September 2014 | 180 P.3d 1060, 39 Kan.App.2d 312 (Kan.App. 2007)
In re Marriage of Leoni (Kansas 2007)
Under the facts of this case where the individual with the child support obligation was the 100% owner of the subchapter S corporation, the district court correctly computed the gross domestic income by including all of the subchapter S income plus business expenses which were found to have been improperly deducted. The standard of review of a district court’s order determining the amount of child support is whether the district court abused its discretion, while interpretation and application of the Kansas Child Support Guidelines are subject to unlimited review. Use of child support guidelines is mandatory and failure to follow the guidelines is reversible error. Any deviation from the amount of child support determined by the use of the guidelines must be justified by written findings in the journal entry, and failure to make such written findings is reversible error. The determination of whether and to what extent to include subchapter S corporate earnings, profit, or distribution as income in computing child support obligations is highly fact sensitive. In situations where the individual with the support obligation is able to control the retention and disbursement of funds from a subchapter S corporation, he or she has the burden of proving that such actions when calculating child support include the past earnings history of the corporation, ownership share, and the shareholder’s ability to control the distribution or retention of net profits in the business were necessary to maintain or preserve the business.
Factors a district court should consider when deciding what amount, if any, of a subchapter S corporation’s income should be included when calculating child support include the past earnings history of the corporation, ownership share, and the shareholder’s ability to control the distribution or retention of net profits in the business. When the combined income of the parties is in excess of the maximum contained in the Kansas Child Support Guidelines schedule, the “extended-income formula” may be utilized in calculating child support. A district court may deviate from the presumptive amount of child support provided in the Kansas Child Support Guidelines only if it makes specific written findings explaining the deviation.
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