This opinion is nonprecedential except as provided by
                       Minn. R. Civ. App. P. 136.01, subd. 1(c).

                             STATE OF MINNESOTA
                             IN COURT OF APPEALS
                                   A23-1256

                                 In re the Marriage of:

                                   Tonya M. Keim,
                                    Respondent,

                                          vs.

                                   Jeremy R. Keim,
                                      Appellant,

                                  County of Fillmore,
                                     Respondent.

                                 Filed June 10, 2024
                               Reversed and remanded
                                  Cochran, Judge

                            Fillmore County District Court
                                File No. 23-FA-21-288

David L. Liebow, James A. Godwin, Godwin Dold, Rochester, Minnesota (for respondent
Tonya M. Keim)

Amber Lamers, Dittrich & Lamers, P.A., Rochester, Minnesota (for appellant)

Brett Corson, Fillmore County Attorney, Marla J. Stanton, Assistant County Attorney,
Preston, Minnesota (for respondent County)

       Considered and decided by Cochran, Presiding Judge; Ede, Judge; and Smith, John,

Judge. ∗



∗
 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
                          NONPRECEDENTIAL OPINION

COCHRAN, Judge

       In this appeal from a child-support magistrate’s order establishing child support,

appellant-father argues that the magistrate erred when calculating his income and by

applying the 2022 child-support guidelines to determine his child-support obligation.

Because we agree that the magistrate erred when calculating father’s income and the 2023

child-support guidelines apply, we reverse and remand for recalculation of the parties’

child-support obligations under the 2023 guidelines.

                                         FACTS

       Appellant Jeremy R. Keim (father) and respondent Tonya M. Keim (mother)

married in 2008 and have four minor children. In 2021, mother petitioned for dissolution.

The parties reached a stipulated agreement for dissolution covering all issues except child

support. The district court entered a judgment and decree based on the parties’ agreement,

providing for joint physical custody and equal parenting time.

       Mother and father both moved to establish child support. Mother reported a

monthly income of $5,998.42. Father’s affidavit stated that he is a self-employed farmer;

that his income is “well below the poverty guideline,” with annual income of $1,993 in

2021 and $3,722 in 2022; and that his accountant would “testify in detail about [his]

ordinary and necessary business expenses.” Father’s affidavit alternatively proposed a

monthly potential income of $1,834 based on minimum wage.

       In May 2023, a child-support magistrate held a hearing. The sole contested issue

was father’s income. Mother and father introduced financial documents, including 2021


                                            2
and 2022 joint tax returns, balance sheets summarizing father’s net worth, and father’s

monthly budget. Father also testified on his own behalf and presented testimony from his

accountant. Father testified that his business—the farm operation—is a sole proprietorship

and that he uses a single line of credit to pay for both his personal expenses and his farm-

operation expenses. Father stated that he did not believe that any of the reported expenses

for his farm operation were personal. Father acknowledged that he had not provided the

magistrate with any of the documents that were used to prepare his tax returns.

       Father’s accountant testified about father’s taxable income. The accountant initially

testified that the depreciation expenses claimed for the farm operation did not include any

accelerated depreciation. Later, the accountant acknowledged that the deduction did

include accelerated depreciation and informed the magistrate that she could provide what

portion of the claimed depreciation expense was accelerated. The accountant also testified

that certain legal and appraisal fees related to the dissolution had been claimed as business

expenses for the farm operation. The accountant testified that all of father’s other claimed

expenses were business expenses. The accountant testified that she relied on information

provided by father when reporting which expenses were personal and which expenses were

for the farm operation.

       Following the hearing, father filed a supplemental declaration from the accountant

with revised depreciation schedules and an updated calculation of depreciation. Father also

filed a letter calculating his average gross monthly income as $3,197. Mother filed a letter

asserting that the record supports a finding that father’s monthly income is $81,469.60,

after disallowing certain expenses claimed on his tax returns.


                                             3
       In her June 26, 2023 order, the magistrate stated that the testimony from father and

his accountant was “rife with contradictions, misstatements, omissions, and

misinformation” and “established that there was commingling of personal expenses with

business expenses, deductions for losses that were incurred many years prior to the

business year in question, and inclusion of unknown accelerated depreciation.” The

magistrate found, based on father’s tax returns, that father’s gross monthly income is

$46,432.    The magistrate also found that father’s estimated net monthly income is

$34,118.90. The magistrate explained she would use the more “conservative [net] monthly

income” to calculate child support because “actual income is difficult to decipher.” Then,

using the 2022 child-support guidelines, the magistrate determined father’s child-support

obligation is $1,250.

       Father appeals.

                                       DECISION

       “On appeal from a [child-support magistrate’s] ruling, the standard of review is the

same as it would be if the decision had been made by a district court.” Hesse v. Hesse,

 (Minn. App. 2009). We review a district court’s order setting child

support for an abuse of discretion. Butt v. Schmidt, 

 (Minn. 2008).

“A district court abuses its discretion by making findings of fact that are unsupported by

the evidence, misapplying the law, or delivering a decision that is against logic and the

facts on record.” Woolsey v. Woolsey, 

, 506 (Minn. 2022) (quotation

omitted).




                                            4
       Under Minnesota law, “child support” refers to the aggregate amount a parent may

be ordered to pay the other parent to help provide for the parties’ joint children. Minn.

Stat. § 518A.26, subd. 20 (2022). Minnesota’s child-support guidelines set forth the

procedure for calculating a parent’s presumptive basic child-support obligation. Minn.

Stat. §§ 518A.34 (Supp. 2023), .35 (2022). To determine the amount of that obligation,

the first step in the procedure is to determine each parent’s gross income. Minn. Stat.

§§ 518A.29 (2022), 518A.34(b)(1).       “[G]ross income includes any form of periodic

payment to an individual, including, but not limited to, salaries, wages, commissions, self-

employment income under section 518A.30 . . . .” Minn. Stat. § 518A.29(a) (emphasis

added). Self-employment income is “defined as gross receipts minus costs of goods sold

minus ordinary and necessary expenses required for . . . business operation.” Minn. Stat.

§ 518A.30 (2022). In applying the self-employment statutory formula,

              the district court must first identify the business’s gross
              receipts, cost of goods sold (if applicable), and ordinary and
              necessary expenses, and then apply the formula by subtracting
              the cost of goods sold and ordinary and necessary expenses
              from the business’s gross receipts in order to arrive at the
              parent’s income from . . . operation of a business.

Haefele v. Haefele, 

 (Minn. 2013). This court applies a clear-error

standard of review to a district court’s finding of gross income. Newstrand v. Arend, 

 (Minn. App. 2015), rev. denied (Minn. Dec. 15, 2015).

       On appeal, father challenges the magistrate’s calculations of his income and the use

of the 2022 child-support guidelines. We first consider father’s challenges related to his

income and then the applicable child-support guidelines.



                                             5
I.     The magistrate erred in her calculation of father’s income for child support.

       “A court’s determination of income must be based in fact and will stand unless

clearly erroneous.” 

 (quotations omitted). When reviewing for clear error, we “view

the evidence in a light favorable to the findings” and “will not conclude that a factfinder

clearly erred unless, on the entire evidence, we are left with a definite and firm conviction

that a mistake has been committed.” In re Civ. Commitment of Kenney, 

,

221 (Minn. 2021) (quotations omitted). We do not reweigh or reconcile conflicting

evidence; rather, we conduct “a review of the record to confirm that evidence exists to

support the decision.” Id. at 222.

       Here, the magistrate rejected father’s claimed gross monthly income of $3,197 as

not credible and instead calculated father’s gross monthly income to be $46,432. The

magistrate also estimated his net monthly income to be $34,118.90. The magistrate then

calculated father’s child-support obligation utilizing father’s estimated net monthly income

rather than his gross monthly income, even though section 518A.29 requires the use of

gross income, because net monthly income was more “conservative.” The magistrate also

noted that the use of net income, as opposed to gross income, was “immaterial since

[father’s] income will provide for a cap in support.”

       Father challenges both the district court’s determination of his net monthly income

and of his gross monthly income, arguing that neither is supported by the record. We

address father’s challenges beginning with the magistrate’s calculation of his gross

monthly income.




                                             6
       A.      The magistrate erred in finding father’s gross monthly income.

       The magistrate found that father’s gross monthly income is $46,432 based on the

statutory formulas in sections 518A.29 and 518A.30 and father’s tax returns. Father

challenges only the magistrate’s finding of his self-employment income from the farm

operation. 1

       As noted above, self-employment income is determined by finding gross receipts

and subtracting the “costs of goods sold” and the “ordinary and necessary expenses” of the

business. Minn. Stat. § 518A.30. “Ordinary and necessary expenses” exclude “any other

business expenses determined by the court to be inappropriate or excessive for determining

gross income for purposes of calculating child support.” Id. “The person seeking to deduct

an expense, including depreciation, has the burden of proving, if challenged, that the

expense is ordinary and necessary.” Id. A finding of fact concerning expenses will not be

set aside unless clearly erroneous. Rutten v. Rutten, 

 (Minn. 1984).

       Father challenges the magistrate’s findings that some of his proffered self-

employment expenses—telephone expenses, depreciation expenses, hedge-loss expenses,

and net operating losses—were inappropriately deducted or excessive for purposes of

calculating child support. In short, he argues that the magistrate overstated his income by

including the amount of those expenses in his self-employment income. We address each



1
 Father does not dispute that the magistrate properly included income from other sources—
cattle sales, machinery rentals, and property rental—in his gross income. Father also does
not dispute that the magistrate properly excluded certain legal and appraisal expenses from
the “ordinary and necessary expenses” of the farm operation. We thus address only the
challenged expenses.

                                            7
challenged finding in turn, concluding that there is merit only as to father’s argument

regarding net operating losses.

       Telephone Expenses

       First, father argues that the magistrate overstated his self-employment income by

disallowing a portion of his claimed telephone expenses. The magistrate disallowed one-

half of the claimed telephone expenses based on her findings that the claimed expenses

included personal use.

       Father relies on his testimony and that of his accountant to argue that he adequately

justified that the claimed telephone expenses were ordinary and necessary expenses for the

farm operation.    The magistrate, however, found father and his accountant to be

inconsistent and not credible. And her finding that one-half of the total telephone expenses

were “inappropriate or excessive” shows that she rejected father’s and the accountant’s

testimony about the total amount of telephone expenses as not credible.                 See

Pechovnik v. Pechovnik, 

 (Minn. App. 2009) (deferring to district

court’s “implicit[]” credibility determination). Furthermore, our review of the record—

including father’s testimony—supports the magistrate’s findings that father “deducted

some of his personal phone expenses as business expenses” and “had no verification as to

the actual amount.” As a result, the magistrate did not err by concluding that father failed

to meet his burden to establish the full amount of the telephone expenses were “ordinary

and necessary expenses required for self-employment or business operation” and thus

disallowing one-half the claimed telephone expenses. See Minn. Stat. § 518A.30.




                                             8
      Depreciation Expenses

      Second, father argues that the magistrate overstated his self-employment income by

disallowing a portion of his claimed depreciation expenses. A business’s “ordinary and

necessary expenses” specifically excludes “amounts allowable by the Internal Revenue

Service for the accelerated component of depreciation expenses.” Minn. Stat. § 518A.30.

The magistrate disallowed one-half of father’s claimed depreciation expenses because

father failed to establish what portion of the claimed depreciation was the accelerated

component.

      Father relies on the post-hearing declaration and the revised depreciation schedules,

which were prepared by his accountant, to argue that the magistrate erred when disallowing

his claimed depreciation expenses. He asserts that, based on the revised depreciation

schedules, the magistrate should only have disallowed $4,706 of his claimed depreciation

expenses for 2021 and $6,309 of his claimed depreciation expenses for 2022. We are

unpersuaded.

      The magistrate found that the accountant “misstated basic principles of accounting

regarding appreciation” and failed to “initially disclose the accurate nature of the

depreciation.” The magistrate also found that father’s revised depreciation schedules were

still incomplete regarding the amount of accelerated depreciation and explained that “[t]he

credibility of the incomplete information is unknown in light of [the accountant’s] prior

misstatements to the Court.” We give great deference to the magistrate’s credibility

determinations. See Sefkow v. Sefkow, 

 (Minn. 1988). Given the

magistrate’s concerns about the accountant’s prior misstatements related to depreciation—


                                            9
concerns which are fully supported by the record—we are not persuaded that the magistrate

erred in her treatment of father’s depreciation expenses.

       Moreover, the record supports the magistrate’s findings that the accountant provided

inconsistent and incomplete testimony about father’s depreciation expenses, even in the

revised depreciation schedules. In fact, father acknowledges on appeal—consistent with

the magistrate’s assessment—that the revised depreciation schedule still “includes an

accelerated component of depreciation.” “On appeal, a party cannot complain about a

district court’s failure to rule in [his] favor when one of the reasons it did not do so is

because that party failed to provide the district court with the evidence that would allow

the district court to fully address the question.” Eisenschenk v. Eisenschenk, 

 (Minn. App. 2003), rev. denied (Minn. Nov. 25, 2003). Here, father was afforded

multiple opportunities to clarify what portion of his claimed depreciation expenses was the

accelerated component. Father did not do so. We therefore conclude that the magistrate

did not err by concluding that father failed to meet his burden to prove that the full amount

of the claimed depreciation expenses were “ordinary and necessary expenses” and by

disallowing one-half the claimed depreciation expenses. See Minn. Stat. § 518A.30.

       Hedge-Loss Expenses

       Third, father contends that the magistrate overstated his self-employment income

by disallowing a portion of his hedge-loss expenses. The magistrate determined that father

failed to establish that the entirety of the hedge-loss expenses represented an ordinary and

necessary expense for the farm operation and therefore disallowed one-half of his claimed

hedge-loss expenses.


                                             10
       Father contends that he adequately justified that the hedge-loss expenses

represented an ordinary and necessary expense. Father’s argument relies on his testimony,

but the magistrate was not required to accept his testimony if she did not find it credible.

See Kenney, 963 N.W.2d at 224 (“[A] factfinder is not bound by witness testimony, even

if uncontradicted, when there is reason to doubt the testimony.”); see also Varner v. Varner,

 (Minn. App. 1987) (“The finder of fact is not required to accept even

uncontradicted testimony if the surrounding facts and circumstances afford reasonable

grounds for doubting its credibility.”). The record supports the magistrate’s findings that

neither father nor his accountant testified that hedging is a common practice or is necessary

for his farming operation. Furthermore, father does not identify authority suggesting that

hedge-loss expenses are an ordinary and necessary expense of farming. We therefore

conclude that the magistrate did not err by concluding that father failed to meet his burden

to demonstrate that the hedge-loss expenses were an “ordinary and necessary expense” and

by disallowing one-half of the hedge-loss expenses as inappropriate or excessive for the

purposes of calculating child support. See Minn. Stat. § 518A.30.

       Net Operating Losses

       Finally, father argues that the magistrate overstated his gross monthly income from

the farm operation by including “net operating losses” reported on his tax returns in the

calculation of his self-employment income. The magistrate determined that father failed

to establish a basis for treating the net operating losses as an ordinary and necessary

business expense and thus included the amount of those losses—$354,472 in 2021 and

$348,533 in 2022—in her calculation of father’s self-employment income.


                                             11
       Father contends that the magistrate erred because the net operating losses do not fall

within the definition of self-employment income under section 518A.30 and therefore

should not have been included in the calculation. We agree that the magistrate’s treatment

of his net operating losses—in essence, treating the amount of those losses as income to

the farm operation—is inconsistent with section 518A.30 and unsupported by the record.

       As noted above, section 518A.30 provides that income from self-employment “is

defined as gross receipts minus costs of goods sold minus ordinary and necessary expenses

required for self-employment.” Minn. Stat. § 518A.30. Unlike the other challenged

expenses—telephone, depreciation, and hedge loss—there is no evidence in the record that

the net operating losses were a business expense for father’s farm operation. The net

operating losses were included as a separate line item on father’s tax return, unrelated to

business expenses. We therefore agree with father that the magistrate erred by treating the

net operating losses as an expense that father was required to justify when calculating his

self-employment income. See Minn. Stat. § 518A.30. Furthermore, the magistrate did not

find—and the record does not suggest—that the net operating losses represented a gross

receipt of the farm operation. See id. As a result, we conclude that the magistrate erred by

including the net operating losses in the calculation of father’s self-employment income.

We also note that removing the net operating losses from the calculation of father’s

self-employment income has a significant effect on the father’s gross monthly income,

reducing it by approximately $29,292 per month.

       In sum, we conclude that father has not shown that the magistrate erred by

disallowing one-half of father’s claimed telephone, depreciation, and hedge-loss expenses


                                             12
when calculating father’s self-employment income.       However, we conclude that the

magistrate erred by including the net operating losses in father’s self-employment income.

We therefore conclude that the magistrate erred by finding that father’s gross monthly

income is $46,432 for child support purposes and remand for recalculation of the

self-employment portion of his gross monthly income.

      B.     The magistrate’s finding of father’s estimated net monthly income is not
             supported by the record.

      In addition to calculating father’s gross monthly income as $46,432, the magistrate

also estimated father’s net monthly income as $34,118.90.         Father argues that the

magistrate erred in estimating his monthly income.

      At the outset, we note that the magistrate relied on father’s estimated net monthly

income to determine the parties’ child-support obligations because that figure was more

“conservative” than the gross monthly income calculated by the magistrate. In light of our

conclusion that the magistrate significantly overestimated father’s gross monthly income,

the record does not support the magistrate’s finding that father’s estimated net monthly

income is a more “conservative” number. Rather, the record supports the opposite.

Therefore, remand is appropriate on that basis alone.

      Furthermore, even setting aside the magistrate’s characterization of father’s net

monthly income as a “conservative” estimate, we conclude that the magistrate’s method of

estimating father’s income is not supported by the record. The magistrate estimated

father’s net monthly income based on father’s “increase in net worth” and his monthly

expenses. Although the record supports the magistrate’s reasoning that father’s monthly



                                            13
expenses are reflective of his income, we conclude that the record does not support the

magistrate’s reliance on father’s increase in net worth. 2

       To determine father’s average monthly “increase in net worth,” the magistrate

looked at father’s net worth in August 2008 and compared that number to his net worth in

January 2021. The magistrate found that father’s net worth increased by $3,270,046 during

this time period. The magistrate used this amount to determine an average monthly

increase in net worth, which the magistrate then included in the estimate of father’s average

net monthly income. The magistrate reasoned that the increase in net worth represented

assets acquired from after-tax dollars (i.e. cash). But, as father contends, the record shows

that a significant portion of his increased net worth is due to the passive appreciation of his

existing long-term assets. For example, the record shows that $1,543,000—nearly half of

the increase in father’s net worth—is due to the passive appreciation of one farm property,

rather than the acquisition of new assets. Accordingly, even under clear-error review, the

record does not contain evidence supporting the magistrate’s decision to treat father’s

increase in net worth as equivalent to after-tax dollars available to father to pay monthly

child support. See Kenney, 963 N.W.2d at 222. The magistrate therefore clearly erred by

relying on father’s increase in net worth when estimating father’s net monthly income and

by finding that father’s estimated net monthly income is $34,118.90. 3


2
  Because we conclude that the magistrate erred in her method of estimating father’s
income, we do not reach father’s argument that the magistrate erred by finding he is able
to meet his monthly expenses.
3
 In estimating father’s income, the magistrate relied on cases from this court affirming the
decision to reject a self-employed parent’s taxable income and instead estimate income

                                              14
II.     The magistrate erred by calculating child support based on the 2022 child-
        support guidelines.

        Father also argues that the magistrate erred by failing to apply the 2023 child-

support guidelines. We agree. The 2023 child-support guidelines took effect on January 1,

2023.    See 2021 Minn. Laws ch. 30, art. 10, § 65, at 562-72 (stating that relevant

amendments of the child-support statutes went into effect on January 1, 2023). The child-

support magistrate set the parties’ child-support obligation in June 2023. Accordingly, the

2023 child-support guidelines govern the calculation of the parties’ child-support

obligations.

        Conclusion

        In sum, the magistrate erred by determining that father’s child-support obligation is

$1,250 per month under the 2022 child-support guidelines.           As outlined above, we

conclude that the magistrate overstated father’s gross income by including net operating


based on record evidence. See, e.g., Roatch v. Puera, 

 (Minn. App. 1995)
(affirming finding of income based on “business records, tax returns, expert testimony and
an examination of the parties’ lifestyles”); Marx v. Marx, 

 (Minn. App.
1987) (affirming district court’s decision to “reject appellant’s taxable income and to
instead estimate his income” based on the sum of annual wages from his business and
interest income “less 25 percent for taxes and other deductions”). That caselaw was
decided prior to the amendments to the child-support guidelines in 2005, under guidelines
which required child-support obligations to be based on net income rather than gross
income. See 2005 Minn. Laws ch. 164, §§ 7, at 1887-89; 16, at 1901; 29, at 1924-25. And
as father identifies, those cases were decided prior to the supreme court’s clarification that
calculating a self-employed parent’s gross income requires identification of gross receipts,
costs of goods sold, and ordinary and necessary expenses. See Haefele, 

. As a result, it is not clear whether the pre-2005 caselaw supports a district court
or magistrate’s authority to “estimate” income rather than apply statutory definitions of
income under the current child-support guidelines. Regardless, the magistrate had
sufficient information to calculate father’s gross income based on the statutory formula, as
addressed above, and thus there is no need to estimate father’s income.

                                             15
losses and clearly erred in estimating father’s net monthly income. We therefore reverse

and remand for the magistrate to recalculate father’s gross income as specified under

sections 518A.29 and 518A.30 and in a manner consistent with this opinion.                 In

determining the parties’ presumptive child-support obligations, the magistrate shall use the

2023 child-support guidelines and may, in her discretion, reopen the record.            After

recalculating the parties’ presumptive child-support obligations under the guidelines, the

magistrate shall consider whether to adhere to or deviate from the guidelines based on the

factors in Minnesota Statutes section 518A.43, subdivision 1 (2022), as required by that

statute. We express no opinion as to whether a deviation is appropriate in this case.

       Reversed and remanded.




                                            16