ASFAW v. WOLDBERHAN

Filed 2/27/07

CERTIFIED FOR PARTIAL PUBLICATION*

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

STORY CONTINUED FROM PART I..

The general test in New York is that in determining the amount of support payments a party is capable of paying, it is the partys net income adjusted for business expenses that should form the basis of the calculations. (Cannan v. Cannan (App.Div. 1981) 436 N.Y.S.2d 133, 134.) But in defining income and expenses: Paper losses and expenses not actually incurred should not be taken into account. (Dobbins v. Dobbins (1977) 397 N.Y.S.2d 412, 414 [child and spousal support under separation agreement].) Finally in Ohio, the Court of Appeals acknowledged the economic underpinnings of its child support statute which limits allowable depreciation to only business equipment. (Ohio Rev. Code Ann.,  3.119.01(c)(9)(a).) The exclusion of other types of depreciation is designed to ensure that a parents gross income is not reduced by any sum that was not actually expended in the year used for computing child support. (Baus v. Baus (1991) 72 Ohio App.3d 781, 784, 596 N.E.2d 509.) (Foster v. Foster (Ohio.App. 12 Dist. 2002) 780 N.E.2d 1041, 1044.) Deduction for building depreciation was disallowed. (Ibid.)

In contrast, courts that have allowed income to be reduced by depreciation expense have often relied on the traditional treatment of depreciation for tax purposes. Thus, in Spotts v. Spotts (Fla.App. 1978) 355 So.2d 228, 229, Floridas District Court of Appeal referred to provisions of the Internal Revenue Code authorizing depreciation deduction as its basis for reducing a lump sum support payment. The Congress of the United States has recognized that before a net income figure can be reached, depreciation of the property used to produce income must be deducted. Depreciation, therefore, is not income. It is a cost of producing income. (Ibid.)

In Turner v. Turner (Del.Supr. 1991) 586 A.2d 1182, the Delaware Supreme Court also considered the traditional role of depreciation in the determination of business income. This Court has acknowledged that since depreciation is considered by generally accepted accounting principles to be an expense in determining net taxable income, it may also be a legitimate business expense for the purpose of computing the amount of net income which is available for child support, pursuant to [Delawares support formula]. [Citation.] The concept of depreciation, as an expense, is a recognition of the fact that certain fixed assets, which are used in a business, wear out gradually and will eventually need to be replaced. [Citation.] The simplest form of this concept is known as straight line depreciation. If straight line depreciation is used, the difference between the original cost of an asset and its scrap value is divided by the asset's estimated useful life. The quotient is treated as the annual depreciation expense.  (586 A.2d at p. 1187.) The court allowed straight line but not accelerated depreciation. (Id. at p. 1189; but see Emsley v. Emsley (Del.Fam.Ct. 1983) 467 A.2d 700, 704 [purposes and policies of the Internal Revenue Code are far different from the Delaware child support law].)

Given the varied treatment of depreciation in states, that case law is of only marginal assistance.

(vii) Depreciation of Rental Property May Not Be Deducted From Annual
Gross Income in Calculating Child Support in California.

Based on our review of the statutory language and other extrinsic aids, we hold that depreciation of rental property is not deductible in calculating child support under sections 4058 and 4059.

First, although income is broadly defined in the statutory child support scheme (Cheriton, supra, 92 Cal.App.4th at p. 285), deduction provisions are specific and narrowly construed (Stewart v. Gomez, supra, 47 Cal.App.4th at p. 1755). We find the Legislatures choice of the words expenditure, required, and operation of the business in section 4058 are words of limitation. Expenditure suggests an actual outlay of cash or other consideration. Depreciating an asset does not involve a reduction of cash available for child support. Nor is depreciation required for the operation of a business. A proprietor cannot operate a business without inventory, without employees, without paying taxes, and so forth. A business can be conducted without a deduction for depreciation. We conclude that operation of the business means ordinary and necessary business expenditures directly related to or associated with the active, day-to-day conduct of a business. (See, e.g., Mandel v. Myers (1981) 29 Cal.3d 531, 543 [Budget Act defines operating expenses and equipment in terms of expenditures required for purchase of materials, supplies, equipment, services . . . .].) c.f. Keller v. Chowchilla Water Dist. (2000) 80 Cal.App.4th 1006, 1013 [in a dispute regarding whether the Water District's purchase of water was a capital cost, or maintenance and operation expense exempt from the assessment procedure under Prop. 218 (Cal. Const., art. XIII D,  5), the court noted maintenance and operation expenses means the cost of rent, repair, replacement, rehabilitation, fuel, power, electrical current, care and supervision necessary to properly operate and maintain a permanent public improvement]; and Kirkpatrick v. City of Oceanside (1991) 232 Cal.App.3d 267, 281 [discussing an earlier unpublished opinion in which the appellate court found land lease costs were debt service expenses specifically excluded by ordinance from the definition of normal operating expenses].) Depreciation of a business asset, by its very nature, is not essential to the day to day running of the business, but is intended to promote the continuity of the business over a longer term.[1]

Second, as recognized by several other jurisdictions, depreciation is a fictional loss that, in the real world represents tax savings and, therefore, additional cash available to the parent to meet child support obligations.

Third, the policies identified by our statutes favor the construction we place on sections 4058 and 4059. The overriding policy of the statutory formula is to place the interests of children as the states top priority. ( 4053(e).) Thus, a parents principal obligation is to support his or her minor children according to his or her circumstances and ability to pay in order to improve the lives of the children. ( 4053(a), (d), (f); see Cheriton, supra, 92 Cal.App.4th at p. 283.) Simply put, these policies are at odds with a child receiving less financial support from a parent who is permitted under tax laws and accounting principles to take a deduction that does not reduce funds available for support.[2]

Here, the trial court erred in allowing father a $57,000 deduction from rental income.

Accordingly, we remand to the trial court for recalculation of fathers annual gross income and annual net disposable income without reduction for depreciation.

[[ Begin nonpublished portion. ]]

[[b. There Was Not Substantial Evidence to Support the Trial Courts

Findings Regarding Fathers Income

Mother contends the trial court erred in basing child support on the fact that father had monthly income of $3,350 for other reasons. She argues that findings were not supported by substantial evidence, and that the only substantial evidence was the opinion of her forensic accountant that fathers monthly income was more than $30,000. We agree that the evidence does not support the finding that fathers income was only $3,350, but do not agree that the forensic accountants figures are the only evidence on the subject.

The trial court has   a duty to exercise an informed and considered discretion with respect to the [parents child] support obligation . . . .  [Citation.] (In re Marriage of Heiner (2006) 136 Cal.App.4th 1514, 1520 (Heiner).) In reviewing the exercise of that discretion for abuse, we consider  whether or not the trial court exceeded the bounds of reason, all of the circumstances before it being considered. [Citations.] . . .  [W]hen two or more inferences can reasonably be deduced from the facts, a reviewing court lacks power to substitute its deductions for those of the trial court. [Citation.] The burden is on the complaining party to establish abuse of discretion. [Citation.] The showing on appeal is insufficient if it presents a state of facts which simply affords an opportunity for a difference of opinion. [Citation.] (Id. at pp. 1519-1520.)

With respect to the trial courts findings of fact, our review is limited to determining whether they are supported by substantial evidence. [Citation.] (Heiner, supra, 136 Cal.App.4th at p. 1520.) In making that determination, we  must presume that the record contains evidence to support every finding of fact, and an appellant who contends that some particular finding is not supported is required to set forth in his brief a summary of the material evidence upon that issue. Unless this is done, the error assigned is deemed to be waived. [Citation.] It is incumbent upon appellants to state fully, with transcript references, the evidence which is claimed to be insufficient to support the findings. [Citations.] (In re Marriage of Fink (1979) 25 Cal.3d 877, 887.)

Here, the trial court received into evidence fathers June 26, 2004, income and expense declaration and attachments thereto. It also received into evidence a report on fathers income and expenses prepared by Jack Zuckerman, a forensic accountant retained by mother. The following chart compares the income and expenses claimed by father and those attributed to father in Zuckermans report:

Description Father Report

Annual Revenues:

Rent from apartments $384,000 $457,113

Coin-Operated Laundry Machines 0 6,448

Parking Lot Income 30,000 147,000

Management Fees 0 16,800

Interest 0 55,600

Total $414,000 $682,961

Total Annual Expenses ($373,800)[3] ($368,400)[4]

Net Annual Income $ 40,200 $314,561

Monthly Net Income $ 3,350 $ 26,213

Perquisites[5] 700 $ 5,523

Total Guideline Income $ 5,333 $ 31,737

At trial, the following evidence was adduced.

(i) Rental Income

Father owned five apartment buildings, referred to as: Vineland, Fulton, Sepulveda, Arlington and Cashio. Zuckerman arrived at his rental revenue figure of $457,113 by assuming that father owned 100 percent of all five buildings. Although father purported to deed 50 percent interest in one building to a third person, there was no indication that father was paying any of the income from that building to anyone else. Moreover, in refinancing documents, father claimed that he owned the entire building.

Father testified that, at the time of trial, he owned 100 percent of four buildings, but just 50 percent of the Vineland building. Father believed he owned 50 percent of Vineland because he put down just half the purchase price and assigned a deed of trust in that building to Mr. Chaney. When he refinanced Vineland, father represented to the bank that he owned 100 percent of it because his was the only name on title.

Father also testified that the buildings were built in the 1920s, 1940s and 1950s, and were not in good condition. The gross receipts from the buildings were less than reflected on Zuckermans report because the buildings sometimes had vacancies.

The trial court credited fathers evidence. Based on fathers June 26, 2004, income and expense declaration and attachments, the trial court found that father owned 50 percent of the Vineland property in 2003; the gross income from the apartments was $384,000 in 2003, and the expenses were $357,000 that year.

The evidence does not support the trial courts finding that father owned only 50 percent of Vineland. A trust deed is essentially a lien and does not convey any ownership interest in property to the trustee. Witkin explains: The trustee takes the legal title for security only, leaving a legal estate and the ordinary rights of ownership in the trustor. (4 Witkin, Summary of Cal. Law (10th ed. 2005) Secured Transactions in Real Property,  6, p. 796.) The only reasonable inference from the evidence fathers testimony that he paid half the purchase price for the Vineland property and gave Mr. Chaney a trust deed, but that father continued to represent that he owned 100 percent of the property in the subsequent refinancing transaction is that Mr. Chaney loaned father a sum of money that was secured by an interest in the property, not that Mr. Chaney actually owned an interest in the property. On remand, child support must be calculated to reflect that father owns 100 percent of Vineland.

(ii) Refinancing Proceeds

There was evidence that, in April 2003, father refinanced several of the properties: Vineland, Sepulveda and Arlington. In November 2003, father refinanced the Delano property. In June 2003, father sold the Laurel Canyon property, and in April 2004, father sold the Delano property. Zuckerman testified that he arrived at the income figure attributed to these refinancing and sales transactions by assuming a 5 percent return on proceeds of $1,112,000. (See In re Marriage of Destein (2001) 91 Cal.App.4th 1385 [trial court has discretion to impute income based on an estimated rate of return].) Zuckerman had not seen closing statements from the subject transactions and if the net proceeds were less than he assumed, the income would be less, as well.

Mother introduced into evidence the following closing statements from the refinancing and sales transactions which had been relied upon by Zuckerman: (1) Arlington refinance with cash-out to borrower of $101,105.09; (2) Sepulveda refinance with cash-out to borrower of $97, 989.03; (3) Delano refinance with cash-out to borrower of $115,135.92; and (4) Vineland refinance with cash-out to borrower of $291,571.82. Also relied upon by Zuckerman was a closing statement showing a sale of the Laurel Canyon property in June 2003 with net proceeds of $70,233.52 going to father. Finally, Zuckerman relied on a Property Profile showing the Delano property sold for $550,000 in April 2004. Since the Delano property was subject to a $310,000 loan as a result of the April 2003 refinancing, father would have received approximately $240,000 from this sale.[6]

Father testified that he purchased the Fulton building in October 1998. Some time in early 1999, his sister, Meheret, loaned him $20,000 and his brother, Debue, loaned him an additional $20,000. Father testified that he used this money to purchase the Fulton property and that Meherets $20,000 paid one-half the down payment. Also in early 1999, fathers brother, Zekarias, loaned father an additional $20,000, which father used to purchase the Sepulveda property.[7] In exchange, father gave each sibling a deed of trust.[8] Each deed of trust is dated March 16, 1999 less than two weeks after mother and father legally separated on March 5, 1999. In 2003, father testified, he refinanced several properties, as a result of which he received about $500,000, not the $1.1 million upon which Zuckerman based his calculations.[9] Of that $500,000, father repaid Meheret about $300,000 and Debue about $150,000. Father did not repay Zekarias at all. Father used the money that was left for maintenance of the properties.

According to its Statement of Decision, the trial court considered the fact that [father] previously sold and refinanced certain real properties standing in his name. [Father] testified that as to any monies he received from either the sale of any properties and/or the refinancing, were paid to certain individuals as and for buying-out their interest in the property so sold and/or refinanced. Accordingly, at the time of trial, there were no funds available to [father] that the Court could consider as income available for the payment of child support by [father] to [mother].

Thus, based on fathers ambiguous testimony that in 1999 Mehret and Debue loaned him money which he used to purchase the Fulton property (property which father testified he purchased in 1998), the trial court found that the siblings were purchasing an interest in the properties with their respective $20,000 payments to father, not loaning father the money, and that father was buying out their interest in the property with the refinancing proceeds. Although this finding would explain why father did not simply repay them their $20,000 loans, but gave them many times that amount from the refinancing proceeds, it is not supported by the evidence.

First, father testified that Meheret, Debue and Zekarias loaned him the money. This is consistent with father giving each a second deed of trust, subject to a first deed of trust, and not a grant deed. As we have already discussed, a trust deed does not convey any ownership interest in property. Thus, there is no evidence that father sold any interest in the properties to his siblings, only that the siblings loans were secured by the properties. Thus, the trial courts finding that the siblings had an interest in the property which father bought out using the refinancing proceeds is not supported by the evidence.

Second, even if it could be inferred that father sold his siblings an interest in the properties reflected on their respective deeds of trust, there was no evidence of what percentage of interest in each property the siblings bought for $20,000. Without such evidence one cannot determine whether the amounts father paid to family members from the refinancing proceeds ($300,000 to Meheret and $150,000 to Debue) are equivalent to the value of their respective interests in the property.

The only reasonable inference from the evidence that was introduced fathers three siblings, who had no apparent source of funds, each purported to loan father $20,000 shortly after he legally separated from mother; the loans were collateralized by second deeds of trust; a few years later, father refinanced the properties, cashing-out significant amounts of equity, most of which he turned over to his sister and brother is that father was attempting to avoid having those assets available for paying child support. This, he cannot do. Upon remand, the trial court is to recalculate child support based upon the inclusion of the refinancing and sales proceeds shown on the closing statements as a source of income.

(iii) Income from Coin-Operated Laundry Machines

Zuckerman testified his calculations were based on mothers representation that there were coin-operated laundry machines in each of the apartment buildings.

Father testified that each apartment building had a coin-operated washer and dryer, but the machines at three of the buildings were inoperable.

The trial court made no express findings regarding income from the coin-operated laundry machines. Upon remand, the trial court should make a finding as to whether or not father receives any income from the coin-operated washers and dryers.

(iv) Parking Lot Income

In addition to the apartment buildings, father operated Zee Parking, a parking lot located at 333 E. Walnut Street in Pasadena. Mothers expert Zuckerman testified that his calculations of income derived from the parking lot were based on the assumption that all of the parking spaces in the lot were used for the general public.

Bertrand Collins, a private investigator retained by mother, testified that he surveyed the parking lot on August 4, 6, 10, 11, 12, 13, 19, 20, and 23, 2004. Collins was at the lot from about 7:00 a.m. until 3:30 p.m., and sometimes as late as 6:30 p.m. Collins kept a schedule of cars coming and going, which was introduced into evidence.[10] Thirty-two spaces in the lot were marked Zee Parking. The lot has two driveways, but cars are only allowed in on the Walnut side.

Fathers investigator, Nils Grevillius, testified that he and his employees surveyed the lot on March 20, 2003, April 3, 2003, and June 18, 2004. Grevillius made a log of the cars parked there on those days and prepared a report summarizing his findings. According to Grevilluss report, dated July 2, 2004, the parking lot had 53 spaces, 15 of which were marked off for use by Zee Parking and 38 of which were marked off for use by the parole department; on March 20, 2003, there were a total of 46 paid cars in the lot; on April 3, 2003, there were 68; and on June 18, 2004, there were 57. The average number of paid cars was 57.

Father testified that he began operating the parking lot in 1989. He was entitled to use just 16 of the 57 spaces in the lot. The remaining spaces were used by the parole department which is located across the street from the lot. While father operated the lot, he was in charge of collecting money. He collected between $200 and $250 each day and deposited all of the money he collected into an account at the Bank of America. Father disputed the assumption, relied upon by Zuckerman, that there was ever in excess of 100 paying customers in the lot on any one day.

After the case was set for trial, father subleased the parking lot to his friend, Mengistu Altayework. Father did so because it was too hard for him to work on the apartment buildings and the parking lot. He was not trying to lower his support obligations. Despite the sublease, father was still responsible for a weekly $225 rent payment to the E.L. Realty Company.

Altayework testified that he had been operating the parking lot since January 2004; he pays rent to father in the amount of $2,500 per month; of the 53 spots in the parking lot, only 16 were available to be used for paying customers; the parking lot makes between $200 and $250 a day.

Steve Lombard, a CPA, retained by father, did a cash analysis of the parking lot based on the corporate tax returns, Zuckermans report and interviews with Altayework, the corporate bookkeeper and father. Based on this information, Lombard opined that the gross receipts for the parking lot would be $78,000 per year; after expenses, cash flow would be $39,000 per year.

On August 28, 2004, the trial court ordered a receiver to be stationed at the parking lot for two weeks to collect the money, record the amount and then turn it over to the parking lot operator. When trial resumed on October 28, 2004, the receivers report was not introduced into evidence. Mothers investigator Collins, however, testified that, during the two weeks the receiver was in place at the parking lot, three orange cones were used to block off the parking lot entrance when the lot was full. Also during those two weeks, Collins noticed that cars belonging to Altayework and fathers brother were parked in the lot. Father testified that he did not instruct anyone at the lot to do anything differently during the two weeks the receiver was there.

The trial court found the parking lot generated annual income of $30,000 and had monthly expenses of $1,400 ($16,800 annually), resulting in a monthly net profit of $1,100. Thus, it appears the trial court treated the lease payments from Altayework as fathers income. Although the monthly expenses are more than fathers weekly $225 rent payment, this can be attributed to regular and ordinary business expenses such as insurance. We find no error in the trial courts calculations.

(v) Management Fees

Father testified that he manages the apartment building in which he lives. He receives no salary for doing so. Zuckerman attributed annual income of $16,800 to father for management fees. Zuckerman arrived at this figure by imputing income to father from the fact that father lives rent-free in exchange for managing the apartment building in which he lives.

According to Family Code section 4058, subdivision (a)(3), annual gross income includes: In the discretion of the court, employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts. Thus, the trial court had discretion to treat the reduction in fathers living expenses (i.e., the amount father would otherwise have to pay to rent an apartment equivalent to the one in which he lives rent-free) as income to father. The trial court made no express finding regarding this alleged source of income. Upon remand, the trial court should indicate the manner in which it is exercising its discretion on this subject. In doing so, the trial court may consider whether father claimed any deductions from income for housing costs.

(vi) Perquisites

Zuckerman testified that the information upon which he calculated prerequisites came from mother; if the information were different, his calculations would be different.

Father testified that he owns a Mercedes which he uses 90 percent for business to drive in between properties. He no longer owns a Jeep. Father has an American Express credit card, a Bank of America Credit Card, an MBNA credit card and a Citibank credit card. Except for the American Express card, he uses the other cards exclusively for business purposes.

Thus, father presented evidence from which it can reasonably be inferred that the assumptions upon which mothers forensic accountant made his calculations were faulty. On appeal, mother has failed to demonstrate error in that she has not shown which items were fathers personal expenses. (In re Marriage of Walker (1989) 216 Cal.App.3d 644, 653.)

c.Retroactive Child Support

Mother contends the trial court abused its discretion in denying mothers request that the child support order be made retroactive to the date mother filed her initial order to show cause. As we understand her argument, it is that the overwhelming evidence that [father] has not been forthcoming with his true income since the petition was filed in 1999 warrants retroactive child support. We disagree.

Family Code section 4009 provides: [A]n original order for child support may be made retroactive to the date of filing the petition, complaint, or other initial pleading. Family Code section 3653, subdivision (a) provides: An order modifying or terminating a support order may be made retroactive to the date of the filing of the notice of motion or order to show cause to modify or terminate . . . .

One factor in the formula for calculating child support is the percentage of time the high earning parent spends with the child. The more time the parent spends with the child, the less that parent must pay to the other parent for support; conversely, the less time the parent spends with the child, the more the high earner parent must pay to the other parent for support. ( 4055.)

Here, in its order of September 9, 1999, on mothers order to show cause re child support, the trial court found mothers taxable income was $2,400 per month; fathers taxable income was $3,000 per month; and father had 49 percent time with the children. Based on these findings, it ordered father to pay child support in the amount of $586 per month.

In its order of February 1, 2005, the trial court found mothers wages and salary were $3,771; fathers wages and salary were $3,350; and father had 20 percent time with children. Based on these findings, it ordered father to pay child support in the amount of $882 per month. The payments were made retroactive to September 1, 2004, which was several days after the Friday, August 27, 2004, first day of trial. The trial court implicitly found that it would be unfair to make the increased child support payments retroactive to an earlier date when the children had been spending almost 49 percent of their time with father, who was presumably then paying a substantial portion of their expenses. (See  4055.)

2. The Trial Court Was Required to Make Findings on Uninsured Medical Expenses

Mother contends the trial court erred in failing to make provisions for the payment of uninsured medical expenses pursuant to section 4062, subdivision (a)(2) ( 4062(a)(2)). We agree.

Section 4062(a)(2) mandates additional child support for reasonable uninsured health care costs. (In re Marriage of Lusby (1998) 64 Cal.App.4th 459, 471; In re Marriage of Fini (1994) 26 Cal.App.4th 1033, 1039 (Fini).) If the income of the parents is not disparate, the court has discretion to apportion reasonable uninsured health care costs in proportion to each parents net disposable income. (Fini, supra, at p. 1039, fn. 5.)

Code of Civil Procedure section 634 provides: When a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brought to the attention of the trial court either prior to entry of judgment or in conjunction with a motion under Section 657 or 663, it shall not be inferred on appeal or upon a motion under Section 657 or 663 that the trial court decided in favor of the prevailing party as to those facts or on that issue.

In her trial brief, mother requested that reasonable uninsured health care costs continue to be shared equally by the parents. The proposed judgment was silent as to who would be responsible for the childrens uninsured health care costs. On January 11, 2005, mother objected to the proposed judgment on the grounds that it did not require father to contribute to the cost of uninsured health care expenses.[11] Without responding to the objection, the trial court signed the proposed judgment on February 1, 2005. We conclude that the trial court erred in not making findings as to the apportionment of the childrens uninsured medical costs. Accordingly, we remand for the trial court to do so.]]

[[ End nonpublished portion. ]]

DISPOSITION

The judgment is affirmed in part and reversed in part and remanded. The cause is remanded to the trial court with directions to: (1) Recalculate child support consistent with the views expressed herein including (a) denying any deduction from rental income for depreciation; (b) treating father as the owner of 100 percent of all five properties discussed; (c) imputing income on the proceeds of the refinancing transactions; (d) determining whether father had income from coin operated machines; and (e) considering whether father was receiving actual or in kind management fees; and (2) Make specific findings as to the apportionment of the childrens uninsured medical expenses. Mother shall recover her costs on appeal.

CERTIFIED FOR PARTIAL PUBLICATION

RUBIN, J.

We concur:

COOPER, P. J.

BOLAND, J.

Publication Courtesy of California attorney directory.

Analysis and review provided by Oceanside Property line Lawyers.

* Pursuant to California Rules of Court, rules 8.1100 and 8.1110, this opinion is certified for publication with the exception of Discussion sections 1b., 1c., and 2.

[1] We do not suggest that promotion of the long term health of a business is unimportant; only that the Legislature did not allow a deduction for it in calculating child support. (Cf. Mejia, supra, 31 Cal.4th at p. 671 [assets at the time of dissolution play little part in calculating child support];In re Marriage of Henry, supra, 126 Cal.App.4th at p. 119 [generally unrealized increase of value of assets not considered in determining child support].)

[2] Our opinion addresses only depreciation deductions from rental income. The parties do not raise, and we have not considered, other types of depreciation, such as for equipment, nor do we address the treatment of actual reserve accounts (see City of Los Angeles v. Public Utilities Com. (1975) 15 Cal.3d 680, 685; Oceanside Mobilehome Park Owners Assn. v. City of Oceanside (1984) 157 Cal.App.3d 887, 895.) Nor do we consider whether increased value of assets or depreciation can be considered special circumstances under sections 4052 and 4057, subdivision (b)(5). (See Mejia, supra, 31 Cal.4th at p. 671.)

[3] Comprised of rental property expenses of $357,000 (including depreciation) plus parking lot expenses of $16,800 ($1,400 monthly times 12 months).

[4] This figure apparently assumes depreciation is a proper expense.

[5] Zuckerman defines Perquisites as personal expenses taken as business expenses. For example, father claims auto expenses for three cars, a pickup truck, a Jeep and a Mercedes, but the Mercedes is fathers personal automobile. Zuckerman treated the perquisites as non-taxable income. Father does not explain the source of the $700 perquisites he claims.

[6] At the continued trial, mother testified that she reviewed the raw documents upon which Zuckerman based his report and concluded that the proceeds from sales and refinancing of the properties was $969,113, not the $1.1 million estimated by Zuckerman.

[7] On cross-examination, father testified that his sister had no money when she came to this country from Ethiopia in 1997 or 1998, but she borrowed money from fathers brother in order to loan father the $20,000. Zekarias came to this country from Canada in 1997; in Canada, Zekarias was on welfare and father did not know where he got the money he loaned to father in 1999.

[8] Although father testified he used Mehrets and Denubes money to purchase the Fulton building and Zekariass to purchase the Sepulveda building, Meherets deed of trust indicates it is for the Cashio building, and both Denubes and Zekariass deeds of trust indicate they are for the Fulton building,

[9] According to the closing statements, the refinancing transactions resulted in cash-out to father of $605,801.86.

[10] According to Collins schedule, there were a total of 128 paying customers on the 4th; 107 on the 6th; 114 on the 10th; 135 on the 11th; 136 on the 12th; 121 on the 13th; 123 on the 19th; 107 on the 20th; and 94 on the 23rd.

[11] Contrary to fathers assertion that mother waived the issue because she did not expressly refer to section 4062, we find these references to uninsured health care costs sufficient to preserve the issue for appeal under Code of Civil Procedure section 634.