{ "id": 11219811, "name": "JANICE MAULDIN CAUBLE, Plaintiff v. TED JAMES CAUBLE, Defendant", "name_abbreviation": "Cauble v. Cauble", "decision_date": "1999-06-01", "docket_number": "No. COA97-1274", "first_page": "390", "last_page": "400", "citations": [ { "type": "official", "cite": "133 N.C. App. 390" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "509 S.E.2d 804", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1999, "pin_cites": [ { "page": "805" } ], "opinion_index": 0 }, { "cite": "132 N.C. App. 36", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11236874 ], "year": 1999, "pin_cites": [ { "page": "38" } ], "opinion_index": 0, "case_paths": [ "/nc-app/132/0036-01" ] }, { "cite": "419 S.E.2d 181", "category": "reporters:state_regional", "reporter": "S.E.2d", "opinion_index": 0 }, { "cite": "268 S.E.2d 185", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1980, "pin_cites": [ { "page": "190" } ], "opinion_index": 0 }, { "cite": "300 N.C. 708", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8564644 ], "year": 1980, "pin_cites": [ { "page": "714" } ], "opinion_index": 0, "case_paths": [ "/nc/300/0708-01" ] }, { "cite": "419 S.E.2d 176", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1992, "pin_cites": [ { "page": "181", "parenthetical": "\"Guidelines . . . vest the trial court with the discretion to deduct. . . straight line depreciation\"" }, { "page": "181" } ], "opinion_index": 0 }, { "cite": "107 N.C. App. 140", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527264 ], "weight": 2, "year": 1992, "pin_cites": [ { "page": "147", "parenthetical": "\"Guidelines . . . vest the trial court with the discretion to deduct. . . straight line depreciation\"" }, { "page": "147" } ], "opinion_index": 0, "case_paths": [ "/nc-app/107/0140-01" ] }, { "cite": "26 U.S.C. \u00a7 61", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1998, "opinion_index": 0 }, { "cite": "26 U.S.C. \u00a7 446", "category": "laws:leg_statute", "reporter": "U.S.C.", "year": 1998, "opinion_index": 0 }, { "cite": "468 S.E.2d 33", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1996, "opinion_index": 0 }, { "cite": "343 N.C. 50", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 798953 ], "year": 1996, "opinion_index": 0, "case_paths": [ "/nc/343/0050-01" ] }, { "cite": "455 S.E.2d 442", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1995, "pin_cites": [ { "page": "447" }, { "page": "444" } ], "opinion_index": 0 }, { "cite": "118 N.C. App. 356", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11918367 ], "weight": 2, "year": 1995, "pin_cites": [ { "page": "358" } ], "opinion_index": 0, "case_paths": [ "/nc-app/118/0356-01" ] }, { "cite": "587 N.E.2d 188", "category": "reporters:state_regional", "reporter": "N.E.2d", "case_ids": [ 10998843 ], "year": 1992, "pin_cites": [ { "page": "190-91", "parenthetical": "retained earnings of Subchap-ter-S corporation constituted profit attributable to defendant as controlling shareholder" } ], "opinion_index": 0, "case_paths": [ "/ne2d/587/0188-01" ] }, { "cite": "406 N.W.2d 77", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 10656986 ], "year": 1987, "pin_cites": [ { "page": "79", "parenthetical": "profits of subchapter S Corporation must be attributed to sole shareholder and officer" } ], "opinion_index": 0, "case_paths": [ "/nw2d/406/0077-01" ] }, { "cite": "494 S.E.2d 763", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1998, "opinion_index": 0 }, { "cite": "347 N.C. 570", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 551191 ], "year": 1998, "opinion_index": 0, "case_paths": [ "/nc/347/0570-01" ] }, { "cite": "487 S.E.2d 774", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1997, "pin_cites": [ { "page": "778", "parenthetical": "income of plaintiff owning 50% of corporation included certain cash reserves plaintiff had pledged to a creditor bank for business financing because plaintiff had made the choice to encumber said reserves, and as such the reserves were \"available to plaintiff'" } ], "opinion_index": 0 }, { "cite": "127 N.C. App. 20", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11791758 ], "year": 1997, "pin_cites": [ { "page": "26", "parenthetical": "income of plaintiff owning 50% of corporation included certain cash reserves plaintiff had pledged to a creditor bank for business financing because plaintiff had made the choice to encumber said reserves, and as such the reserves were \"available to plaintiff'" } ], "opinion_index": 0, "case_paths": [ "/nc-app/127/0020-01" ] }, { "cite": "481 S.E.2d 365", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1997, "pin_cites": [ { "page": "369" }, { "page": "369", "parenthetical": "\"[a]ny judgment ... setting an amount of child support [is] dependent in significant part upon the amount of [defendant's] income and the nature of his estate - whether exclusively owned or controlled by defendant\"" } ], "opinion_index": 0 }, { "cite": "125 N.C. App. 522", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11869186 ], "weight": 2, "year": 1997, "pin_cites": [ { "page": "528" }, { "page": "528" } ], "opinion_index": 0, "case_paths": [ "/nc-app/125/0522-01" ] }, { "cite": "264 S.E.2d 750", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1980, "pin_cites": [ { "page": "751", "parenthetical": "bracketed language in original" } ], "opinion_index": 0 }, { "cite": "46 N.C. App. 301", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8550410 ], "year": 1980, "pin_cites": [ { "page": "302", "parenthetical": "bracketed language in original" } ], "opinion_index": 0, "case_paths": [ "/nc-app/46/0301-01" ] }, { "cite": "421 S.E.2d 795", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1992, "pin_cites": [ { "page": "798", "parenthetical": "citations omitted" }, { "page": "798" }, { "page": "798" } ], "opinion_index": 0 }, { "cite": "107 N.C. App. 695", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8527921 ], "weight": 2, "year": 1992, "pin_cites": [ { "page": "700", "parenthetical": "citations omitted" }, { "page": "700" } ], "opinion_index": 0, "case_paths": [ "/nc-app/107/0695-01" ] }, { "cite": "493 S.E.2d 804", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1997, "pin_cites": [ { "page": "806" }, { "page": "806" }, { "page": "806", "parenthetical": "no abuse of discretion by trial court to include in defendant's gross income retirement accounts, stocks, and land, because court must consider all available sources of income" } ], "opinion_index": 0 }, { "cite": "128 N.C. App. 174", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 11653040 ], "weight": 2, "year": 1997, "pin_cites": [ { "page": "177" }, { "page": "177" } ], "opinion_index": 0, "case_paths": [ "/nc-app/128/0174-01" ] }, { "cite": "400 S.E.2d 736", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 4, "year": 1991, "pin_cites": [ { "page": "740" }, { "parenthetical": "emphasis added" }, { "parenthetical": "emphasis added" } ], "opinion_index": 0 }, { "cite": "101 N.C. App. 617", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8528011 ], "year": 1991, "pin_cites": [ { "page": "624" } ], "opinion_index": 0, "case_paths": [ "/nc-app/101/0617-01" ] }, { "cite": "443 S.E.2d 96", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1994, "pin_cites": [ { "page": "97" } ], "opinion_index": 0 }, { "cite": "114 N.C. App. 808", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8528024 ], "year": 1994, "pin_cites": [ { "page": "810" } ], "opinion_index": 0, "case_paths": [ "/nc-app/114/0808-01" ] } ], "analysis": { "cardinality": 894, "char_count": 22821, "ocr_confidence": 0.766, "pagerank": { "raw": 2.2197031490800873e-07, "percentile": 0.7774906954034772 }, "sha256": "b54b2d885600c11a189aedebfbdc932c0f40e8583f81102b57e99cf736960bd8", "simhash": "1:c5ea9448945e896d", "word_count": 3578 }, "last_updated": "2023-07-14T19:41:36.377256+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges GREENE and TIMMONS-GOODSON concur." ], "parties": [ "JANICE MAULDIN CAUBLE, Plaintiff v. TED JAMES CAUBLE, Defendant" ], "opinions": [ { "text": "JOHN, Judge.\nDefendant appeals the trial court\u2019s child support order, asserting the court erred by (1) \u201cimproperly calculating the income of the [defendant] from the Farm Supply business\u201d; and (2) \u201cnot including in the income of the [defendant] the losses from the Fun Park corporation.\u201d We vacate in part and remand in part.\nPertinent facts and procedural history include the following: Plaintiff and defendant, both residents of Stanly County, were married 29 December 1968. Amanda Beth Cauble, the sole child of the marriage, was born 24 November 1985. Following separation in early 1991, the parties divorced 26 September 1994. Subsequent to a hearing at the 28 October 1996 Session of Stanly County District Court, an order awarding plaintiff custody of Amanda was filed 24 March 1997. .\nPlaintiff\u2019s claim for child support was heard during the 19 March 1997 Civil Non-Jury Session of District Court of Stanly County. In its 5 May 1997 order, the court entered the following relevant findings of fact:\n7. The plaintiff testified that she was employed by Home Savings Bank of Albemarle and that her current gross monthly earnings are $2,885.00. . . .\n8. In June of 1983, plaintiff and defendant founded Stanly Farm Supply, Inc. (hereinafter called \u201cStanly Farm\u201d) with the defendant owning 51% of the outstanding shares of capital stock, namely, 251 shares, and the plaintiff owning 49% of the outstanding shares of capital stock, namely, 249 shares.\n9. Stanly Farm is a closely held corporation.\n10. Since June 1, 1983, defendant has managed the Stanly Farm business as its chief executive officer.\n11. Since June 1, 1983, Stanly Farm has been engaged in the business of selling feeds, seeds, fertilizer, farm equipment, farm supplies and other related items to the farming communities in Stanly County and other surrounding counties.\n12. Since January 1, 1983, Stanly Farm has been a C corporation with its fiscal year being the same as the calender year and its method of accounting being the accrual method.\n13. For more than three years, the defendant\u2019s annual salary with Stanly Farm has been $8,000.00 In addition he has rented a dump truck to Stanly Farm and has received annual rental income of $5,400.00\n15. Since June 1, 1983, Stanly Farm has had taxable income each calendar year, with the exception of 1996, which tax return shows a taxable income loss of $1,498.71\".\n16. All income after payment of taxes of Stanly Farm since its inception in June of 1983 have been retained and the accumulated retained earnings on December 31, 1996 was $470,676.20.\nIn arriving at defendant\u2019s gross income from Stanly Farm Supply, Inc. (Stanly Farm), the trial court allowed the following as ordinary and necessary business expenses of the corporation:\nSalaries and wages.$62,599.72\nTaxes and Licenses.$10,532.72\nInterest.$ 487.56\nAdvertising.$ 5,533.72\nOther deductions .$74,409.79\nHowever, \u201cin the interest of justice,\u201d the court excluded the sums of $6,447.53 and $71,886.68, claimed by Stanly Farm on its 1996 tax return as deductions respectively for depreciation and bad debt. The court\u2019s order provided in this regard that:\n19. The depreciation of $6,447.53 . . . represents straight line depreciation or lower than straight line depreciation. Stanly Farm in earlier years did use an accelerated component of depreciation.\n20. The bad debts ... represent!] bad debts from sales in previous years and does not represent cash dollars flowing out of Stanly Farm during 1996.\n21. Defendant also received from Stanly Farm in 1996, $540.00 as reimbursement for the use of his personal vehicle for Stanly Farm and $5,400.00 rental income.\n23. On December 31, 1996, Stanly Farm had on hand a cash balance of $69,301.49. . . .\n24. Defendant, as the owner of 51% of the outstanding shares of the capital stock of Stanly Farm, had the authority as to the disbursement of any monies owned by Stanly Farm.\n25. Since June 1, 1983, Stanly Farm has never paid dividends to its shareholders.\nThe court thereupon concluded:\n2. The defendant\u2019s annual gross income from his operation of Stanly Farm for purposes of calculating child support is $49,206.00 . . . [and the] appropriate level of monthly gross income available to defendant to satisfy his child support obligation is $4,100.00. . . .\n5. The defendant\u2019s monthly obligation for child support... is $467.00.\nAlso at issue at the child support hearing was defendant\u2019s 100% ownership of Fun Park, Inc. (Fun Park), a Subchapter-S corporation established by defendant in 1996. Fun Park reported a loss of $43,321.11 in 1996. Defendant\u2019s evidence tended to show that $13,347.63 of this figure consisted of the straight line depreciation component. The trial court\u2019s order contained no findings or conclusions addressing defendant\u2019s income or loss from Fun Park.\nDefendant filed timely notice of appeal 25 April 1997.\nInitially, defendant argues the trial court improperly (1) \u201cimputed to [him] income of [Stanly Farm] without finding that he had deliberately depressed his income\u201d; (2) determined the \u201camount of income available to him through [Stanly Farm] by disregarding Stanly Farm\u2019s accrual accounting method; and (3) \u201cfail[ed] to deduct from [the] income of [Stanly Farm] the reasonable and necessary expenses of depreciation and bad debt. . . incurred in an accrual accounting tax computation.\u201d Each of these contentions is unfounded.\nThe\nultimate objective in setting awards for child support is to secure support commensurate with the needs of the children and the ability of the father [mother] to meet the needs.\nPittman v. Pittman, 114 N.C. App. 808, 810, 443 S.E.2d 96, 97 (1994). The statute governing child support provides that:\n[p]ayments ordered for the support of a minor child shall be in such amount as to meet the reasonable needs of the child for health, education, and maintenance, having due regard to the estates, earnings, conditions, [and] accustomed standard of living of the child and the parties ....\nN.C.G.S. \u00a7 50-13.4(c) (Supp. 1997).\nProspective child support is \u201cnormally determined under the North Carolina Child Support Guidelines (the Guidelines),\u201d see G.S. \u00a7 50-13.4(c), which utilize the \u201cgross income\u201d of each parent in calculating the amount of child support required to be payed thereunder by an obligor. Absent a request for variance,\nsupport set consistent with the [Guidelines is conclusively presumed to be in such amount as to meet the reasonable needs of the child for health, education, and maintenance.\nBrowne v. Browne, 101 N.C. App. 617, 624, 400 S.E.2d 736, 740 (1991).\nUnder the Guidelines, gross income is defined as \u201cincome from any source,\u201d including \u201cincome from . . . dividends, . . . pensions, . . . interest, [and] trust income.\u201d North Carolina Child Support Guidelines, AOC-A-162 (1994). Further, concerning calculation of the gross income of a parent who is self-employed or operates a business, such as defendant herein, the Guidelines provide:\nFor income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, gross income is defined as gross receipts minus ordinary and necessary expenses required for self-employment or business operation.\nId. (emphasis added).\nSpecifically excluded from \u201cordinary and necessary expenses\u201d are\namounts allowable by the Internal Revenue Service for the accelerated component of depreciation expenses, investment tax credits, or any other business expenses determined by the Court to be inappropriate for determining gross income for purposes of calculating child support.\nId. (emphasis added). In addition, the\nincome and expenses from self-employment or operation of a business should be carefully reviewed to determine an appropriate level of gross income available to the parent to satisfy a child support obligation.\nId.\nThe amount of a trial court\u2019s child support award will not be disturbed on appeal except upon a showing of abuse of discretion. See Burnett v. Wheeler, 128 N.C. App. 174,177, 493 S.E.2d 804, 806 (1997). In addition,\n[b]ecause the Guidelines vest the trial court with the discretion to disallow the deduction of any business expenses which are inappropriate for the purposes of calculating child support, the trial court\u2019s decision ... to disallow the claimed expenses must be upheld unless it is \u201cmanifestly unsupported by reason\u201d and therefore an abuse of discretion.\nKennedy v. Kennedy, 107 N.C. App. 695, 700, 421 S.E.2d 795, 798 (1992) (citations omitted).\nMoreover,\n[t]his Court is bound by the trial court\u2019s findings where there is competent evidence to support them. \u201cIf different inferences may be drawn from the evidence, [the judge sitting without a jury] determines which inferences shall be drawn . . and the findings are binding on the appellate court.\nMonds v. Monds, 46 N.C. App. 301, 302, 264 S.E.2d 750, 751 (1980) (bracketed language in original) (citations omitted). In this latter regard, suffice it to state that our examination of the instant record reflects competent evidence in support of each of the trial court\u2019s findings, and we thus are \u201cbound by . . . [said] findings.\u201d Id.\nBearing the foregoing in mind, we proceed to consider ad seriatim defendant\u2019s contentions as to the trial court\u2019s treatment of his interest in Stanly Farm. Defendant first maintains the trial court erroneously imputed to him income of Stanly Farm without finding he had deliberately depressed his income. Although defendant correctly asserts that income may be imputed to a party \u201conly if there is a finding that the party deliberately depressed his income,\u201d Burnett, 128 N.C. at 177, 493 S.E.2d at 806, the trial court herein did not impute income to defendant. Rather, the court\u2019s computation of defendant\u2019s income included his fifty-one per cent (51%) ownership of Stanly Farm, which accorded him \u201cthe authority to make decisions as to the disbursement of any monies owned by Stanly Farm.\u201d\nThis Court has previously held that\nsetting an amount of child support [is] dependent . . . upon the amount of [defendant\u2019s] income and the nature of his estate\u2014 whether exclusively owned or controlled by defendant.\nShaw v. Cameron, 125 N.C. App. 522, 528, 481 S.E.2d 365, 369 (1997). In the instant case, the uncontradicted evidence supports the trial court\u2019s finding that the profits of Stanly Farm were available to defendant by virtue of his controlling interest in the closely-held corporation. Thus, notwithstanding defendant\u2019s declination to disburse said corporate income, the trial court did not abuse its discretion in allocating to him that amount of income earned by Stanly Farm corresponding to his corporate interest. See Guidelines (\u201c[gross] income from [a] . . . closely held corporation [is] . . . gross receipts minus ordinary and necessary expenses\u201d); see also Barham v. Barham, 127 N.C. App. 20, 26, 487 S.E.2d 774, 778 (1997) (income of plaintiff owning 50% of corporation included certain cash reserves plaintiff had pledged to a creditor bank for business financing because plaintiff had made the choice to encumber said reserves, and as such the reserves were \u201cavailable to plaintiff\u2019), aff\u2019d, 347 N.C. 570, 494 S.E.2d 763 (1998); Burnett, 128 N.C. App. at 177, 493 S.E.2d at 806 (no abuse of discretion by trial court to include in defendant\u2019s gross income retirement accounts, stocks, and land, because court must consider all available sources of income); cf. Roth v. Roth, 406 N.W.2d 77, 79 (Minn. App. 1987) (profits of subchapter S Corporation must be attributed to sole shareholder and officer); Merrill v. Merrill, 587 N.E.2d 188, 190-91 (Ind. App. 1992) (retained earnings of Subchap-ter-S corporation constituted profit attributable to defendant as controlling shareholder).\nNotwithstanding, defendant points to this Court\u2019s opinion in Taylor v. Taylor, 118 N.C. App. 356, 455 S.E.2d 442 (1995), rev\u2019d on other grounds, 343 N.C. 50, 468 S.E.2d 33 (1996), and argues the trial court should have considered only the income actually received by defendant from Stanly Farm in its computation of his gross income. Taylor is inapposite.\nFirst, defendant neglects to consider that the Guidelines were not applicable in Taylor and that the court\u2019s award of child support therein was derived solely from its conclusions as to \u201cthe amount of support necessary to meet the reasonable needs of the child and the relative abilities of the parties to provide that amount.\u201d See id. at 362, 455 S.E.2d at 447. The trial court herein, however, was obligated to follow the Guidelines which direct computation of an obligor\u2019s income based upon the amount of his \u201ctaxable income . . . from any source;\u201d which amount may include \u201cpotential income if [voluntarily] unemployed or underemployed.\u201d Guidelines.\nMore significantly, unlike the instant record, no evidence in Taylor indicated the obligor owned a controlling corporate interest whereby he might have directed distribution of corporate profits to his benefit. See Taylor, 118 N.C. App. at 358, 455 S.E.2d at 444. Defendant\u2019s reliance upon Taylor is thus unavailing.\nDefendant next asserts the trial court erred in determining the \u201camount of income available to him through [Stanly Farm]\u201d because the court did not take into consideration the accrual accounting method utilized by Stanly Farm. According to defendant,\n[u]nder the accrual method of accounting, income is accounted for when the right to receive it is created. Thus, it is not the actual receipt of the income but the right to receive which results in an income entry.\nTherefore, defendant continues, the \u201caccrual method creates fictional income\u201d and \u201cthe trial court can make no determination of the income actually available to the [defendant].\u201d\nWhile it appears no North Carolina authority directly addresses the significance of the accrual method of accounting in relation to an award of child support, accrual accounting figures represent income which is taxable for federal tax purposes, see 26 U.S.C. \u00a7 446 (1998) and 26 U.S.C. \u00a7 61 (1998), and such amounts are thus properly considered as \u201cgross receipts\u201d for purposes of the Guidelines. See Guidelines (in determining gross income, \u201c[a]ll income is assumed to be taxable\u201d). Further, in determining an obligor\u2019s gross income derived from the latter\u2019s interest in a closely held corporation, the trial court may in its discretion allow appropriate adjustments upon \u201ccareful[] review[]\u201d of the \u201cincome and expenses from self employment.\u201d See id.; see also Lawrence v. Tise, 107 N.C. App. 140, 147, 419 S.E.2d 176, 181 (1992) (\u201cGuidelines . . . vest the trial court with the discretion to deduct. . . straight line depreciation\u201d).\nThe trial court found that Stanly Farm at the end of its 1996 fiscal year \u201chad on hand a cash balance of $69,301.49,\u201d and that \u201c[a]ll income after payment of taxes of Stanly Farm since its inception in June of 1983 have been retained and the accumulated retained earnings . . . [are] $470,676.20.\u201d Our careful review of the record reveals that save for evidence of an approximate $19,000.00 bad debt deduction in 1995, defendant introduced no evidence tending to establish that percentage of the annual gross income of Stanly Farm which typically comprised bad debt, i.e., money Stanly Farm would never receive. Absent evidence to the contrary, therefore, use of accrual figures in the trial court\u2019s calculations herein was reflective of \u201can appropriate level of gross income available to the [defendant],\u201d see Guidelines, and the trial court\u2019s reliance upon such accrual figures was not \u201cmanifestly unsupported by reason.\u201d See Kennedy, 107 N.C. App. at 700, 421 S.E.2d at 798.\nDefendant\u2019s third contention is that the court\nfail[ed] to deduct from [the] income of [Stanly Farm] the reasonable and necessary expenses of depreciation and bad debt incurred in an accrual accounting tax computation.\nThis argument is also unpersuasive.\nUnder the Guidelines, the trial court is accorded the discretion to discern those business expenses which are \u201cinappropriate for determining gross income for purposes of calculating child support.\u201d See Guidelines. In the case sub judice, the trial court disallowed \u201cin the interest of justice\u201d deductions of $71,886.68 in bad debt and $6,447.53 in depreciation taken by Stanly Farm in 1996. The court stated in its order that the bad debt \u201cd[id] not represent cash dollars flowing out of Stanly Farm during 1996.\u201d The court also noted that\n[s]ince June 1, 1983, Stanly Farm... had taxable income each calendar year, with the exception of 1996, which tax return shows a taxable income loss of $1,498.71.\nIn light of such findings, as well as those specifying the retained earnings and cash on hand of Stanly Farm, we cannot say the trial court\u2019s disallowance of Stanley Farm\u2019s claimed bad debt and depreciation expenses in computing defendant\u2019s gross income from the corporation was \u201cmanifestly unsupported by reason.\u201d Kennedy, 107 N.C. App. at 700, 421 S.E.2d at 798.\nIn a separate assignment of error, defendant argues the trial court erred by \u201cnot including in the income of the [defendant] the losses from the Fun Park corporation.\u201d Defendant\u2019s final argument has merit.\nIt is well established that\n[effective appellate review of an order entered by a trial court... is largely dependent upon the specificity by which the order\u2019s rational is articulated. Evidence must support findings, findings must support conclusions; conclusions must support the judgment. Each step of the progression must be taken by the trial judge, in logical sequence; each link in the chain of reasoning must appear in the order itself. Where there is a gap, it cannot be determined on appeal whether the trial court correctly exercised its function to find the facts and apply the law thereto.\nCoble v. Coble, 300 N.C. 708, 714, 268 S.E.2d 185, 190 (1980).\nIn the case sub judice, the trial court\u2019s child support order contains no reference to defendant\u2019s 100% ownership interest in Fun Park. See Shaw, 125 N.C. App. at 528, 481 S.E.2d at 369 (\u201c[a]ny judgment ... setting an amount of child support [is] dependent in significant part upon the amount of [defendant\u2019s] income and the nature of his estate \u2014 whether exclusively owned or controlled by defendant\u201d). We note defendant introduced evidence tending to show that Fun Park reported a loss in 1996 of $43,321.11. The business employed an accelerated method of depreciation resulting in a 1996 deduction of $39,725.13, the accelerated component being $26,377.50 and the straight line component totaling $13,347.63. Although straight line depreciation may be excluded from an obligor\u2019s gross income in the court\u2019s discretion, see Tise, 107 N.C. App. at 147, 419 S.E.2d at 181, the trial court\u2019s order herein fails to reflect its treatment of the Fun Park figures. For example, considering only the straight line depreciation, the loss of Fun Park in 1996 might have totaled $16,953.61, or $3,595.98 without consideration of depreciation in any amount. As such, \u201cthe findings in this regard are not sufficiently specific to indicate to this Court whether the trial court properly applied the Guidelines in computing [defendant\u2019s] gross income.\u201d Id. at 148, 419 S.E.2d 181.\nBased on the foregoing, those portions of the trial court\u2019s order purporting to compute defendant\u2019s gross income and award child support thereon must be reversed. In addition, this matter is remanded for additional findings regarding the income or loss, if any, of defendant from Fun Park as well as re-computation of defendant\u2019s gross income and entry of a new child support award in light of such findings. On remand,\nthe trial court shall rely upon the existing record, but may in its sole discretion receive such further evidence and further argument from the parties as it deems necessary and appropriate to comply with the instant opinion.\nHeath v. Heath, 132 N.C. App. 36, 38, 509 S.E.2d 804, 805 (1999).\nAffirmed in part; vacated in part and remanded with instructions.\nJudges GREENE and TIMMONS-GOODSON concur.", "type": "majority", "author": "JOHN, Judge." } ], "attorneys": [ "Morton, Grigg & Phillips, by Ernest H. Morton, Jr. and David L. Grigg, Jr., for plaintiff-appellee.", "Tucker, Slaughter & Singletary, P.A., by William C. Tucker, for defendant-appellant." ], "corrections": "", "head_matter": "JANICE MAULDIN CAUBLE, Plaintiff v. TED JAMES CAUBLE, Defendant\nNo. COA97-1274\n(Filed 1 June 1999)\n1. Child Support, Custody, and Visitation\u2014 child support\u2014 calculation of income \u2014 closely held corporation\nThe trial court did not abuse its discretion in a child support action by imputing income to defendant from a closely held farm supply business without finding that defendant had deliberately depressed his income where the uncontradicted evidence supported the finding that the profits were available to defendant by virtue of his controlling interest in the closely held corporation.\n2. Child Support, Custody, and Visitation\u2014 child support\u2014 calculation of income \u2014 accrual accounting\nThe trial court did not abuse its discretion in a child support action by not considering the accrual accounting method used by defendant\u2019s closely held corporation in calculating defendant\u2019s income. Although defendant argued that the accrual method creates fictional income and that the court could make no determination of income actually available, accrual accounting figures represent income which is taxable for federal tax purposes and such amounts are thus properly considered for purposes of the Child Support Guidelines. Furthermore, in determining an obligor\u2019s gross income derived from an interest in a closely held corporation, the court in its discretion may allow appropriate adjustments.\n3. Child Support, Custody, and Visitation\u2014 child support\u2014 closely held corporation \u2014 bad debts\nThe trial court did not abuse its discretion in a child support action by not allowing claimed bad debt and depreciation expenses from a closely held corporation in computing defendant\u2019s gross income. Under the Guidelines, the court is accorded the discretion to discern those business expenses which are inappropriate for determining gross income for purposes of calculating child support.\n4. Child Support, Custody, and Visitation\u2014 child support\u2014 calculation of income \u2014 losses\nThe trial court erred in a child support action by not including in defendant\u2019s income losses from a corporation. Although straight line depreciation may be excluded from an obligor\u2019s gross income in the court\u2019s discretion, the order in this case contains no reference to defendant\u2019s ownership interest in this corporation and fails to reflect its treatment of these corporate figures. The findings are not sufficiently specific to indicate whether the court properly applied the Guidelines.\nAppeal by defendant from order filed 5 May 1997 by Judge Susan C. Taylor in Stanly County District Court. Heard in the Court of Appeals 18 August 1998.\nMorton, Grigg & Phillips, by Ernest H. Morton, Jr. and David L. Grigg, Jr., for plaintiff-appellee.\nTucker, Slaughter & Singletary, P.A., by William C. Tucker, for defendant-appellant." }, "file_name": "0390-01", "first_page_order": 420, "last_page_order": 430 }