Background
The Alaska Supreme Court affirmed a monthly child-support obligation of $773 after untangling a self-employed parent’s business records. Jeremy Sidney and Amanda Bishop shared legal custody of their youngest child. When the superior court ordered updated income affidavits, Sidney delayed production for years and initially reported negative income. He later reported roughly $1.88 million in gross income, approximately $1.84 million in deductions, and adjusted annual income of about $46,000 from a commercial building and three businesses.
The superior court found that Sidney’s numbers were not credible. It added more than $1.07 million in depreciation shown on a business tax return to the income reported on his child-support affidavit, producing income above $1.1 million. The court ultimately corrected its initial support computation and applied the then-governing $126,000 income cap under Alaska Civil Rule 90.3, resulting in the $773 monthly obligation. It also removed an amount for the child’s health coverage after recognizing the child’s eligibility for Indian Health Service care.
Sidney argued on appeal that the court improperly added depreciation, wrongly disallowed ordinary and necessary business expenses, and mishandled Bishop’s health-insurance deductions. The Supreme Court agreed with one part of his arithmetic objection: the affidavit itself had not deducted depreciation. But that did not decide the appeal because the record revealed a different, substantial error in Sidney’s favor.
The Court’s Holding
The court held that adding depreciation to Sidney’s stated income was erroneous, but harmless. The business schedules counted approximately $917,703 in tools, blasting, equipment rentals, and fuel once within cost of goods sold and again as separate deductions. Because Sidney owned a 50% interest, correcting that double count increased his annual income by about $458,851. Added to his stated adjusted income, the record supported income of at least $505,070. That remained far above the $126,000 cap used to calculate support.
The court also rejected Sidney’s argument that the superior court disallowed all non-depreciation business expenses. Although language in the Rule 60(b) order said the supporting exhibit lacked enough detail to decide whether expenses were ordinary and necessary, the final calculation began with Sidney’s own net-income figure, which already incorporated those deductions. The court therefore had allowed them in practice.
Sidney obtained no further relief on health expenses. The final order used his proposed calculation of Bishop’s individual premium rather than premiums for her whole household. It also removed the separate credit for the child’s coverage because Indian Health Service care was available. The Supreme Court affirmed the final support order on the alternative ground established by the record.
Key Takeaways
- Tax accounting and Civil Rule 90.3 accounting are not interchangeable; business owners must clearly identify each claimed deduction and show that it is ordinary and necessary to produce income.
- An appellate court may affirm on any ground supported by the record, even when the trial court used erroneous arithmetic.
- Double-counted costs can render an error harmless when the corrected income still exceeds the child-support cap.
- Health-premium deductions are limited to qualifying costs, and Indian Health Service eligibility can affect the allocation of a child’s healthcare expense.
Why It Matters
The decision is a warning for Alaska family-law practitioners handling owners of closely held companies. A summary spreadsheet is vulnerable if it cannot be reconciled line by line to tax schedules, cost-of-goods calculations, ownership percentages, and Rule 90.3 categories. Counsel should check for expenses embedded in multiple lines before presenting a claimed net income.
It also demonstrates the reach of harmless-error review. Showing that the superior court chose the wrong path is insufficient when the same record independently supports the ultimate capped award. Although unreported, the opinion offers a concrete checklist for presenting self-employment income and preserving disputes over health-insurance adjustments.