Imputing Income

In Yarinsky v Yarinsky --- N.Y.S.2d ----, 2007 WL 108475 (N.Y.A.D. 3 Dept.) the Appellate Division held that Courts have considerable discretion in fashioning a child support award; when assessing a parent's income from which to determine his or her child support obligation, a court should consider factors such as the parent's "gross (total) income as ... reported in the most recent federal income tax return", as well as additional income from sources other than employment and a parent's past income . Further, a court may impute income based upon a parent's prior employment experience and future earning capacity in light of his or her educational background. Notably, when a party's or an expert's account of his or her finances is not believable, a court is justified in finding an income higher than that claimed . Upon its review of the record the Appellate Division concluded that the Support Magistrate acted within his discretion in focusing on the 2003 federal tax returns of the parties and the husbands solely owned subchapter S corporation, as they were the most recent at the time of the hearing. Further, each item of income attributed to the husband for child support purposes--which totaled$189,547-- was supported in the record. It was clear that--in anticipation of an eventual full plenary hearing on child support--the husband made a number of financial decisions which effectively reduced the amount of the corporate nonemployment income received by him in 2003; the most glaring were his December 2003 decisions to purchase a new corporate vehicle for his personal use ($31,356) and to upgrade his office computer system ($15,070.16) thereby reducing the 2003 excess corporate profit--payable as income to him as sole shareholder of the corporation--by $46,426. Accordingly, it imputed $40,426 in additional 2003 income to the husband's share of the combined parental income.