COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 71352 KATHY HIGGINS f/k/a DANVERS : : Plaintiff-Appellee : JOURNAL ENTRY : v. : AND : GARET H. DANVERS : OPINION : Defendant-Appellant : DATE OF ANNOUNCEMENT OF DECISION: NOVEMBER 6, 1997 CHARACTER OF PROCEEDING: Civil appeal from the Cuyahoga County Common Pleas Court, Domestic Relations Division, Case No. D191306 JUDGMENT: Affirmed. DATE OF JOURNALIZATION: __________________________ APPEARANCES: For Plaintiff-Appellee: JAMES K. CLOWER 13 Park Avenue West Mansfield, Ohio 44902 For Defendant-Appellant: MAUREEN FIORILLI ZITO 6000 Lombardo Center, #610 Cleveland, Ohio 44131 ROCCO, J.: Garet H. Danvers appeals from a judgment of the Common Pleas Court, Domestic Relations Division, adopting the referee's 2 recommendations and granting the motions of Kathy Higgins f/k/a Danvers to modify child support and for attorney fees. Based upon the forthcoming analysis, we affirm. In 1990, the common pleas court granted Garet and Kathy a divorce. Kathy was awarded custody of their minor son Patrick, while Garet was granted visitation privileges and ordered to pay $665.00 per month in child support. On August 12, 1993, Kathy filed motions to modify child support and for attorney fees. The court referee conducted motion hearings, at which both parties adduced evidence of their incomes and expenses. At the time of the hearings, Garet, an accountant, was employed by Ernst & Young, L.L.P., in Cleveland, Ohio, as the Director of State and Local Taxes, and was an equity partner in that accounting firm, while Kathy was employed by Edwin Shaw Hospital as a nursing education coordinator. The parties stipulated to Kathy's annual gross receipts of $42,247.20. In addition, the referee credited an additional $2,000.00 to this amount, which reflected annual tuition reimbursement to Kathy by her employer. Thus, the referee credited Kathy with total annual gross receipts of $44,247.20. The referee, after encountering much resistance from Garet, calculated Garet's annual gross receipts to be $177,702.00, based upon his 1993 income tax return. This amount represented an adjustment to his reported gross income, since the 1993 return reflected thirteen months of income, rather than twelve. The referee also credited an additional $366.00 to this amount, which reflected Garet's annual 3 income from interest and dividends. Hence, the referee credited Garet with total annual gross receipts of $178,068.00. The referee then debited Kathy's total annual gross receipts by $1,475, which represented an estimate of her local income taxes and a tax exemption for a child from a previous marriage who lived with her. The referee also debited Garet's total annual gross receipts in the amount of $12,946.04. This amount included Garet's estimated 1993 local income taxes, one-half of his 1993 self- employment tax and a debit of $3,863.00 for ordinary and necessary business expenses, which was the amount he deducted on the 1993 income tax return. Garet, however, argued for additional debits to his total annual gross receipts, but the referee disallowed these. Specifically, Garet contended that, as an equity partner in Ernst & Young, he was obligated to make a capital contribution in the amount of $90,000.00, payable in five annual installments of $18,000.00, commencing in December, 1995, and that such contribution generated income. He also argued that, since Ernst & Young conducted business in all fifty states, he was obligated to pay state and local taxes in every state. He further urged that his expenses for real estate taxes, personal property tax on his automobiles, home mortgage interest, charitable deductions, moving expenses and retirement contributions constituted ordinary and necessary business expenses. The referee then subtracted the respective debits, $1,475 for Kathy and $12,946.04 for Garet, from the credits and calculated the 4 following adjusted annual gross incomes: (1) Kathy, $42,772.00; and (2) Garet, $165,121.96. Adding these together, the referee computed a combined adjusted annual gross income of $207,893.96, determined that Garet earned 79.4% of this amount and, using the R.C 3113.215(D)(1) child support schedule, calculated a basic combined child support obligation totaling $21,080.45.1 The referee then added $728.00 to this amount, reflecting a stipulated annual premium paid by Kathy for health insurance covering Patrick. The referee next calculated the estimated child care expenses for Patrick, based upon Kathy's testimony. Kathy stated that Patrick's school tuition amounted to $1,300.00 per year. She also testified that day care, prior to and after school, cost $55.00 per week, and that summer day care cost $19.00 per day. Garet did not dispute the accuracy of these costs but, rather, argued that Patrick did not need to be in day care. The referee then estimated Kathy's total annual child care expenses to be $3,355.00, by adding the tuition costs to the day care costs and deducting a child care credit of $480.00, and then added this amount to the basic combined child support obligation. Thus, the referee concluded that the basic combined annual child support obligation equaled $25,163.45, 79.4% of which was obligated to Garet, i.e., $19,979.77 per year, or $1,665.00 per month. Garet, however, requested a substantial deviation from this revised child support obligation, claiming he had extraordinary 1This amount is actually less than the same percentage of the parents' combined annual income as computed under the basic child support schedule, which is properly calculated to be $22,983.00. 5 personal expenses. He cited to the fact that he resided in Michigan, paying a social partner in excess of $2,000.00 per month for room and board, but also maintained a condominium in Lakewood, Ohio, which cost him $800.00 per month in total living expenses. He further argued that due to the distance between him and Patrick, who lived in Canton, Ohio, he assumed an increased cost whenever he drove there for visitation. He also claimed that since the divorce decree, he had made significant in-kind contributions to Patrick's support, which primarily consisted of toys and clothing. He finally cited the enormity of his attorney fees. The referee nevertheless recommended a deviation of only $100.00 per month, obligating Garet to pay a monthly amount of $1,565.00. Specifically, the referee found that most of Garet's reported expenses lacked credibility, they did not provide statutory reasons which justified a deviation, or they reflected personal, rather than necessary, choices. The referee then retroactively applied Garet's revised monthly child support obligation, which gave rise to an arrearage of $16,200.00. The referee finally recommended that Garet pay Kathy $3,000.00 for her attorney fees. On August 30, 1996, the court adopted the referee's recommendations and Garet now appeals raising three assignments of error for our review. However, since these assignments are very broadly worded, we state them and shall consider them together: I. THE TRIAL COURT ERRED IN ITS FAILURE TO COMPLY WITH OHIO LAW. 6 II. THE TRIAL COURT ERRED IN THAT ITS DECISION WAS INCONSISTENT WITH THE EVIDENCE PRESENTED. III. THE TRIAL COURT ERRED IN ITS ABUSE OF DISCRETION. These assignments of error encompass four specific issues raised by Garet in his appellate brief: (1) the court erred when it refused to deduct from Garet's total annual gross receipts, as ordinary and necessary business expenses, his annual capital contribution to Ernst & Young, his 1993 itemized deductions, and the local taxes he is allegedly required to pay in every state; (2) the court erred when it calculated the annual child care expenses for Patrick; (3) the court erred when it refused to order a greater deviation from Garet's revised child support obligation; and (4) the court erred when it awarded Kathy $3,000.00 in attorney fees. A reviewing court will not reverse a child support order absent an abuse of discretion. An abuse of discretion signifies more than an error of law but, rather, implies the court's attitude was arbitrary, unconscionable or unreasonable. Rock v. Cabral (1993), 67 Ohio St.3d 108; Will v. Will (1996), 113 Ohio App.3d 8. Garet first contends the court erred when it failed to debit from his total annual gross receipts, as ordinary and necessary business expenses, his annual capital contribution to Ernst & Young, his itemized deductions, and the taxes he claims an obligation to pay in every state. For purposes of child support calculation, gross income includes self-generated income. R.C 3113.215(A)(2). Self- generated income means [g]ross receipts received by a parent from 7 self-employment, proprietorship of a business, joint ownership of a partnership or closely held corporation, * * * minus ordinary and necessary expenses incurred by the parent in generating the gross receipts. (Emphasis added). R.C 3113.215(A)(3). Ordinary and necessary expenses refers to [a]ctual cash items expended by the parent or the parent's business * * *. R.C 3113.215(A)(4)(a). Garet first sought a debit from his total annual gross receipts, as an ordinary and necessary business expense, his annual capital contribution to Ernst & Young. In support of this, he relied upon Kamm v. Kamm (1993), 67 Ohio St.3d 174, in which a self-employed farmer sought to similarly deduct the purchase of capital assets, viz., farm machinery. The Supreme Court, at syllabus 1, held: Acquisition of a capital asset by a self- employed, child-support obligor may be deductible against such obligor's gross receipts for the purpose of computing the obligor's child-support obligation in accordance with R.C 3113.215, provided the acquisition is otherwise both ordinary and necessary and is acquired by an actual cash expenditure. (Emphasis added). In addition, the Court provided an example to assist in the determination of whether the acquisition of a capital asset is ordinary and necessary, stating in relevant part at 177: [T]he purchase of a new tractor by a farmer out of actual cash flow would seem to be an ordinary and necessary expense. However, the purchase of a computer system by a farmer, though arguably helpful in the management of the farm's operation, may not be ordinary and necessary under all the financial circumstances. (Emphasis added). 8 Furthermore, the Court addressed a concern that its decision would enable a child support obligor to perpetually reduce or extinguish a child support obligation, merely by purchasing capital assets on a regular basis. Grasping the potential for inequitable results, the court stated in relevant part at syllabus 2: Allowance of a deduction for acquisition of a capital asset by a self-employed, child- support obligor against such obligor's gross receipts may be grounds for deviation from the child-support guidelines pursuant to R.C 3113.215, providing the best interest of the child is considered. (Emphasis added). In the case before us, we first observe that, pursuant to Berry v. United States (1959), 267 F.2d 298, a partnership interest is indeed a capital asset. We cannot say, however, that Garet's capital contribution, for purchase of his equity interest in the partnership, constitutes an ordinary and necessary business expense. The purchase by an accountant of an equity interest in a partnership is not even remotely analogous to the purchase by a farmer of a tractor. In most situations, farming, as a sole means of earning a living, necessarily requires the utilization of certain farm machinery, whether it be a tractor, combine, thresher, etc. These machines have become ordinary implements for a farmer, and are frequently observed in operation on the farms in this state. Simply stated, one reasonably expects that a self-employed farmer ordinarily and necessarily possesses, or at least requires, such farm machinery in order to conduct a farming business. 9 We do not draw too narrow an exception in this regard. In Woods v. Woods (1994), 95 Ohio App.3d 222, the Hancock County Court of Appeals held that a truck driver may deduct, from his gross receipts, the installment payments on his truck. The court observed at 225: There can be no question but that the purchase of a truck by a self-employed truck driver is an ordinary and necessary expense to the driver. Paraphrased, one reasonably expects that a self-employed truck driver ordinarily and necessarily possesses, or at least requires, a truck to carry on business. Applying these concepts to the case before us, one does not reasonably expect that a self-employed accountant ordinarily and necessarily possesses or requires an equity interest in a partnership in order to generate income. One might reasonably expect that a self-employed accountant would possess or require a computer or, perhaps, a small legal or tax library, to conduct business. However, an accountant's ownership of an equity interest in a partnership, though arguably helpful in the generation of business income, is quite unnecessary for such a purpose. In addition, such an equity interest more closely resembles an extraordinary investment, rather than an ordinary business implement. We are guided in part by R.C 1775.17(A), which provides that, upon the dissolution of a partnership, each partner shall be reimbursed his capital contribution and share equally in profits and surpluses remaining after all liabilities have been satisfied. Thus, an equity interest in a partnership, unlike a tractor or 10 truck, does not customarily lose its value over time and, the equity owner, unlike the farmer or the truck driver, is expected to recover the full amount originally expended for the asset. Hence, we may properly analogize the purchase of a partnership interest to the acquisition of stocks, bonds or annuities, and conclude that, for purposes of child support, it is an investment, rather than an ordinary and necessary business expense. Even if we were to go so far as to say that Garet's capital contribution constituted an ordinary and necessary business expense, Garet made no claim and adduced no evidence that a deduction of that contribution from his total annual gross income was in Patrick's best interest. The best interest of the child is always the court's touchstone when deciding matters of child support. Accordingly, the court did not abuse its discretion when it disallowed the capital contribution as a debit to Garet's total annual gross receipts. Garet also sought a debit from his total annual gross receipts, as ordinary and necessary business expenses, those amounts he paid for real estate taxes, personal property tax for his automobiles, home mortgage interest, charitable deductions, moving expenses and retirement contributions, all of which he itemized on his 1993 tax return. 16 U.S.C.A. S 162(a) permits an itemized deduction for [a]ll the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business * * *. However, 11 we observe that the foregoing expenses are personal, rather than expenses paid or incurred in carrying on Garet's business. Thus, the court did not abuse its discretion when it disallowed these itemized deductions as debits to his total annual gross receipts. Garet further sought a debit from his total annual gross receipts, as ordinary and necessary business expenses, those amounts he claimed he would personally owe, in future years, to every state in the Union, for local taxes. In Houts v. Houts (1995), 99 Ohio App.3d 701, 705-06, the court stated in relevant part: [W]hen calculating an obligor's gross income, R.C 3113.215 requires only that income and expenses from a calendar year be included in that calculation * * * The trial court can include in an obligor's gross income calculation only the income and ordinary and necessary expenses for one calendar year. In the case before us, the court calculated and debited $3,554.04 from Garet's total annual gross receipts for local taxes actually paid or estimated to be paid in 1993. The referee also stated that both parties accepted this amount as evidenced by the fact that each, in their separate child support worksheets, requested a debit of only $3,455.00. Thus, Garet adduced no evidence, at the hearings, in support of his claim that this amount was less than accurate. Since the court relied upon the evidence before it, and since it was not required to calculate Garet's support obligation based upon estimates of expenses that would be incurred in future years, the court did not abuse its discretion regarding this matter. 12 Garet next contends the court erred when it calculated the annual child care expenses for Patrick, arguing that Kathy adduced no documentary evidence detailing the actual costs she incurred. A referee and trial court may calculate child care costs based upon only the testimony of a party to the divorce action, i.e., in the absence of documentary evidence, if said testimony is found to be credible. Compare Hockenberry v. Hockenberry (1992), 75 Ohio App.3d 806. In the case before us, Kathy testified regarding the actual costs of Patrick's tuition and the need for, and costs related to, Patrick's day care. While Garet protested that Patrick did not need day care, he did not contest the accuracy of the tuition and day care costs. Since the referee found Kathy's testimony credible, and since the calculations were reasonable and mathematically correct, the court did not abuse its discretion when it credited Kathy with the foregoing child care expenses. Garet next contends the trial court erred when it refused to order a further deviation from his child support obligation based upon the fact that he had two residences, that he drove great distances to visit Patrick, incurring increased travel expenses, that he had made in-kind contributions to Patrick's support and that he had incurred enormous attorney fees. R.C 3113.215(B)(3)(a-p) provides that a court [m]ay deviate from the amount of support * * * in cases in which the application of the schedule and the applicable worksheet * * * would be unjust or inappropriate and would not be in the best interest of the 13 child. In determining whether the amount calculated from the worksheet is unjust, inappropriate and/or not in the best interests of the child, the court may consider extraordinary costs associated with visitation; disparity in income between parties or households; benefits that either parent receives from remarriage or sharing living expenses with another person; significant in-kind contributions including clothing; the relative financial resources, other assets and resources and needs of each parent; the standard of living and circumstances of each parent and the standard of living the child would have enjoyed had the marriage continued or had the parents been married; the need and capacity of the child for an education and the educational opportunities that would have been available to the child had the circumstances requiring a court order for support not arisen; and the responsibility of each parent for the support of others. Id. (Quotations omitted). In our case, the referee determined that Garet should receive a deviation from his revised child support obligation amounting to $100.00 per month. Specifically, the referee found that most of Garet's reported expenses lacked credibility, they did not provide statutory reasons which justified further deviation, or they reflected personal, rather than necessary, choices. The record supports these findings. At the time of the hearings, Garet lived with a social partner, an M.D., in a $400,000.00 home in Michigan and contributed approximately $2,000.00 per month to maintain this arrangement. He also owned a condominium in Lakewood, Ohio and worked for Ernst & 14 Young, L.L.P., based in Cleveland, Ohio. In essence, he maintained two residences for his own personal convenience or pleasure, even though this meant he would incur additional travel expenses when visiting Patrick. Further, Garet often incurred increased expenses when he and Patrick stayed in hotels and ate in restaurants. Once again, this reflected personal choices on the part of Garet. Expenses which Garet voluntarily incurred for his own pleasure or convenience do not constitute extraordinary costs associated with visitation. The court, however, could properly have ordered a deviation, without abusing its discretion, based upon the ordinary and reasonable costs associated with travel between Cleveland, Ohio and Canton, Ohio. Garet also testified that he owed a significant sum in attorney fees. However, R.C 3113.215(B)(3), supra, does not provide for a deviation based upon legal expenses. He finally argued that he had made in-kind contributions to Patrick, primarily toys and clothing, which totaled approximately $300.00 per year. If true, the court could have ordered a deviation of $25.00, without abusing its discretion, from Garet's monthly support obligation. Nevertheless, as already noted, the referee recommended, and the court ordered, a deviation of only $100.00 per month. Considering the extreme disparity in income between Garet's and Kathy's households, the fact that Garet receives benefits from his social partner for living expenses in Michigan, the enormity of Garet's assets, as reflected in the transcript, the obvious 15 standard of living and educational opportunities that Patrick would have enjoyed had his parents not divorced, and Kathy's responsibility to care for an additional child, not born as issue of this marriage, we conclude the court did not abuse its discretion when it refused to order a deviation in excess of $100.00, from Garet's child support obligation, since this would have been unjust, inappropriate and not in Patrick's best interests. Garet finally contends the court erred when it awarded Kathy $3,000.00 in attorney fees. In Blum v. Blum (1967), 9 Ohio St.2d 92, the Supreme Court addressed this issue in its syllabus: A trial court has authority, after the entry of a divorce decree, to enter an order requiring the divorced husband to pay reasonable expense money to his former wife to enable her to pay attorney fees incurred in post-decree proceedings relative to the support of the minor children of the marriage. However, when a party has the resources to pay an attorney, that party is usually not entitled to an award of attorney fees. Id. In our case, the record reveals that Garet, prior to the hearings, refused to settle this child support matter and, during the hearings, continually resisted any precise calculation of his income, rendering futile any negotiation or stipulation on this matter. The referee concluded [d]efendant was attempting to make the modification proceedings as difficult for Plaintiff as possible, a point worth noting considering that he objects to her incurring fees when he forces her to do so. * * * [H]ad he been 16 willing to articulate his position * * * the time spent in these proceedings could have been significantly reduced * * *. Report of Referee, at 12-13. Since Garet prolonged the duration of these proceedings, which increased Kathy's attorney fees, the trial court did not abuse its discretion when it ordered him to pay $3,000.00 toward those fees. Based upon the foregoing analysis, Garet's three assignments of error lack merit and are, therefore, overruled. Judgment affirmed. 17 It is ordered that appellee recover of appellant costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Cuyahoga County Common Pleas Court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. JOSEPH J. NAHRA, P.J., CONCURS; TERRENCE O'DONNELL, J., CONCURING AND DISSENTING. (SEE CONCURRING AND DISSENTING OPINION ATTACHED.) JUDGE KENNETH A. ROCCO N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc. App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E), unless a motion for reconsideration with supporting brief, per App.R. 26(A) is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the clerk per App.R. 22(E). See, also, S.Ct.Prac.R. II, Section 2(A)(1). 18 COURT OF APPEALS OF OHIO COUNTY OF CUYAHOGA NO. 71352 KATHY HIGGINS f/k/a DANVERS : : Plaintiff-Appellee : : C O N C U R R I N G : A N D -vs- : D I S S E N T I N G : O P I N I O N GARET H. DANVERS : : Defendant-Appellant : DATE OF ANNOUNCEMENT OF DECISION: NOVEMBER 6, 1997 O'DONNELL, J., CONCURRING IN PART AND DISSENTING IN PART: While I agree with the majority's conclusion regarding the appellant's second, third and fourth contentions, I share a dif- ferent view regarding Garet's capital partnership contribution to Ernst & Young. Garet sought a deduction from his gross income for the $90,000 capital contribution which he is obligated to pay at the rate of $18,000 per year for the privilege of becoming a partner at Ernst & Young. Garet relies on Kamm v Kamm (1993), 67 Ohio St.3d 174, for authority authorizing the deduction of these payments from his gross income. The court stated in its syllabus: Acquisition of a capital asset by a self-employed, child- support obligor may be deductible against such obligor's gross receipts for the purpose of computing the obligor's child-support obligation in accordance with R.C. 3113.215, provided the acquisition is otherwise both 19 ordinary and necessary and is acquired by an actual cash expenditure. (Emphasis added). In my view, the trial court abused its discretion in denying the deduction against Garet's gross income for purposes of com- puting his child support obligation in accordance with R.C. 3113.25 because it is in the best interest of the child to do so. Here, in an effort to generate more income which can only benefit his child, Garet is obligated to acquire a partnership interest by paying for it. This interest is a capital asset. These five annual, $18,000 payments consist of actual cash expen- ditures which, although reducing his disposable income, will generate a higher annual income in future years, which will enure to the best interest of the child. I believe the majority has confused the acquisition of this capital asset with whether or not it constitutes an ordinary and necessary business expense. The fact is, it is not an expense, but rather, acquisition of an asset. Since that enures to the best interest of the child in this case, the Domestic Relations Court, in accord with Kamm, supra, should have permitted the deduction and abused its discretion by not doing so. .