MICHAEL S. BELL, APPELLANT
MARY H. BELL, APPELLEE
Released for Publication March 13, 2014.
ON REVIEW FROM COURT OF APPEALS. CASE NO. 2011-CA-000467-MR. MERCER CIRCUIT COURT NO. 09-CI-00124.
FOR APPELLANT: William R. Erwin, Helton, Erwin & Associates.
FOR APPELLEE: John Wesley Oakley, II, Marshall, Oakley & Oakley.
MINTON, CHIEF JUSTICE
We accepted discretionary review of the decision by the Court of Appeals reversing the trial court order setting the amount of Michael Bell's monthly child-support obligation. To calculate the amount of the obligation, the trial court used the child-support guidelines in Kentucky Revised Statutes (KRS) 403.212 but deviated from the statutory language of the guidelines by deducting from Michael's gross income his unreimbursed business expenses even though Michael was not self-employed. The issue before us is whether the trial court abused its discretion and misapplied the statute by deducting these unreimbursed business expenses from Michael's gross income rather than, if satisfied from the evidence that the unreimbursed expenses constitute an extraordinary factor, making an appropriate adjustment in the guideline award as allowed by statute.
We conclude the Court of Appeals properly held the trial court abused its discretion by deducting Michael's unreimbursed business expenses from gross income because Michael was not self-employed. When dealing with family matters, a trial court has broad discretion; but that discretion does not include deviating from the statutory method of determining gross income when calculating child support. In order to deduct unreimbursed business expenses from gross income, a trial court must find the parent is self-employed. If the parent is not self-employed, the trial court may nevertheless exercise its discretion regarding unreimbursed business expenses by reducing the guideline award if deduction is warranted by the evidence. Accordingly, we now affirm the decision of the Court of Appeals and remand this case to the trial court for further proceedings not inconsistent with this Opinion.
I. FACTUAL AND PROCEDURAL BACKGROUND.
The trial court held a hearing in Michael and Mary Bell's divorce action to resolve
all remaining issues before the entry of a final decree. One of the remaining issues was to establish the amount of support for Michael to pay to support their only child.
The trial court found Michael capable of earning $125,086 in gross annual income through his employment as a sales representative for a dental products supplier. Testimony established that Michael's sales job requires that he incur significant expenses for client development, which entails client entertainment and overnight travel. According to Michael's supervisor, Michael is expected to maintain and increase the market value of his clients. To this end, Michael regularly must remove a client from the workplace environment. And, further, Michael's employer pays him solely on commission from the sales he makes. Maty has not, either at the hearing or on appeal, disputed the reasonableness or necessity of these expenses.
In the trial court's estimation, Michael incurs, on average, $36,000 in annual unreimbursed business expenses. As a result of this finding, the trial court reduced Michael's gross income from $125,086 to $89,086 and ...