In re Guha (Kansas 2020)

The determination of a parent’s income from a subchapter S corporation is fact specific. The court will consider the company’s earnings history, ownership share, and the parent’s control over distribution and retention of the net profits. In this high-income case, the father’s business was organized as a S Corporation. In this modification action, the trial court found his income included his salary, maintenance payments, and 70% of the company’s gross income. The father appealed this determination. The appellate court affirmed the decision. Determining a parent’s income from a S corporation is fact specific. The father argued the decision that 70% of his gross income would be counted as income was unfounded. The appellate court noted that a parent with control over the retention and disbursement of profits has the burden to provide that the financial decisions are necessary to maintain and preserve the business. The appellate court found the trial court’s determination was not unreasonable given the facts.