Angela D. (Fezell) Taylor v. Douglas Fezell

We granted permission to appeal pursuant to Rule 11 of the Tennessee Rules of Appellate Procedure to determine whether the retained earnings of an S corporation should be treated as income to the sole or majority shareholder of the corporation for the purpose of calculating child support in accordance with the Tennessee Child Support Guidelines. We conclude that absent a showing that the retained earnings are excessive or that an obligor is actually manipulating his or her income, the retained earnings of an S corporation should not be imputed as income to the sole or majority shareholder in calculating a child support obligation. Because there was no showing in this case that the retained earnings were excessive or that the obligor-father manipulated the funds of the S corporation to reduce his child support obligation, we hold that the trial court and the Court of Appeals erred by imputing to him as income the company's retained earnings. Further, we hold that the lower courts erred by failing to include the economic value of the obligor-father's company car in its calculation of income. Finally, we hold that the trial court and the Court of Appeals erred by not granting the obligee-mother's petition to have the obligor pay her attorney's fees in this cause. Based on the foregoing, we reverse the judgment of the Court of Appeals and remand to the trial court for a determination of child support that is consistent with this opinion and for a determination of attorney's fees.