Depreciation, Self-Employment, and Child Support in North Carolina: Lessons from Herron v. Pressley

When child support is calculated for self-employed parents, disputes often arise about how to treat business deductions—especially depreciation. A recent North Carolina Court of Appeals decision, Mecklenburg County ex rel. Herron v. Pressley (2024), highlights just how complex this issue can be and why trial courts must make detailed findings before modifying support. 

Case Background 

• Parties: Shannon Herron (mother) and Kedric Pressley (father) share two children, born in 2011. The parents were never married. 

• Father’s employment: Pressley is a self-employed dump truck owner and operator. 

• Prior order: In 2019, Pressley was ordered to pay $50/month in child support. 

• Motion to modify: In 2022, Herron (through Mecklenburg County) sought an increase.

At the 2023 modification hearing, Herron presented Pressley’s 2021 and 2022 tax returns, which showed large depreciation deductions. The trial court rejected those deductions outright, added them back to Pressley’s income, and concluded he earned about $4,784/month, raising his support obligation to $905/month. 

Pressley appealed. 

The Legal Issue

At the heart of the appeal was whether the trial court properly applied the North Carolina Child Support Guidelines when it excluded depreciation. 

• The Guidelines define income from self-employment as gross receipts minus ordinary and necessary business expenses. 

• But they also provide that certain expenses—like the accelerated portion of depreciation—are not considered “ordinary and necessary” for child support purposes. 

• Courts must carefully review business income and expenses, recognizing that tax treatment and child support calculations often diverge.
  

The appellate court emphasized prior precedent (Lawrence v. Tise, Cauble v. Cauble, Craven Cnty. ex rel. Hageb) requiring trial courts to explain clearly how they treat depreciation so appellate courts can review whether the Guidelines were applied correctly. 

The Court’s Decision

The Court of Appeals reversed and remanded, holding that: 

• The trial court erred by simply refusing to accept depreciation without explaining why. 

• Findings of fact must show whether depreciation was accelerated (which Guidelines exclude) or straight-line (which may be permissible). 

• Without specific findings, appellate review is impossible.
  

Judge Flood’s majority opinion stressed that trial courts must “articulate their rationale with sufficient specificity” so reviewing courts can tell whether the judgment is legally sound. 

Judge Stroud dissented, arguing the trial court had sufficient evidence and discretion to exclude the depreciation based on the returns alone, particularly since Pressley offered no proof distinguishing straight-line from accelerated depreciation. 

Key Takeaways for Family Law

1. Self-employment income requires scrutiny. Unlike W-2 wages, self-employment allows for tax deductions that may not reflect actual cash flow. Courts must parse those details carefully. 

1. Depreciation is not always deductible. Accelerated depreciation can be excluded, but courts must explain their reasoning. Straight-line depreciation may be allowed if shown to reflect real business expense. 

1. Detailed findings are essential. Trial courts cannot simply reject deductions without explanation; appellate courts demand clarity. 

1. Burden of proof matters. If a parent wants depreciation recognized, they must present evidence (e.g., accountant testimony, asset schedules). Failure to do so risks losing the deduction. 

Final Thoughts

Herron v. Pressley serves as a cautionary tale for both parents and practitioners. For self-employed parents, it underscores the need to prepare detailed evidence explaining business expenses. For courts, it reinforces the obligation to make clear, specific findings when applying the Child Support Guidelines.

The ruling ensures that child support reflects real ability to pay, not just a tax return line item.

If you need to speak with a family law attorney in Huntersville, North Carolina, please reach out to Adkins Law, PLLC to arrange a consultation with an experienced family law attorney.