In the Matter of the Marriage of Mary Jo Brand and Michael Joseph Brand

Summary

The Supreme Court of Kansas held that income attributed to a minority shareholder from Subchapter S corporations is not automatically included in domestic gross income for child-support purposes. The court required a case-by-case analysis considering factors such as ownership percentage, distribution history, control over retained earnings, and potential income manipulation. On the facts presented, the distributions were primarily used to pay tax obligations, and the district court did not abuse its discretion by excluding them from the support calculation.

Holdings

1. There is no blanket rule requiring all Subchapter S corporation earnings, retained profits, or distributions reported for tax purposes to be included as domestic gross income for child-support purposes. A case-by-case analysis is required to determine what amount was actually received or available to the parent for support.
2. The district court did not abuse its discretion by excluding Michael Brand's retained earnings and distributions from the child-support calculation because the distributions were made to pay his tax obligations, he lacked control over corporate distributions, and there was no evidence of income manipulation.
3. The income attributed to Michael from BBBR's sale of land was properly excluded because it was a lump-sum payment rather than income regularly received.
4. Relevant factors include the corporation's past earnings history, the shareholder's ownership percentage, and the shareholder's ability to control the distribution or retention of corporate profits; heightened scrutiny is warranted when income can be manipulated through control over distributions.

Questions Presented

1. Whether a shareholder's pass-through income, retained earnings, and distributions from Subchapter S corporations must automatically be included as domestic gross income when calculating child support under the Kansas Child Support Guidelines.
2. Whether the district court abused its discretion by excluding Michael Brand's undistributed corporate income and distributions from the child-support calculation.
3. Whether the capital gain associated with a corporation's sale of land constituted regularly received income for child-support purposes.

Disposition

affirmed