As part of a continuing series of cases which have sought to clarify the definition of gross income for child support purposes, the New Hampshire Supreme Court, in the August 13, 2014 case of In re: Maves and Moore , held that the capital gains realized from the sale of a condominium should be included in gross income for the purposes of calculating a child support obligation.
In Maves, the husband was awarded in the property division a company known as Squam Lakeside Farm, which was a campground consisting of 119 campsites. After the divorce, the husband altered his business plan and converted the campground into condominiums. He reported capital gains income of over $1,000,000 on his 2011 tax return. In 2011, his wife moved to modify the child support obligation asserting that the capital gain income was a material change in circumstances.
The trial could held that the capital gains generated from the sale of the condominium units constituted “irregular income” which would be considered as part of the husband’s child support obligation. The husband appealed and the Supreme Court upheld the trial court’s Order insofar as it included the capital gain income as gross income for child support purposes. In its ruling the Supreme Court rejected the claim that, because other states specifically included capital gains income in their definition of gross income for child support, but New Hampshire did not, our Legislature intended to exclude capital gains from the definition of income. The Supreme Court stated that how other states define income is irrelevant to how New Hampshire defines income for its child support calculations. Moreover, had the husband’s logic been followed, a person who derives substantial income exclusively from capital gains would pay no child support and that would result in an absurd situation.
The Maves’ decision reinforces the need for a careful analysis of a party’s tax return and business documentation when calculating or modifying child support, as ignoring capital gain income could result in a significantly reduced child support award.
If you have any questions regarding child support, whether in Massachusetts or New Hampshire, please do not hesitate to contact an attorney at Hamblett & Kerrigan to discuss. The attorneys at Hamblett & Kerrigan have experience in handling such situations. Let Hamblett & Kerrigan use their experience to your advantage.
Andrew J. Piela is a Director at Hamblett & Kerrigan, P.A. Mr. Piela concentrates his practice in civil litigation, family law, probate and land use litigation. You can reach Attorney Piela by e-mail at email@example.com.