Marriage of DePumpo (Colorado 2022)

Unrealized gains on an investment portfolio don’t meet the definition for child support income. However, equitable principles may apply. The definition of income includes income from rent. Depreciation can only be included if it is found to be an ordinary and necessary business expense, as defined in the child support statute. The parties filed for divorce. Specific to child support, the trial court calculated the mother’s income using her monthly salary and included an amount for unrealized monthly gains from an investment account. The trial court included depreciation expenses associated with rental properties in the father’s income. The mother appealed the final order, arguing the incomes were not correct. The appellate court agreed and reversed and remanded. In this issue of first impression, the appellate court found unrealized capital gains are not income for child support or maintenance. They are not included in the statutory definition of income. Until realized, a gain isn’t immediately available to a parent to pay expenses. The record contained no evidence to show the parents had used this account for income. However, the appellate court recognized there may be an equitable argument. Some parents may use an investment account can’t be used to shield money. The appellate court reversed the determination of the mother’s income for more findings on the earning-potential of the investment account. The husband received the parties’ rental properties, and the trial court included depreciation, as an ordinary and necessary business expenses, in his income determination. The definition of income for child support includes rental income, which is gross receipts less ordinary and necessary business expenses, which can include depreciation. The appellate court found more findings were necessary to understand why the trial court considered depreciation as an ordinary and necessary expense.