Child support income calculation

[Ref]

I started an LLC w/ my partner in January 2006 after being unable to find a job for 2 months. When I was laid off, I filed for a reduction in CS due to my fear of not being able to make the kind of money I did before. Although the business was started in January 2006, I continued to collect unemployment until February when I was sure that the business was something that could sustain me and my family.

Since the start in January, my parter and I only started taking distributions in April and continued until August. At that point, we were not able to distribute until a very small distribution in October.

My lawyer is saying that the judge will annualize my income from April until August, maybe October and not include January through Mayrch in the calcualtion. This will cause my CS to substantially increase at this point instead of stay the same or go down slightly.

My ex's lawyer also asked for all payments from January through March and I provided her with copies of unemployment deposits, not the earned but not paid distributions.

I was wondering if providing the judge with the accrual basis entry would allow him to see that the amounts paid were earned in January- October not April through August.

1. Should I pay back the unemployment amount? I was still keeping an eye out for a job that had more security than the business.

2. Do you think the accrual information would get the judge to see that it was earned since the beginning of the year?

3. How about my LLC paperwork showing that we started the business in 1/2006 NOT April?

4. Would partner meeting minutes dated in the end of January showing that distributions are to be accrued on a monthly basis starting January help?

Thanks Soc.

Ref

[socrateaser]

>1. Should I pay back the unemployment amount? I was still
>keeping an eye out for a job that had more security than the
>business.

If you pay back the unemployment, you will not have earned it, therefore it can't be calculated into the support obligation. But, this won't stop the judge from attempting to impute your reasonably likely ongoing income.

>
>2. Do you think the accrual information would get the judge to
>see that it was earned since the beginning of the year?

It's up to you to produce the accounting and make the argument. I don't know the judge. Your attorney seems to think you're about to beat a dead horse, and he may have better info about the judge of the case.

>3. How about my LLC paperwork showing that we started the
>business in 1/2006 NOT April?

You're grasping at straws. If you think that your fiscal year income will be less than what your opponent thinks, then consider offering to stipulate to the higher support amount now, with a one-time credit back at the end of the year, in the event that the 12 month average is inaccurate. The down side is that your opponent will want the opposite effect considered, i.e. if you make more, then you pay more.

That's probably where I'd go with the argument.

>4. Would partner meeting minutes dated in the end of January
>showing that distributions are to be accrued on a monthly
>basis starting January help?

You need to forget about this sort of micro managing your YTD earnings. The judge will look at the actual income, accounts receivables and err on the side of the child's interests.

Lawyers are horrible at math, so if your reports trend upwards, the judge will believe that the trend will continue (even though financial trending is completely unsupportable, scientifically -- unless you bring in an economics expert witness to run the math for the court).

However, if you can show that your business is trending downward in every material category...that might be convincing.

Point is that no family lawyer or judge understands business. What they understand is monkey business, and they uniformly presume that anyone who's self employed or a controlling partner/owner of a business, will affirmitively fail to disclose income and cook the books to some extent.

If you're not bringing in a CPA to testify to the financials, then you will not be believed, no matter what you tell the court. So, decide if the cost of the expert is worth what you may win in child support, and if not, then settle on something else before the hearing. Otherwise, you'll be throwing good money after bad.

You can always come back in another 6 months and argue that your income is not what the court assumed for it's calculations, thus you should be entitled to a downward mod.

[Ref]

My attorney said that if I present a document just showing the payment amount and the check dates, the judge will assume that the payments related to April earnings, not January through April.

I am asking if I should instead show a schedule of when the amounts were due to me to the judge (at the end of each month this is recorded), so that it is easy to understand that they are quarterly payments not monthly payments.

I am not sure what my attorney was trying to tell me, but I believe he wanted me to present my income as a monthly schedule to walk the judge through it.


1. Is this unreasonable?

2. How is my collecting unemployment during the period I was earning distribution income going to look?

3. Would it be helpful in this situation to show through partner meeting minutes, guarenteed distributions when funds are available for a specific amount? Would this be helpful for a judge like this to annualize? Such as a statement in the minutes such as "It is agreed that for the year starting January 1, 2006 through December 31, 2006 the partners are guarenteed payments of X amount to be distributed on a monthly basis or when funds are available for distributions".

Thanks
Ref
 

[socrateaser]

>My attorney said that if I present a document just showing
>the payment amount and the check dates, the judge will assume
>that the payments related to April earnings, not January
>through April.
>
>I am asking if I should instead show a schedule of when the
>amounts were due to me to the judge (at the end of each month
>this is recorded), so that it is easy to understand that they
>are quarterly payments not monthly payments.
>
>I am not sure what my attorney was trying to tell me, but I
>believe he wanted me to present my income as a monthly
>schedule to walk the judge through it.
>
>
>1. Is this unreasonable?

No, but I think that you need to make your case extremely transparent so that there can be no argument that your current income level is in doubt. Otherwise, the judge will rule in favor of the child, which means mo' money.

>
>2. How is my collecting unemployment during the period I was
>earning distribution income going to look?

Like you're trying to gild the lilly.

>
>3. Would it be helpful in this situation to show through
>partner meeting minutes, guarenteed distributions when funds
>are available for a specific amount? Would this be helpful for
>a judge like this to annualize? Such as a statement in the
>minutes such as "It is agreed that for the year starting
>January 1, 2006 through December 31, 2006 the partners are
>guarenteed payments of X amount to be distributed on a monthly
>basis or when funds are available for distributions".

The judge is not going to care about some agreement you make with your partner to keep income out of your hands, because he'll view it as an artifice to avoid child support. The only way this sort of thing will work is if you can show that your partner has control of the business and he testifies that you will receive no more than $X. Otherwise, the judge will discount your testimony.

[Ref]

but this is just not how I think. I want to be honest and I have been this entire time. Unfortunately, I think I may get screwed with this. I understand that the judge will assume that I am hiding something, but I have provided everything my ex's lawyer ask for. I have given months worth of bank statements, credit cards statement, and years worth of tax returns.
Sorry - just venting.

My income from employment last year (annualized because I was laid-off in October) would be very close to what I am making currently if I am allowed to annualize over 10 months.

1.Would that be relevant?

2. Do you have any advice for someone trying to be honest in explaining this to the judge?

Thanks so much for everything Soc.

Ref

[socrateaser]

>1.Would that be relevant?

I think you're trying to shoe horn your argument. I'm trying to help you find a different argument that will be more effective, but you're not listening, yet.

>2. Do you have any advice for someone trying to be honest in
>explaining this to the judge?

The judge will look at the two or three most current pay periods. Suppose you argue that your work is cyclical/seasonal, and that it will not average out. Is there evidence to support this in your line of work?

Think outside the box or you're dead. Outside arguments, if reasonable, may cause the judge to tilt his head, and it may leave your opponent with no viable counter argument except, "Your honor, that's absurd."

The problem you're up against is that you could end up with a non-guideline support order that forces you to pay a percentage of income rather than a fixed number. This means that if the numbers go down, you pay less, but if they go up you will pay a lot more.

Now if you can live with that, then I suggest that you offer to stipulate to it and not bother with the hearing at all.

[Ref]

I really have no trend yet. The business is very young. There are months that there is good cash flow and there are months that I have to borrow from my own home equity loan to float the finances.

As far as "pay periods" go, the last two payments were in August for maybe $10k and the next was in October for $1K. I am not sure how to show my last few "pay periods".

BM's lawyer and the Judge have yet to request my company's financials. The court date is about a week away.

It is too late to cancel court and BM followed up my request for decrease with 2 contempt charges and change in visitation. All of her arguements are full of lies and she will be seen in a poor light by the judge for that. I don't believe her lawyer knows that she has lied so blantently and put admissions in writing in letters and voicemail that she sent me. This is why her lawyer wouldn't drop the case anyway.


Any additions to your advice?

Thanks for your help

Ref

[socrateaser]

>Any additions to your advice?

Don't get distracted from proving your case by the other parent's alleged misrepresentations. The court may or may not find these statements relevant. Concentrate on proving that your earnings are not what the other side claims.

If they don't request certain financials, and those financials are not relevant to your proving your case, and there's no FL statute or rule requiring you to produce such evidence at trial, then you have no obligation to produce it. But, make certain you're on solid ground before you show up without some relevant financial info.

You want to appear to be completely transparent with your financials, and you want those financials to show that child support should be set at precisely the amount you claim.