This photo of Now-and-Later candies was taken by Evan-Amos as a part of Vanamo Media, which creates public-domain works for educational purposes.
This photo of Now-and-Later candies was taken by Evan-Amos as a part of Vanamo Media, which creates public-domain works for educational purposes.

Deferred income: Count it when earned, not received

Appeals court answers question of first impression in Md.

A father who sought a modification after his child-support obligation increased more than six-fold was right on the law but failed to make his case on the facts, the Court of Special Appeals held.

John Leinewebber argued that the Howard County Circuit Court had erred in raising his child support obligation from $2,199 a month to more than $13,000 a month in 2012. The court did so after finding that Leinewebber, a Jones Lang LaSalle employee, had never disclosed to his ex-wife that his income had also risen about six-fold since 2006, when the couple divorced.

Leineweber filed a motion for modification in 2013, saying the higher figure for 2012 included about $396,000 he had deferred for years under his compensation plan, which had already been counted as income when earned and therefore should be excluded.

The circuit court denied his motion, taking the position that the money was income when received, and that if it had also been counted earlier, that “may have been a mistake,” but since neither side had appealed it at the time, it was “water under the bridge.”

The Court of Special Appeals affirmed the outcome, but expressly disavowed the lower court’s reasoning.

“In this case, both parties agree that there is presently no Maryland authority that addresses the issue of whether deferred income, which was attributed to a parent in the years that it was earned for purposes of calculating child support, can be counted again as ‘income’ in the year actually received when recalculating child support,” Judge Alexander Wright wrote for the appellate panel.

After examining cases from Alaska, Ohio and Alabama, the court concluded that deferred income should be counted in the year in which it was earned, not received.

Otherwise, a parent “would be able to decrease his or her child support obligation by shifting income earned presently into the future,” the 3-0 panel concluded.

Turning to the facts of the case, however, the court found that father had not met his burden of proving that the money should be excluded from his current income.

The parties had agreed to modify child support if either lost 25 percent or more of their income. However, none of the documents Leineweber submitted to the court established such a loss.

“Father provided proof that he had deferred at least $401,491.90, from which he cashed out the $396,164.24 that is presently at issue,” the opinion says. “What Father failed to prove, however, is that the circuit court, in recalculating his child support and arrears in January 2012, included the $396,164.24 in its calculations… .

“Accordingly, we cannot, nor could the circuit court, discern what portion of Father’s ‘annual income’ could be attributed to his deferred income. Because Father failed to provide evidence that the $396,164.24 in deferred income was actually used by the Master in her 2012 calculations, we cannot give him the benefit of reducing his present income by that amount.”

— The case is John Leineweber v. Michele Leineweber, CSA No. 1011, Sept. Term, 2013. Appeal from Howard County. Affirmed.

 

About Barbara Grzincic

Barbara Grzincic is managing editor at The Daily Record and edits TDR's Maryland Family Law Update.

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