Corwin v. Corwin

[Cite as Corwin v. Corwin, 2013-Ohio-3996.]

IN THE COURT OF APPEALS

TWELFTH APPELLATE DISTRICT OF OHIO

WARREN COUNTY

BRETT E. CORWIN, :
CASE NOS. CA2013-01-005
Plaintiff-Appellee, : CA2013-02-012

: OPINION
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:

JULIE A. CORWIN, :

Defendant-Appellant. :

APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
DOMESTIC RELATIONS DIVISION
Case No. 11DR34432

Andrea N. Hicks, 224 Reading Road, Mason, Ohio 45040, for plaintiff-appellee

David N. McNamee, 42 Woodcroft Trail, Suite D, Beavercreek, Ohio 45430, for defendant-
appellant

M. POWELL, J.

{¶ 1} Defendant-appellant, Julie A. Corwin (Wife), and plaintiff-appellee, Brett E.

Corwin (Husband), each appeal a decision of the Warren County Common Pleas Court,

Domestic Relations Division, in their divorce, determining the value of Husband's businesses,

and establishing spousal support and child support. For the reasons discussed below, we

affirm in part, reverse in part, and remand the cause to the trial court for further proceedings.
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{¶ 2} Husband and Wife were married August 26, 1995. Two children were born as

issue of their marriage: Devin, born February 22, 2000, and Morgan, born November 8, 2001.

Husband and Wife separated on November 26, 2008 and have lived apart since that date.

The parties initially filed for divorce in 2010 but voluntarily dismissed that proceeding (the

"2010 Divorce Case"). On February 24, 2011, Husband re-filed for divorce. Wife answered

and counterclaimed for divorce. Husband and Wife agree that the end date of the marriage

is December 31, 2009 and that the duration of the marriage was 14 years.

{¶ 3} A final contested hearing was held before a magistrate on December 12, 2011,

February 23, 2012, and March 5, 2012. Contested issues presented to the court concerned

(1) the division of marital assets, (2) the incomes of the parties, (3) spousal support, (4) child

support, and (5) parenting time.

{¶ 4} A main focus of the divorce was the valuation of Husband's income and one-

third ownership interest in Brink Corwin & Nicholson, LLC, Brink Corwin & Nicholson II, Ltd,

and BCN Dayton LLC (collectively, "BCN"). BCN operates three "Bargos Grill and Tap" bars

in Springdale, Dayton, and Centerville, Ohio. There was no dispute that BCN was marital

property. In determining the value of Husband's interest in BCN, and his income, each party

presented valuation experts.1

{¶ 5} Husband presented appraiser Brian Russell. Russell testified that he

performed a valuation of BCN using tax returns from the companies for the years 2006

through 2010 including an "adjustment" made for "vending machine income at a rate of
2
$30,000" per year that had not been reported on the tax returns. Russell explained that

1. The parties stipulated that both witnesses were qualified experts.

2. The vending machine income stemmed from pool tables, jukeboxes, dart boards, and touchscreen games
located inside the three bars.

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"what you're doing when you're doing a business valuation and you're looking at the five-year

or whatever historical period range is, is to really do an analysis to give yourself the best

estimate and assumption as to what you believe the company's normalized earnings or net

income will be in the future years."

{¶ 6} Russell opined that BCN had a marketable value of $368,739 with Husband's

one-third interest valued at $82,816 as of 2009. However, Russell acknowledged on redirect

examination that he had made an error in his valuation report when he failed to "add back the

amortization expense." Additionally, Russell testified that he learned that the $30,000

vending machine income not reported by BCN was, in actuality, closer to $34,000.

Therefore, Russell revised his valuation report and found that Husband's ownership interest

in BCN was $96,135 for 2009. Finally, Russell concluded that Husband's yearly income was

between $35,000 and $37,000.

{¶ 7} Wife presented appraiser Alan C. Duval. Duval stated that in preparing his

valuation of BCN, he initially looked at the owners' individual tax returns as well as BCN's tax

returns. After finding some "anomalies," Duval determined that BCN had likely filed

fraudulent tax returns by failing to report approximately $700,000 in receipts. Therefore, he

reviewed not only the tax returns but also a series of other records including bank

statements, financing statements, and a 2004 Buy/Sell Agreement to determine the value of

BCN.

{¶ 8} Initially, Duval testified that, in 2009, BCN had a value of $1,232,000 with

Husband's one-third ownership interest valued at $340,000. Duval further stated that

Husband's annual income is approximately $120,000. In making this determination, Duval

factored in an "auto expense" from BCN that he assumed was Husband's, amortization

expenses, and "inter-account transfers" such as payroll, ATM, and sales tax. Duval validated

his opinion through the 2004 Buy/Sell Agreement between the members of BCN, who valued
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one of the BCN bars at $500,000.3

{¶ 9} However, in his second day of testimony, and after reviewing additional

documentation he received from BCN, Duval found that Husband's one-third interest in BCN

had a 2009 value of only $219,000. Duval stated that his valuation did decrease, but

explained that his valuation was still higher than Russell's—even though they used the same

capitalization of earnings method—because Duval used "cushion factors" to determine

"additional unreported income" he believed BCN had not reported on its taxes.

{¶ 10} Husband testified concerning the "anomalies" found by Duval. Husband stated

that, after receiving Duval's report indicating that BCN had underreported approximately

$700,000, he contacted his accountant and Russell and found that there were several

exclusions that Duval did not factor in to his valuation report. Specifically, Husband stated

that Duval did not exclude sales tax or bank account withdrawals to load the ATM machines

located at the three bars. Duval also did not exclude funds withdrawn by the state of Ohio for

BCN's KENO account. Husband explained that Duval should not have included the payroll

account in his report because this account only contained "intra-company transfers" from one

bank account to another in order to pay employees. Husband further testified that, though

his yearly income was approximately $100,000 in 2007, BCN had not performed well in the

last few years and he now has a yearly income of approximately $50,000.

{¶ 11} Husband also addressed the parties' shared parenting plan, stating that, since

early 2010, he received visitation with the children overnight on Wednesdays, every other

weekend and overnight on the alternating Mondays ("Monday visitations") when he does not

have weekend visitation. Husband seeks continuance of his Monday visitations so that he

would not have to go an entire week without seeing his children.

3. Russell, on the other hand, testified that the Buy/Sell Agreement added "very little" to any opinion because the
partners had no basis at arriving at an initial value of $500,000.

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{¶ 12} Wife testified regarding her current income and her desire to have Husband's

Monday visitations with the children cease. As to her income, Wife testified that, prior to

2005, she worked on a full-time basis making approximately $23,000 per year. However, she

left the workforce in 2005 to care for the children. Two years after the couple separated,

Wife began working part time at a company called Ranstad, making $13 per hour and

working an average of 23 hours per week. Wife claimed that her ability to work is "restricted"

due to the fact that she is a mother. Specifically, Wife clarified that it would be very difficult

for her to work full time due to her children, not wanting to work weekends and nights, and

her lack of a college degree.

{¶ 13} Regarding Husband's parenting time, Wife testified that she did not wish for the

Monday visitations with Husband and the children to continue. She believed these visits

were "confusing" for the children and caused a "commotion" due to the excessive travel

between school and their parents' residences. Wife expressed that it would be in the

children's "best interest" if Husband had parenting time only on Wednesdays and every other

weekend.

{¶ 14} The magistrate rendered his decision on July 31, 2012. The magistrate found

Russell's valuation, "accompanied by Husbands [sic] statements regarding revenues and

deposits generated by companies," to be a more accurate estimate of Husband's ownership

interest of BCN. Thus, the magistrate concluded that Husband's ownership interest had a

value of $96,135. Consequently, Husband owed Wife $48,067.50 as her half of Husband's

ownership interest in BCN. The magistrate further determined, based upon his own

calculations, that Husband's annual income was $74,504. The magistrate further found that

Monday visitations were in the best interests of the children and that Wife would receive

spousal support in the amount of $1,380 per month for 43 months effective July 1, 2012, and

child support in the amount of $303.80 per month.
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{¶ 15} Both parties filed objections to the magistrate's decision. Wife objected to the

value placed upon Husband's business, the income determinations for Husband and Wife,

and the effects the various determinations had on spousal support and child support.

Husband objected to the magistrate's calculation of his income and the effective date of

spousal support. The trial court overruled, in part, and sustained, in part, the objections on

November 14, 2012.

{¶ 16} In its decision on the objections to the magistrate's decision, the trial court

found that (1) Russell's valuation of Husband's interest in BCN was "more accurate," (2)

Husband's annual income is $74,504, and (3) Husband should pay Wife $1,380 per month in

spousal support and $303.80 per month in child support. However, the trial court found that

the parties previously stipulated in the 2010 Divorce Case that any spousal support payments

awarded would be retroactive to December 2008. Thus, the trial court found that Husband's

monthly support payments for 43 months shall be considered retroactive to December 2008

and Husband shall receive credit for any past payments made to Wife.

{¶ 17} On January 10, 2013, the trial court filed its Final Judgment and Decree of

Divorce, granting the parties a divorce. Wife timely appeals the trial court's decision, raising

seven assignments of error:

{¶ 18} Assignment of Error No. 1:

{¶ 19} THE [TRIAL] COURT'S DETERMINATION OF THE VALUE OF BCN WAS

AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE AND AN ABUSE OF THE [TRIAL]

COURT'S DISCRETION.

{¶ 20} Assignment of Error No. 2:

{¶ 21} THE [TRIAL] COURT'S DETERMINATION OF [WIFE'S] INCOME WAS

AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE AND AN ABUSE OF THE [TRIAL]

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COURT'S DISCRETION.

{¶ 22} Assignment of Error No. 3:

{¶ 23} THE [TRIAL] COURT'S DETERMINATION OF [HUSBAND'S] INCOME WAS

AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE AND AN ABUSE OF THE [TRIAL]

COURT'S DISCRETION.

{¶ 24} Assignment of Error No. 4:

{¶ 25} THE [TRIAL] COURT'S AWARD OF SPOUSAL SUPPORT WAS

INADEQUATE, AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE, AND AN ABUSE

OF THE [TRIAL] COURT'S DISCRETION.

{¶ 26} Assignment of Error No. 5:

{¶ 27} THE [TRIAL] COURT'S ORDER OF PARENTING TIME IS AGAINST THE

MANIFEST WEIGHT OF THE EVIDENCE AND AN ABUSE OF THE [TRIAL] COURT'S

DISCRETION.

{¶ 28} Assignment of Error No. 6:

{¶ 29} THE [TRIAL] COURT'S AWARD OF CHILD SUPPORT WAS AGAINST THE

MANIFEST WEIGHT OF THE EVIDENCE AND AN ABUSE OF THE [TRIAL] COURT'S

DISCRETION.

{¶ 30} Assignment of Error No. 7:

{¶ 31} THE [TRIAL] COURT'S AWARD OF THE TAX EXEMPTIONS WAS AGAINST

THE MANIFEST WEIGHT OF THE EVIDENCE AND AN ABUSE OF THE [TRIAL] COURT'S

DISCRETION.

{¶ 32} Husband cross-appeals, presenting one assignment of error for review:

{¶ 33} Cross-assignment of Error No. 1:

{¶ 34} THE TRIAL COURT ERRED IN DETERMINING [HUSBAND'S] INCOME THUS

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AFFECTING SUPPORT ORDERS.

{¶ 35} For ease of discussion, the assignments of error shall be addressed out of turn.

We begin our review by addressing the parties' contentions regarding the division of marital

property and spousal support, looking specifically to the value of Husband's interest in BCN

and Husband's annual income.

Division of Marital Property and Spousal Support

{¶ 36} In her first, third, and fourth assignments of error, Wife argues the trial court

erred in its distribution of marital property and award of spousal support based upon (1) an

undervaluation of BCN, (2) an undervaluation of Husband's income, and (3) an improper

"start date" of spousal support. In his sole assignment of error, Husband contends the trial

court impermissibly "double-dipped" in disbursing to Wife a portion of Husband's ownership

interest in BCN as marital property and awarding Wife spousal support based upon

Husband's income, which included his share of the excess earnings of BCN.

1. Valuation of BCN

{¶ 37} In her first assignment of error, Wife contends the trial court's determination

relating to the value of BCN was against the manifest weight of the evidence and an abuse of

discretion, thereby affecting the distribution of marital property as well as the spousal support

award.

{¶ 38} R.C. 3105.171 governs the equitable division of marital property in an action for

divorce. In dividing marital property, a trial court shall "divide the marital property equally,

unless the court finds an equal division would be inequitable." Grow v. Grow, 12th Dist.

Butler Nos. CA2010-08-209, CA2010-08-218, and CA2010-11-301, 2012-Ohio-1680, ¶ 12,

citing R.C. 3105.171(C)(1).

{¶ 39} "In making these findings, the trial court must assign a value to all of the marital

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property." Id. at ¶ 12, citing R.C. 3105.171(B); O'Rourke v. O'Rourke, 4th Dist. Scioto No.

08CA3253, 2010-Ohio-1243, ¶ 16. "Indeed, a trial court must place a monetary value on

every contested asset of the parties in a divorce proceeding." O'Rourke at ¶ 16. "In any

order for the division or disbursement of property or a distributive award made pursuant to

[R.C. 3105.171], the court shall make written findings of fact that support the determination

that the marital property has been equitably divided[.]" R.C. 3105.171(G). Specifically, "the

trial court must make findings 'in sufficient detail to allow for meaningful appellate review of

its decision.'" O'Rourke at ¶ 16.

{¶ 40} Because the valuation of a specific asset in a divorce case is a question of fact,

we review the issue under a manifest weight of the evidence standard. See O'Rourke at ¶

17, citing Covert v. Covert, 4th Dist. Adams No. 03CA778, 2004-Ohio-3534, ¶ 6. An

appellate court will not reverse the trial court's valuation "if it is supported by competent and

credible evidence." Grow at ¶ 11. "In determining whether competent and credible evidence

exists, '[a] reviewing court should be guided by a presumption that the findings of a trial court

are correct, since the trial judge is best able to view the witnesses and observe their

demeanor, gestures, and voice inflections, and use those observations in weighing the

credibility of their testimony." Id., citing Bey v. Bey, 3d Dist. Mercer No. 10-08-12, 2009-Ohio-

300, ¶ 15.

{¶ 41} The trial court found Russell's valuation of BCN was "more accurate" than

Duval's. Thus, the trial court valued Husband's ownership interest in BCN at $96,135 and

disbursed one-half ($48,067.50) to Wife as marital property. In making this determination,

the trial court discounted Duval's opinion because it included inter-company transfers

resulting in an overestimate of Husband's interest. Furthermore, the trial court adopted the

decision of the magistrate, which laid out the conclusions of both experts and found that

"Russell's testimony, accompanied by Husbands [sic] statements regarding revenues and
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deposits generated by companies, to be a more accurate estimate of Husband's interest of

$96,135.00."

{¶ 42} Based upon our review of the record in this case, we find that competent,

credible evidence existed from which to conclude that Russell's opinion was a "more

accurate" valuation of Husband's interest in BCN than Duval's. Without explanation as to

why, Duval's valuation included amortization expenses, auto expenses, unreported sales,

and inter-account transfers, including payroll, ATM, sales tax, and other inter-company

transfers. Furthermore, Duval relied upon the outdated 2004 Buy/Sell Agreement, which was

no longer valid, as the agreement, itself, required a valuation of BCN by appraisal after the

first year of the company's existence. Finally, Duval continuously stated that he provided a

"cushion" in his calculations to make sure that he was not overstating the value of BCN but

could not easily identify exactly what the "cushion" was. Thus, the trial court's decision

finding Russell's testimony more credible was not against the manifest weight of the

evidence.

{¶ 43} Accordingly, Wife's first assignment of error is overruled.

2. Double-Dipping

{¶ 44} For ease of discussion, we now address Husband's contention that the trial

court "double-dipped" into Husband's assets by providing Wife a disbursement of marital

property based upon Husband's ownership interest in BCN and also a spousal support award

based upon the excess earnings component of his income derived from BCN. Specifically, in

his sole cross-assignment of error, Husband claims that the trial court "ignored" the expert

testimony stating that Husband's tax returns included amounts distributed from the profits of

the business as well as actual income.

{¶ 45} The parties' experts valued Husband's interest in BCN pursuant to the

"capitalization of earnings" method. As heretofore discussed, the trial court accepted
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Husband's expert's opinion and valued Husband's ownership interest in BCN at $96,135.

Thus, the trial court found that Wife was entitled to $48,067.50 as her marital interest in BCN.

{¶ 46} With respect to spousal support, the trial court reviewed the opinions of both

experts regarding Husband's annual income. Duval testified that he believed Husband's

income was approximately $120,000 per year. Russell expressed the opinion that Husband

had annual income of approximately $37,000 per year. The trial court found that Duval's

opinion was an overstatement of Husband's annual income and Russell's was an

understatement. Consequently, the trial court adopted the magistrate's calculation of

Husband's income, wherein the magistrate averaged "Husband's ordinary business income

as shown on Schedule K-1 Form 1065" by adding to it "1/3 of the depreciation shown on Line

16C of Form 1065" for the years 2009 and 2010. The magistrate concluded that Husband's

annual income was approximately $74,504, including Husband's $10,000 share of the

unreported vending machine receipts.

{¶ 47} In adopting the magistrate's $74,504 figure, the trial court pointed out that this

number was substantially in line with Husband's financial affidavits which included annual

incomes of $61,000 for 2009 and $60,000 for 2010.4 Additionally, the trial court noted that

Husband testified at the divorce hearing that his 2010 income was $52,227. Thus, the trial

court concluded that, based in part upon Husband's $74,504 annual income, Husband

should pay Wife the amount of $1,380 in spousal support for 43 months.

{¶ 48} Husband argues that the trial court abused its discretion by creating a

"hypothetical number" for Husband's income based upon profits and depreciation which had

already been taken into account by the parties' experts, thus resulting in "double-dipping" in

the profit of BCN. Specifically, Husband claims that the trial court violated R.C. 3105.171

4. These figures did not include Husband's $10,000 share of the unreported vending machine receipts.

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and R.C. 3105.18(A) by failing to keep marital property division and spousal support

separate. See R.C. 3105.171(C)(3) (the "court shall provide for an equitable division of

marital property under this section prior to making an award of spousal support to either

spouse * * * and without regard to any spousal support awarded"); R.C. 3105.18(B) ("In

divorce and legal separation proceedings, upon the request of either party and after the court

determines the division or disbursement of property under [R.C. 3105.171], the court of

common pleas may award reasonable spousal support to either party"). In other words,

Husband argues that the trial court abused its discretion in basing spousal support on

Husband's income, inclusive of his share of BCN's future profits, when those profits had

already been accounted for in valuing a marital asset (Husband's interest in BCN) and had

already been equally divided between the parties. Essentially, Husband "posits that once the

future profits have been divided pursuant to R.C. 3105.171, one party's share cannot then be

treated as 'income' for purposes of awarding spousal support." See Heller, 2008-Ohio-3296

at ¶ 12.

{¶ 49} As provided by the Tenth Appellate District in Heller v. Heller:

It is basic valuation theory that the value of a business is equal to
the present worth of the future benefits of ownership. The
"income method" or "capitalization of earnings method" is the
most widely used method to compute the value of a business.
This method relies on the discounted cash flow (DCF) model.
Earnings projections, extrapolated from the company's
accounting statements, are discounts using a capitalization rate
(or multiplier) that takes into account the buyer's required risk-
based rate of return and a factor for future growth. The concept
of the time value of money is at the core of the income valuation
approach. Namely, the income streams or cash flows the buyer
of the business anticipates he or she will receive in the future can
be translated into their present worth.

(Internal quotations omitted). Id. at ¶ 16, quoting Rivers, The "double-dipping" concept in

business valuation for divorce purposes (2006), Massachusetts Bar Assoc.

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{¶ 50} The "double-dipping" referred to by Husband is the "double counting of a

marital asset, once in the property division and again in the spousal support award." (Internal

quotations omitted.) Id. at ¶ 20. "More specifically, where a court uses a business owner's

'excess earnings' to value the interest in the business and also fixes support on that spouse's

total income (inclusive of the 'excess earnings' used to value the business), a 'double-dip'

occurs." Id. "Utilizing the same stream of income that forms the basis of valuing a business

when calculating spousal support provides the non-owning spouse with the benefit from the

same stream of income twice." (Internal quotations omitted.) Id.

{¶ 51} R.C. 3105.171(C)(3) requires that the court provide for an equitable division of

marital property "prior to making any award of spousal support * * * and without regard to any

spousal support so awarded." Additionally, R.C. 3105.18(A) provides that "'[s]pousal support'

does not include any payment made to a spouse * * * that is made as part of a division or

distribution of property * * * under [R.C.] 3105.171." Based upon these provisions, we follow

the Tenth District's determination in Heller and find:

a statutory mandate to keep marital property division and
spousal support separate, and to consider the potential 'double-
dip' when ruling upon these issues in cases where one spouse's
ownership interest in a going concern is discounted to present
value and divided, and where excess earnings arising from that
ownership interest will constitute part of that spouse's stream of
income into the future.

Heller at ¶ 21.

{¶ 52} In this case, Wife received a one-half interest in Husband's ownership interest

in BCN. Wife was then provided an additional $1,380 per month in spousal support for 43

months based, in part, upon Husband's income. However, as explained by Russell during

the divorce hearing:

[W]e are counting net profits of the company that have already
been used under a Capitalization of Earnings Method to
determine the value of the company. So a very large component
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of [Husband's] income has already been taken into consideration
in the valuation of the company that would be part of the property
division itself. To again add that income back in and consider it
as part of [Husband's] income for support purposes is double
counting.

{¶ 53} From our review of the record in this case, neither the magistrate nor the trial

court stated which factors under R.C. 3105.18(C)(1) were relied upon in awarding spousal

support. At the very least, both Husband's ownership interest in BCN of $96,135 and the

determination that Husband earns $74,504 annually include the same $10,000 of unreported

vending machine receipts. Russell stated that his $96,135 figure incorporated Husband's

one-third share of the approximately $34,000 in vending machine receipts while, at the same

time, the magistrate found Husband's income to be $64,504 plus an additional $10,000 for

his share in the unreported vending machine receipts. It is equally apparent that the trial

court based its spousal support award upon Husband's income of $74,504, as the entry on

the objections to the magistrate's decision specifically overruled the objection to spousal

support solely upon the basis that it had also overruled the objection relating to the

determination of Husband's income.

{¶ 54} Thus, it is clear from our review that a "double dipping" had occurred in this

case at least in regard to the vending machine receipts.

{¶ 55} When the trial court treated Husband's share of BCN's expected future profits

as both a marital asset subject to division and as income for spousal support purposes, the

trial court abused its discretion. See Heller at ¶ 23. Consequently, we reverse the spousal

support award of the trial court and remand this matter to the court for further proceedings.

Upon remand, the trial court shall determine an appropriate spousal support award based

upon a "non-double-dipped" income for Husband and the other applicable factors set forth in

R.C. 3105.18(C)(1) based upon the record developed herein or upon such additional

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evidence as the trial court determines appropriate.5

{¶ 56} Accordingly, Husband's cross-assignment of error is sustained.

3. Determination of Husband's Income

{¶ 57} Wife's third assignment of error asserts that the trial court erred in its calculation

of Husband's income. Just as in her first assignment of error, Wife essentially argues that

the trial court abused its discretion by not relying on the testimony of Duval and that such a

determination was against the manifest weight of the evidence and adversely affected the

award of spousal support.

{¶ 58} Pursuant to R.C. 3105.18(B), after providing for an equitable division of marital

property, a trial court may then determine whether to award spousal support and the amount

and duration of such an award. R.C. 3105.18(C)(1) provides that, in "determining whether

spousal support is appropriate and reasonable, and in determining the nature, amount, and

terms of payment, and duration of spousal support, which is payable either in gross or in

installments, the court shall consider a number of factors including the "income of the

parties." R.C. 3105.18(C)(1)(a). Just as in the distribution of marital property, "[a]ppellate

review of an award of spousal support is whether the trial court abused its discretion." Heller

at ¶ 9; Huynh v. Le, 12th Dist. Butler No. CA2012-09-190, 2013-Ohio-2859, ¶ 11.

{¶ 59} As described above, the trial court found that Husband's and Wife's experts'

opinions on Husband's income were either overestimated or underestimated. Therefore, as

discussed above, the trial court adopted the magistrate's income calculation and found

Husband's annual income to be $74,504.

5. This discussion concerning the "double-dip" effect of including Husband's share of the excess earnings of
BCN in his income for purposes of calculating spousal support has no application to the determination of
Husband's income for child support calculation purposes. First, the broad definition of "Gross income" set forth
in R.C. 3119.01(A)(7) includes excess earnings from an interest in a business. Second, the child for whom child
support is paid is not the distributee of marital property consisting of a business valued pursuant to an income
capitalization method and, therefore, the child receives no "double-dip."

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{¶ 60} Based upon a thorough review of the record, we find that the trial court did not

abuse its discretion in determining Husband's annual income to be $74,504 based upon a

review of his K-1 tax forms, financial affidavits, and testimony. Wife provides no basis for

why her expert should have been relied upon over the determinations of the magistrate.

{¶ 61} Our opinion that the trial court did not err in finding Husband's annual income to

be $74,504 is not in contradiction with our determination that the trial court impermissibly

provided Wife with a "double-dip" for purposes of calculating spousal support. A finding that

the trial court must reevaluate its spousal support award to prevent a "double-dip" into

Husband's profits does not equate to a finding that Husband's income was incorrectly

determined for other purposes (i.e., child support). Accordingly, Wife's third assignment of

error is overruled.

4. Spousal Support Award and its Effective Date

{¶ 62} In her fourth assignment of error, Wife contends the trial court's spousal

support award was inadequate based upon her claim that the trial court incorrectly

determined the parties' incomes. Wife further alleges the trial court erred in ruling that the

"start date" for the spousal support award would be December 2008 rather than July 2012.

{¶ 63} Wife initially argues the trial court erred by imputing to her annual income of

$20,800. The decision to impute income for purposes of spousal support is within the

discretion of the trial court and shall not be overruled absent an abuse of discretion.

Havanec v. Havanec, 10th Dist. Franklin No. 08AP-465, 2008-Ohio-6966, ¶ 23, citing Nichols

v. Nichols, 9th Dist. Summit No. 19308, 1999 WL 1293350 (Dec. 29, 1999); Petrusch v.

Petrusch, 2d Dist. Montgomery No. 15960, 1997 WL 102014 (Mar. 7, 1997).

{¶ 64} "Although R.C. 3119.01(C)(11) permits a trial court to impute income to a

parent who is voluntarily unemployed or voluntarily underemployed for the purpose of

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determining the parent's child support obligation, the statutory section on spousal support is

less explicit on the issue." Justice v. Justice, 12th Dist. Warren No. CA2006-11-134, 2007-

Ohio-5186, ¶ 17. "However, this court and others have approved a trial court's imputation of

income for purposes of determining spousal support." Id., citing Moore v. Moore, 12th Dist.

Clermont No. CA2006-09-066, 2007-Ohio-4355, ¶ 64-65; Rotte v. Rotte, 12th Dist. Butler No.

CA2004-10-249, 2005-Ohio-6269; Seaburn v. Seaburn, 5th Dist. Stark No. 2004CA00343,

2005-Ohio-4722, ¶ 32.

{¶ 65} In making its decision to impute income upon Wife, the trial court found that

Wife (1) had previously been employed full time at a rate of $10 per hour, (2) was only 37

years old at the time of the divorce hearing, and (3) had no medical conditions that would

prevent her from working full time. Furthermore, Wife's only stated reasons for not being

able to work full time is that she does not wish to work nights and weekends due to her

children and she does not believe there is employment available for her that would

accommodate her needs and pay her more than "$6.00 an hour." Yet, Wife admitted that

she has not sought full-time employment since before 2005.

{¶ 66} Based upon our review of the record, we find that the trial court did not err in

imputing income to Wife in making its spousal support award. Nevertheless, the issue of the

amount of spousal support awarded to Wife is remanded as set forth in our ruling upon

Husband's assignment of error on cross-appeal. However, this remand does not include a

reconsideration of Wife's income as determined by the trial court and affirmed herein.

{¶ 67} Thus, we turn our attention to Wife's remaining argument that the "start date" of

the spousal support award was made in error. In its entry overruling Wife's objections to the

magistrate's decision, the trial court found that Wife and Husband had previously stipulated in

an Agreed Entry filed January 11, 2011 that Husband "shall receive credit in the new divorce

case for all temporary child and spousal support payments made since December 2008."
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The trial court interpreted this entry to mean that any award of spousal support would be

back-dated to begin December 1, 2008. Thus, the trial court ruled that Wife was entitled to

spousal support at $1,380 per month beginning December 2008 and lasting for 43 months.

{¶ 68} Wife contends the trial court's interpretation of the agreed entry is incorrect.

Instead, Wife claims the agreed entry should be read to mean that the temporary spousal

support order established in 2011 should merely be a factor in determining the spousal

support obligation and duration. Wife provides no authority, in law or logic, supporting her

reading of the agreed entry and we can find none. We therefore conclude that the trial court

was in the best position to determine the intent of the parties and, therefore, did not abuse its

discretion in interpreting the agreed entry to mean that any spousal support payments would

date back to December 2008.

{¶ 69} Accordingly, Wife's fourth assignment of error is overruled.

Child Support and Parenting Time

{¶ 70} We next turn to Wife's assignments of error relating to child support and

parenting time. Wife first argues the trial court's award of child support was made in error

due to the trial court's imputation of income to Wife. Next, Wife claims the trial court erred in

finding that it is in the best interest of the children for Husband to have overnight visitation

with the children on alternating Mondays. Wife additionally argues that the trial court's award

of child support was against the manifest weight of the evidence and an abuse of discretion.

1. Wife's Income

{¶ 71} In her second assignment of error, Wife again avers that the trial court

improperly imputed annual income of $20,800 to her in making its child support

determination. Wife claims that such a determination was an abuse of discretion, as the trial

court did not expressly find that Wife was "voluntarily underemployed" pursuant to R.C.

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3119.01 and there was a lack of evidence that full-time employment was currently available

to Wife.

{¶ 72} R.C. 3119.01 provides that "income," for purposes of determining an

appropriate child support order, consists of the sum of the gross income of the parent and

any "potential income" of the parent if voluntarily underemployed. See Combs v. Combs,

12th Dist. Warren No. CA2001-11-102, 2003-Ohio-198, ¶ 6. "The primary design and

purpose of R.C. 3119.01 are to protect and ensure the best interests of children." Id., at ¶ 7,

citing Marker v. Grimm, 65 Ohio St.3d 139, 141-142 (1992). Thus, "a parent's subjective

motivations for being voluntarily unemployed or underemployed play no part in the

determination whether potential income is to be imputed to that parent in calculating the child

support obligation." Id., citing Rock v. Cabral, 67 Ohio St.3d 108. 112 (1993).

{¶ 73} "Whether a parent is 'voluntarily underemployed' within the meaning of R.C.

3119.01 is a matter to be determined by the trial court based upon the facts and

circumstances of each case." Id. at ¶ 6, citing Rock at syllabus. "The trial court's

determination on this issue will not be disturbed on appeal absent an abuse of discretion."

Id. As stated above, an abuse of discretion is more than an error of law or judgment but a

determination that the trial court's decision is arbitrary, unreasonable, or unconscionable. Id.,

citing Blakemore, 5 Ohio St.3d at 219.

{¶ 74} R.C. 3119.01(C)(11)(a) sets forth a nonexclusive listing of criteria to be

considered by a trial court in determining the amount of income to be imputed to an

underemployed parent. The criteria include the age and any special needs of the children

subject of the child support order and personal factors, such as the parties' prior employment

experience, education, skills, training, health and earning capability. Other factors such as

employment availability and local wage rates are also to be considered. See Combs at ¶ 12.

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{¶ 75} Wife claims the trial court erred in imputing additional income to her as she

cannot work full time because of the couple's children. At the divorce hearing, Wife

explained that her ability to work is "restricted" due to the fact that she is a mother.

Specifically, Wife clarified that it would be very difficult for her to work full time due to the care

of her children, not wanting to work weekends and nights, and her lack of a college degree.

{¶ 76} We find the trial court did not err in implicitly determining that Wife is voluntarily

underemployed. Although neither the magistrate nor the trial court explicitly found Wife to be

voluntarily underemployed, a review of the record before us contains such a finding. See

Drummer v. Drummer, 3d Dist. Putnam No. 12-11-10, 2012-Ohio-3064, ¶ 27 (finding that "the

absence of an express finding of voluntary unemployment or underemployment is not

reversible error where a reviewing court is capable of inferring such a finding from the

record").

{¶ 77} First, the magistrate's decision, adopted by the trial court, provides that Wife

"should earn at least $10.00 per hour." Furthermore, the record contains evidence relevant

to many of the factors listed in R.C. 3119.01(C)(11)(a). Wife was a high school graduate but

does not hold a college degree. She was employed full time prior to 2005 making $10 per

hour for a total of $23,000 per year. After entering the work force again in 2010, Wife is

working 22 hours per week at an income of $13 per hour. Wife was 37 years old at the time

of the divorce hearing and had no medical conditions that would prevent her from working full

time. Based upon the foregoing, the trial court did not abuse its discretion in imputing

$20,800 per year to Wife, representing full-time employment at $10 per hour.

{¶ 78} Accordingly, Wife's second assignment of error is overruled.

2. Parenting Time

{¶ 79} In her fifth assignment of error, Wife argues the trial court erred in determining

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the Monday visitations with Husband would be in the best interests of the children.

{¶ 80} "In establishing a specific parenting time schedule, a trial court is required to

consider the factors set forth in R.C. 3109.051(D)." Anderson v. Anderson, 12th Dist. Warren

No. CA2009-03-033, 2009-Ohio-5636, ¶ 24. These include, in relevant part, the prior

interaction and interrelationship between the parent and children; their geographic proximity

and available time; the age, health, and safety of the children; the mental and physical health

of all the parties; each parent's willingness to reschedule missed parenting time and to

facilitate the other parent's parenting time rights; the wishes and concerns of the children as

expressed to the court; whether either parent previously has been convicted of or pleaded

guilty to any criminal offense involving any act that resulted in a child being abused or

neglected; whether the residential parent has continuously and willfully denied the other

parent's right to parenting time in accordance with an order of the court; whether the parent

has established a residence or is planning to establish a residence outside this state; and

any other factor bearing on the best interest of the child. See R.C. 3109.051(D)(1)-(16);

Anderson at ¶ 24. "After considering all of the factors listed in this section, the trial court, in

its sound discretion, must determine what parenting time schedule is in the best interest of

the child[ren]." Anderson at ¶ 24, citing Braatz v. Braatz, 85 Ohio St.3d 40, 45 (1999).

{¶ 81} The trial court's basic parenting schedule provides for parenting time on

alternating weekends beginning Friday evening and ending Sunday evening with additional

visitation each Wednesday. Wife contends it was error for the trial court to additionally allow

Husband Monday visitation.

{¶ 82} At the divorce hearing, Wife testified that the alternating Monday overnights

were "too confusing" and caused a "commotion" for the children. Specifically, Wife argued

that the alternating Monday visitations lead to misplaced folders and school work, as well as

"late arrivals picking the children up." In order to have "more structure and more
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consistency," Wife sought to eliminate Husband's alternating Monday parenting time.

{¶ 83} However, Wife failed to provide any examples of when Husband was late

picking up the children or in what way the children have been affected by the Monday

visitation. In fact, on cross-examination, Wife admitted that the children have been spending

alternating Mondays with Husband for the last two years and that the children are well-

adjusted, have good grades in school, and are generally "good kids." Additionally, Husband

testified that the children have become accustomed to Monday visitation over the last two

years and that his work schedule allows him to drop the children off and pick the children up

from school and from Wife's residence on time.

{¶ 84} From our review of the record, it is apparent that the trial court considered the

relevant factors set forth above and found that additional parenting time beyond the standard

schedule was in the best interests of the children. We find that the trial court did not abuse

its discretion in providing Husband standard parenting time as well as additional overnight

parenting time on alternating Mondays.

{¶ 85} Accordingly, Mother's fifth assignment of error is overruled.

3. Amount of Child Support Order

{¶ 86} In her sixth assignment of error, Wife argues that the amount of child support

ordered was against the manifest weight of evidence and an abuse of discretion based upon

the trial court's incorrect calculations of Wife's imputed income, Husband's income, and the

value of Husband's share in BCN, as well as the improper award of spousal support and the
6
Monday visitations provided to Husband.

{¶ 87} We previously have determined that the trial court did not err in its calculations

of Wife's imputed income or Husband's income, nor did the trial court err in its valuation of

6. As noted above in fn. 5, the "double-dip" effect of including Husband's share of the excess earnings of BCN in
his income for purposes of calculating spousal support has no application to child support.

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BCN, or allowing Husband to have Monday visitations with the children. Consequently, we

find that the trial court did not abuse its discretion in ordering Husband pay Wife $303.80 in

child support based, in part, upon the original spousal support award. However, as we have

determined the trial court must readdress the issue of spousal support on remand, we

additionally find that the trial court shall also review the child support order in this case. The

trial court shall determine whether a new child support order is necessary, taking into

consideration any "[a]nnual court-ordered spousal support paid to any spouse or former

spouse" pursuant to Line 10 of the applicable child support calculation worksheet. R.C.

3119.022.

{¶ 88} Accordingly, Wife's sixth assignment of error is overruled.

Tax Exemption

{¶ 89} Finally, we turn to Wife's last assignment of error, wherein she argues the trial

court erred in ordering that Husband shall be entitled to claim the parties' minor children on

his taxes. Specifically, Wife states that, because both parties are employed and could

benefit from the tax exemption, the trial court's ruling was an abuse of discretion and against

the manifest weight of the evidence.

{¶ 90} "An appellate court reviews a trial court's decision allocating tax exemptions for

dependents under an abuse of discretion standard." Rainey v. Rainey, 12th Dist. Clermont

No. CA2010-10-083, 2011-Ohio-4343, ¶ 38.

{¶ 91} R.C. 3119.82 provides:

Whenever a court issues * * * a court child support order, it shall
designate which parent may claim the children who are the
subject of the court child support order as dependents for federal
income tax purposes * * * . If the parties agree on which parent
should claim the children as dependents, the court shall
designate that parent as the parent who may claim the children.
If the parties do not agree, the court, in its order, may permit the
parent who is not the residential parent and legal custodian to
claim the children as dependents for federal income tax
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purposes only if the court determines that this furthers the best
interest of the children * * * . In cases in which the parties do not
agree which parent may claim the children as dependents, the
court shall consider, in making its determination, any net tax
savings, the relative financial circumstances and needs of the
parents and children, the amount of time the children spend with
each parent, the eligibility of either or both parents for the federal
earned income tax credit or other state or federal tax credit, and
any other relevant factor concerning the best interest of the
children.

{¶ 92} This statute sets forth a preference to allocate the dependency exemption to

the residential parent unless an allocation to the nonresidential parent is appropriate based

upon tax, financial, and other considerations. In this case, the parties' shared parenting plan

provides that both Wife and Husband are the residential parents of the minor children

regardless of who has custody of the children at the time. See Rainey at ¶ 40.

{¶ 93} Thus, "the trial court must allocate the tax dependency exemption based on the

child[ren]'s best interest[s]." Id. "This court has previously recognized that the best interest

of the child is furthered when the allocation of the exemption produces a net tax savings for

the parents." (Internal quotations omitted.) Id., citing Tuttle v. Tuttle, 12th Dist. Butler Nos.

CA2006-07-176, CA2006-07-177, 2007-Ohio-6743, ¶ 21. "A net tax savings to the parent

usually equates to more money being available for the care of the child, and is one of the five

factors that a court is required to weigh under R.C. 3119.82." Id.

{¶ 94} In this case, the trial court stated that, based upon the evidence before it and

the factors of R.C. 3119.82, Husband should be entitled to claim the parties' minor children

on his taxes. Several factors support the trial court's decision. Husband earns substantially

more income, has a much longer employment history, and has a greater earning ability than

Wife. See Ornelas v. Ornelas, 12th Dist. Warren No. CA2011-08-094, 2012-Ohio-4106, ¶

55. Wife has provided no support for her contention that she should be allocated a tax

exemption merely because it would benefit her. We find the trial court did not abuse its

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discretion by allocating the dependency exemption to Husband.

{¶ 95} Accordingly, Wife's seventh and final assignment of error is overruled.

Conclusion

{¶ 96} Husband's sole cross-assignment of error is sustained and the cause is

remanded to the trial court for determinations regarding spousal support, relating solely to the

issue of "double-dipping," and child support, relating solely to any alteration to the "[a]nnual

court-ordered spousal support paid to any spouse or former spouse." R.C. 3119.022. Wife's

assignments of error are hereby overruled.

{¶ 97} Judgment affirmed in part, and reversed in part, and the cause is remanded for

proceedings consistent with this opinion.

S. POWELL, P.J., and PIPER, J., concur.

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