This is a second appeal disputing the amount the chancellor set for child support. The parties were divorced in 1991, and appellant was awarded custody of the parties’ three children, with appellee paying monthly child support in the amount of $1,075. On December 1, 1994, appellant petitioned for an increase in child support. After a hearing, appellee’s child-support obligation was increased to $3,054.46 per month. Appellee filed a motion to reconsider, and after a February 13, 1996, hearing the chancellor reduced child support to $2,418.56 per month. Appellant filed another motion to reconsider, which was deemed denied; she then appealed the issue of child support, among other things, to this court.
In Stepp v. Gray, 58 Ark. App. 229, 947 S.W.2d 798 (1997), appellant argued that the chancellor erred in calculating child support because he excluded from appellee’s income the full amount of depreciation on rental properties which appellee claimed on his federal income tax return. We agreed and remanded the case to the chancellor for further consideration of the depreciation-deduction issue, stating “we leave it to the discretion of the chancellor to determine whether further evidence is needed to arrive at the amount of the depreciation deduction to be considered as income to Gray.” Id. at 237.
On remand, the chancellor conducted hearings on September 17, 1997, and October 9, 1997. Relying upon appellee’s testimony that twenty percent of his depreciable rental property was in fact appreciating in value, the chancellor found that twenty percent of reported depreciation should be included in computing appellee’s income for child support purposes. In addition, the chancellor determined that for the period preceding October 1, 1997, appellee’s monthly child-support obligation would be thirty-two percent of his monthly income; thereafter, due to new child support guidelines effective October 1, 1997, appellee’s monthly child-support obligation would be twenty-five percent of his monthly income, with the appropriate allowances for medical, dental, tax payments, and two-week support abatement, as well as a credit against child support for any capital-gains tax. Appellant now argues two points on appeal, contending the chancellor erred (1) in calculating appellee’s child-support obligation, and (2) in using the Supreme Court per curiam order of 1997 to set child support and finding that any applicable capital gains tax would be credited against child support. Appellee cross-appeals, contending that none of the depreciation should be includable in his income for purposes of computing child support.
Chancery cases are reviewed de novo on the record, and the chancellor’s findings are not reversed unless they are clearly against the preponderance of the evidence or are clearly erroneous, Heflin v. Bell, 52 Ark. App. 201, 916 S.W.2d 769 (1996); the review can be based upon a complete and independent review of the record. Rockefeller v. Rockefeller, 335 Ark. 145, 980 S.W.2d 255 (1998). The amount of child support lies within the sound discretion of the chancellor and will not be disturbed on appeal absent a showing of abuse of discretion. Halter v. Halter, 60 Ark. App. 189, 959 S.W.2d 761 (1998).
For her first point, appellant argues that all of the depreciation deduction which appellee claimed on his income-tax returns should be added back to his income for purposes of computing child support, and that the chancellor erred in including only twenty percent of the deduction. She further contends that Administrative Order No. 10 provides that child support shall be calculated on last year’s federal and state income tax returns, quarterly estimates, and the net worth approach, and “does not mention static, depreciating and appreciating property to determine income.” She also points out that the court could not determine from the evidence presented which properties were “staying static,” which were depreciating, and which were appreciating.
During the hearings on remand, the chancellor expressed his understanding that Stepp v. Gray, supra, required him to review the depreciation deduction which appellee claimed on his tax returns and to determine the amount to be considered as income for child support purposes. However, the chancellor also expressed some confusion as to deducting the principal payments on appellee’s rental properties from overall depreciation; this confusion appears to be based upon the following sentence in Stepp v. Gray: “It also appears from the evidence presented concerning [appellee’s] mortgage payments that he would have approximately $20,000 in disposable income remaining from the depreciation deduction even if he is credited with the amount of principal paid on the rental properties.” Id. at 237. The chancellor further stated his understanding that, pursuant to Stepp v. Gray, a portion of the depreciation deduction had to be added back to appellee’s income to arrive at his actual income. Accordingly, the chancellor found that $34,861 in depreciation was an allowable deduction from appellee’s income, but that twenty per cent of that figure represented the amount of appellee’s rental property that was appreciating in value. Therefore, the chancellor concluded that twenty percent of $34,861 should be added back to appellee’s income for the purpose of computing child support.
The chancellor based his findings on the unrebutted testimony of appellee and his accountant with regard to the rental properties, the essence of which was that two duplexes and two other properties were appreciating in value and that the others were either static or depreciating in value. From our review of the record, we cannot say that the chancellor’s decision to include twenty percent of the depreciation deduction in appellee’s income for purposes of determining child support was an abuse of discretion.
Under this point, appellant also argues that evidence introduced at a hearing on November 20, 1997,1 specifically appellee’s personal financial statements, reflect that appellee’s testimony at the September 17 hearing regarding the value of his rental property was not truthful. The short answer to this argument is that this evidence was not before the chancellor when he announced his ruling on the depreciation issue. The evidence which was before the chancellor when he made his ruling supports his decision to include only twenty percent of the depreciation deduction in appellee’s income for purposes of child support. See Wing v. Wing, 12 Ark. App. 84, 671 S.W.2d 204 (1984).
In his cross-appeal on this point, appellee argues that none of the depreciation deduction should be included in the income figure used to compute his child-support obligation, and he cites several cases from other states in which straight-line depreciation, which he used, was not considered in determining child support. While appellee’s argument is well-taken, we are not convinced, nor does appellee argue, that it is necessary to adopt a bright-line rule that support payors who utilize the straight-line method of depreciation will never have depreciation considered as a component when setting child support. Each case must be examined on its own set of facts. In the present case, in determining child support, the chancellor added back to appellee’s income the depreciation on those properties that appellee testified were appreciating in value, but not on the properties which appellee testified were staying static or depreciating. Based upon the testimony, we cannot say the chancellor abused his discretion in reaching this decision.
In order to eliminate any confusion resulting from Stepp v. Gray, supra, we take this opportunity to clarify our court’s position on the depreciation-deduction issue. We note that Administrative Order 10: Arkansas Child Support Guidelines, 331 Ark. 581, includes the following provision:
For self-employed payors, support shall be calculated based on last year’s federal and state income tax returns and the quarterly estimates for the current year. Also the court shall consider the amount the payor is capable of earning or a net worth approach based on property, life-style, etc.
The guidelines do not mandate that the court include or exclude a payor’s depreciation deduction, nor do we make that requirement. Rather, we believe that depreciation is a factor that should be considered, just as property and life-style are considered, on a case-by-case basis.
For her second point, appellant argues that the chancellor erred in using Administrative Order No. 10 to set child support and in finding that any applicable capital gains tax would be credited against child support. We disagree. In Heflin v. Bell, supra, we held that a statute or per curiam order of the Arkansas Supreme Court that is in effect at the time of the hearing on a request for modification of child support is the applicable law pertaining to the modification. Id. at 204. At the time of the final hearing in this matter, Administrative Order 10: Arkansas Child Support Guidelines, supra, had been adopted, effective October 1, 1997. Therefore, the chancellor was correct in applying Administrative Order No. 10 for the amount of child support to be paid after October 1, 1997, and in applying the previous guidelines (In re: Guidelines for Child Support, 314 Ark. 644, 863 S.W.2d (1993)) for child support owed for the period prior to October 1, 1997. The 1993 guidelines provide that when the payor’s income exceeds the chart, a payor with three dependents will pay thirty-two percent of his income for child support; Administrative Order No. 10 reduced that percentage to twenty-five percent. The chancellor’s application of the proper law was not in error.
Nor do we find that the chancellor erred in allowing appellee credit for any applicable capital gains tax. For purposes of determining appellee’s rental income, both the 1993 Guidelines and Administrative Order No. 10 allow self-employed payors to calculate child support based upon the previous year’s federal and state income tax returns, and to allow deductions for state and federal income tax. Tax on capital gains is a component of both federal and state income tax returns, and appellee’s 1994 federal tax return indicates that he paid $26,478 in capital gains tax. Moreover, the abstract does not indicate that appellant’s counsel objected to proof of the capital gains tax paid by appellee, either at the time it was introduced or when the issue was discussed at the October 9 hearing. As appellee points out, Ark. R. Civ. P. 15(b) allows amendment of the pleadings to conform to the evidence when issues not raised in the pleadings are tried by express or implied consent. With no objection from appellant, the chancellor could properly consider this evidence.
Affirmed.
Stroud, and Hart, JJ., agree. Griffen, Rogers, and Bird, JJ., concur.A hearing was apparently conducted in this case on November 20, 1997, on appellee’s motion to reduce child support. The court’s ruling on that motion is not at issue in this appeal.