IN RE THE MARRIAGE OF CHAD E. DRAKE AND LAURA A. DRAKE Upon the Petition of CHAD E. DRAKE, Petitioner-Appellant, And Concerning LAURA A. DRAKE, Respondent-Appellee.
from the Iowa District Court for Ringgold County, Thomas P.
Drake appeals the district court's decree dissolving his
marriage to Laura Drake.
A. Taylor of Taylor Law Offices, P.C., Des Moines, for
M. Noble of Noble Law Office, Des Moines, for appellee.
Considered by Potterfield, P.J., and Doyle and Bower, JJ.
Drake appeals the district court's decree dissolving his
marriage to Laura Drake. He contends the court erred in
calculating his income for purposes of determining his child
support obligation. He also challenges the amount of the
equalization payment the district court determined Laura was
due. Upon our review, we affirm as modified and remand to the
district court with instructions.
Standard of Review.
review dissolution actions de novo. See In re Marriage of
Larsen, 912 N.W.2d 444, 448 (Iowa 2018); see
also Iowa R. App. P. 6.907. Although we examine the
entire record and adjudicate the issues anew, we give weight
to the district court's factual findings, especially with
respect to the credibility of the witnesses. See In re
Marriage of McDermott, 827 N.W.2d 671, 676 (Iowa 2013);
see also Iowa R. App. P. 6.904(3)(g). This is
because the district court, in making its credibility
assessment, has the distinct advantage of listening and
observing each witness's demeanor firsthand, while we
must rely on a cold transcript. See Albert v.
Conger, 886 N.W.2d 877, 880 (Iowa Ct. App. 2016); In
re Marriage of Udelhofen, 444 N.W.2d 473, 474 (Iowa
1989); In re Marriage of Vrban, 359 N.W.2d 420, 423
Iowa, child support is calculated using the child support
guidelines." In re Marriage of Erpelding, 917
N.W.2d 235, 245 (Iowa 2018); see also Iowa Code
§ 598.21B(1) (2018); Iowa Ct. R. 9.2. "The purpose
of the guidelines is to provide for the best interests of the
children by recognizing the duty of both parents to provide
adequate support for their children in proportion to their
respective incomes." Iowa Ct. R. 9.3(1). Moreover, there
is "a rebuttable presumption that the amount of child
support which would result from the application of the
guidelines prescribed by the supreme court is the correct
amount of child support to be awarded." Iowa Code §
compute the guideline amount of child support," the
district court must first compute the adjusted net monthly
income of each parent. Iowa Ct. R. 9.14. That amount is
determined by first determining each parent's gross
monthly income. See Iowa Ct. R. 9.14(1). Under the
guidelines, "'gross monthly income' means
reasonably expected income from all sources." Iowa Ct.
R. 9.5(1). The court must determine a parent's income
from the most reliable evidence presented. See In re
Marriage of Powell, 474 N.W.2d 531, 534 (Iowa 1991).
appeal, Chad insists the court erred when it determined he
made an additional $45, 000 annually through his farming
operation. At trial, Chad testified that, in addition to his
full-time job managing two pig nurseries for Iowa Select
Farms, he also does "a little farming on the side,"
I have twenty-seven cows; and I do sixty-three crop acres of
my mom's ground. So it doesn't take up a lot of time.
The fall and the spring are a little bit busier than the rest
of the year. It's more of a hobby anymore than it really
is a job.
claimed that "he carrie[d] about $150, 000 worth of
farming debt each year" and that debt and other expenses
dissipated any farm income. Laura testified she did not
believe Chad's farm was just a hobby because
"he's in it to make money."
reviewing the evidence and hearing the parties'
testimony, the court did not find Chad to be particularly
credible, noting, among other things, that "Chad played
a bit fast and loose with his financial affidavit." It
found "[m]uch of Chad's testimony was
self-serving." Although the court acknowledged it was
within its discretion to deduct depreciation and expenses
from Chad's farm income, the court did not believe the
expenses should be deducted. The court found the expenses
claimed on tax returns primarily consisted of depreciation
and did not show any other significant expenses.
Additionally, the court noted Chad's exhibits showed Chad
as having a running checking account balance of around $4000;
however, "Laura's exhibits showed Chad consistently
ran a much higher balance, anywhere from $17-$40, 000."
"Given Chad's rolling bank account balance, and what
appeared to the court to be his business savvy and drive
regarding farming," the court found Chad's claimed
farm expenses should not be deducted from his farming
income" and determined Chad earned $45, 000 annually
through his farm operation. The district court further noted
that it believed the amount of the child support award was
the correct one, even if it calculated Chad's income
incorrectly, "based on what it perceives to be a
hardship" and that "a deviation would otherwise be
we cannot disagree with the district court's assessment
that Chad played fast and loose with his financial affidavit,
we do disagree with the court's observation that
Chad's farming expenses consisted of primarily
depreciation and that his tax schedules did not show
significant other expenses. In computing Chad's child
support obligation, the court did not subtract any farm
expenses from Chad's farming income. Chad's Schedule
F's for the years 2013 through 2017 showed significant
expenses other than depreciation. To be sure, the
depreciation figures are stunning and, except for one year,
depreciation significantly exceeded farm income each year.
Just deducting the farm expenses from farm income show
Chad's farming operation was essentially a break-even
proposition. Chad's farm income averaged about $43, 800
per year over five years, and the farm expenses averaged
about $40, 700 per year. So, over a five-year period,
Chad's annual net farm profit averaged about $3100 sans
child support guidelines define "net monthly
income" as gross monthly income less specifically
enumerated deductions. See Iowa Ct. R. 9.5. The
guidelines do not specifically provide for a deduction for
depreciation expenses, but the Iowa Supreme Court has
determined "depreciation should not categorically either
be deducted as an expense or treated as income, but rather
that the extent of its inclusion, if any, should depend on
the particular circumstances of each case." In re
Marriage of Gaer, 476 N.W.2d 324, 328 (Iowa 1991). As
the court observed:
Depreciation is a mere book figure which does not either
reduce the actual dollar income of the defendant or involve
an actual cash expenditure when taken. On the contrary, it
represents additional cash available to the defendant by
permitting substantial tax deductions and, ultimately, tax
savings. The fact that the defendant may use some or all of
the cash represented by depreciation to pay off principal
indebtedness on the property is of ...