6.4.2 Self-Employment
6.4.2 Self-Employment aetrahan Tue, 06/27/2023 - 14:28Gross income also includes gross receipts minus ordinary and necessary expenses required to produce income from self-employment, rent, royalties, proprietorship of a business, joint ownership, partnership, or closely held corporation.1 Ordinary and necessary expenses do not include amounts allowable by the IRS for the accelerated component of depreciation expenses or investment tax credits or any other business expenses determined by the court to be inappropriate for determining gross income for the purposes of calculating child support.2
It may be difficult to imagine how this works in practice. Proving income for self-employed persons is difficult without the necessary documentation. Thus, the first course of action is to request (informally or through discovery) tax returns, profit-and-loss statements, or other documentation. To be excluded from income, the expenses must be “ordinary and necessary” in the course of business, and they must be required to produce that income; they must not be personal. Further, the burden is on the self-employed person to prove that the expenses are necessary to produce income.3 If the defendant is alleging expenses associated with starting up a company, the defendant must have documentary proof; something more than testimony is required.4 Additionally, La. R.S. 9:315.1.1 addresses redirected income, payments made to the obligor from a company in which the obligor has an ownership interest, and deferred income. Most cases do not have these issues, but you should be familiar with this article, just in case.