Kobs v. Jacobson

Summary

The Supreme Court of North Dakota reviewed a child support modification involving a self-employed rancher whose recent tax returns showed substantial losses. The court held that depreciation could not be added back to income under the child support guidelines and that income had to be imputed based on the federal minimum wage because the obligor was presumed underemployed. The court reversed and remanded for entry of an amended judgment setting child support at $207 per month, effective February 17, 2005.

Holdings

1. A trial court errs as a matter of law when it fails to comply with the child support guidelines or fails to clearly explain how it determined the obligor's income and resulting support obligation.
2. Depreciation deductions may not be added back into an obligor's net income when determining child support under the North Dakota guidelines.
3. N.D. Admin. Code § 75-02-04.1-07(9) did not authorize imputing Jacobson's 1999 income because the relevant earnings fell outside the rule's thirty-six-month period and the evidence did not establish a permissible basis for the trial court's calculation.
4. An obligor earning less than 167 times the federal hourly minimum wage per month is presumed underemployed, and the applicable imputed income in this case was $860.05 per month, rounded to $900, resulting in a child support obligation of $207 per month.
5. The decreased child support obligation was effective from the date Jacobson's motion to decrease support was served, February 17, 2005.

Questions Presented

1. Whether the trial court properly applied North Dakota's child support guidelines in determining Jacobson's income.
2. Whether the trial court could impute Jacobson's 1999 income as his current income despite his more recent tax returns showing losses.
3. Whether depreciation deductions could be added back into a self-employed obligor's income under the child support guidelines.
4. Whether Jacobson was presumed underemployed under the federal-minimum-wage threshold and, if so, what income had to be imputed.
5. What effective date applied to the reduced child support obligation.

Disposition

reversed_and_remanded