Iowa Court Holds That Farm Depreciation Properly Ignored When Calculating Child Support

July 16, 2019 | Kitt Tovar

On July 3, 2019, the Iowa Court of Appeals issued a ruling concerning the amount of child support a farmer was required to pay. The court found, in this case, the farmer’s depreciation expenses should not be used when determining income for the purposes of assessing child support, but his farming expenses should be deducted from his gross income.


A couple married in 2006, but separated in 2017. The wife worked two off-farm jobs while the husband worked full time managing two pig nurseries. Additionally, the husband rented 80 acres of farmland from his mother. He grew crops and raised cattle. He rented another 40 acres from another landowner. At trial, the husband claimed it was more of a hobby than a job and stated he carried about $150,000 worth of farming debt each year. The trial court did not find the husband to be a credible witness and believed he “played a bit fast and loose with his affidavit.”

The district court found the husband earned an extra $45,000 per year through his farm operation and used that number when calculating the amount of child support owed. The district court did not deduct deprecation and other farms expenses from the farm income because it found the expenses were mainly from deprecation. While the husband’s bank account had a balance of around $4,000 at the time of the trial, the wife testified that its balance was usually between $17,000 to $40,000. The district court found that, based upon all of these facts, the farm expenses he claimed should not be deducted from his income when determining his child support obligation. The husband appealed.

Child Support

In Iowa, there are guidelines to determine child support obligations. This system prioritizes the best interest of the child by acknowledging the duty each parent has to provide financial support in proportion to their individual income. In order to calculate the amount of child support owed, a court will determine the adjusted net monthly income of the parent.

Net monthly income is calculated by subtracting specific deductions from the parent’s gross income. Deductions for depreciation expenses are not always deducted.The Iowa Supreme Court has held that deprecation expenses in child support determinations should be analyzed on a case-by-case basis. In re Marriage of Gaer, 476 N.W.2d 324, 328 (Iowa 1991).

Depreciation Expenses When Determining Child Support

While the Court of Appeals agreed the husband played it “fast and loose” with his financial affidavit, it also found that the tax schedules did show significant non-depreciation expenses. By deducting these expenses, the court determined the farm operation would generally break-even. Over a five -year period, the court found the husband netted approximately $3,100 annually from his farming business.

Depreciation creates tax savings which can then increase an individual’s net worth. However, it is unacceptable to allow a person to use depreciation expenses to create income losses in order to avoid paying higher amounts of child support. The Court of Appeals affirmed the lower court’s ruling that depreciation expenses could not be considered when determining child support payments in this instance.

Farm Expenses When Determining Child Support

Necessary business expenses may be deducted from a parent’s gross income when determining the amount of child support. When calculating the husband’s net income, the district court did not deduct the husband’s necessary farm expenses. The Court of Appeals found the husband’s farm expenses should have been subtracted from his gross income to calculate his child support obligation. The court also held that averaging the farm income would be appropriate to determine his net income. In this case, over a five-year period the husband averaged $3,100 in farm income, not $45,000 as the lower court had calculated.

Property Equalization Payment

The lower court granted the wife an equalization payment of $70,000. This was approximately half of the calculated farm income ($45,000) over a three-year period. The Court of Appeals agreed that based on the length of the marriage, the difference in incomes, and the wife’s need to establish herself, an equalization should be granted. However, the court found that the average yearly farm income was $3,100. The court amended the equalization payment to be $10,000, or roughly three years of farm income.