Ronnie Moore of Tennessee worked in his father’s business, Ed’s Cycles, when he got divorced from Nora Moore in 1991. Ronnie kept the 75 shares of Ed’s Cycles stock he received from his father. Ronnie was ordered to pay Nora $100 a month in child support for their two children.
in June 2001, when the older child became emancipated, Ronnie sold his 75 shares to his sister for $687,550 to be paid in equal installments over five years.
Nora filed for an increase in child support, saying that the one time capital gains transaction ought to be included in Ronnie’s income for calculating child support under the Child Support Guidelines.
The trial court denied Nora’s petition, but the Court of Appeals reversed, and the Supreme Court of Tennessee had the last word.
Since the Child Support Guidelines explicitly include capital gains in the definition of gross income, the Court said, and the Guidelines do not exempt isolated capital gains from inclusion as gross income:
We hold that income from an isolated or “one-time” capital gain must be considered in calculating gross income for the purpose of modifying child support. Moore v. Moore, Supreme Court of Tennessee, September 5, 2007.