposes of comparing his gross monthly income with Mead's gross monthly income before determining their proportional shares of the total child support obligation. Otherwise, Mead argued, Holzmann would receive a windfall because of the tax-free status of his income. If a pre- tax income is imputed to Holzmann, Mead's child support obligation would decrease. The trial court rejected Mead's argument, compared Holzmann's actual monthly income to Mead's gross monthly income and ruled that Mead must pay Holzmann $265.00 per month for child support.
Mead timely filed her notice of appeal and we have jurisdiction to consider it pursuant to Arizona Revised Statutes Annotated ("A.R.S.") section 12-2101(B) (1994). We review the trial court's interpretation of the Guidelines de novo as a question of law. See Burnette v. Bender, 184 Ariz. 301, 304, 908 P.2d 1086, 1089 (App. 1995) (whether capital gains must be included in gross income under section 4(a) of the Guidelines presents a question of law to be reviewed de novo).
DISCUSSION
A. 'Gross Income' under section 4(a) of the Guidelines
The Guidelines establish a standard of support for children consistent with their reasonable needs and the ability of parents to pay by providing a formula for calculation of child support based, in significant part, on the parties' gross incomes. See Guidelines, ยงยง 1, 6-11. Section 4(a) of the Guidelines provides that 'gross income' "may include, but is not limited to, income from salaries, wages, . . . disability insurance benefits." (Emphasis added.)
Mead argues that the non-limitation language in section 4(a) of the Guidelines justifies imputation of a pre-tax income to Holzmann to calculate his 'gross income,' and the court was required to do so in order to avoid an unjustified result. She claims that comparing Holzmann's monthly, non-taxable income to her monthly, taxed income essentially equates Holzmann's 'net income' to her 'gross income,' thereby unfairly decreasing the total amount of support available to the children and increasing her proportional share of the total child support obligation. She further contends that tax must be imputed to Holz
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