In re Marriage of Moorthy, 29 N.E.3d 604

Dissolution of Moorthy-Arjuna in 2003; they have a daughter Seema and Moorthy sought to modify child support in 2011.
Trial court increased support in 2013 based on Arjuna’s salary but did not impute Mahantech’s retained earnings to Arjuna.
Arjuna owned 91% of Mahantech, a subchapter S corporation; earnings were retained for payroll, immigration costs, and other business needs.
Moorthy argued that Arjuna’s share of Mahantech’s retained earnings should be included in net income for child support.
Trial court found retained earnings necessary for business, not excessive, and not properly “received” by Arjuna for purposes of income calculation; Moorthy appealed.
Appellate court affirmed, upholding the exclusion of the retained earnings and related rulings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Arjuna’s retained earnings should be included in net income.	Moorthy argues inclusion of 91% retained earnings.	Arjuna contends retained earnings are corporate assets used for business needs.	Not include retained earnings in net income.
Whether Arjuna manipulated income to reduce support.	Moorthy claims manipulation via earnings retention.	Arjuna asserts no manipulation; salary consistent.	No evidence of manipulation; credible testimony supports legitimate business reasons.
Whether there was a legitimate business purpose for not distributing earnings.	Moorthy argues lack of purpose to retain earnings.	earnings retained for payroll, overhead, immigration costs, and certification program.	Yes, legitimate business purpose supported.
Whether K-1 income from Mahantech can be used as income for child support.	Moorthy seeks inclusion of K-1 income.	K-1 funds not actually received by Arjuna.	K-1 income not includable as Arjuna did not receive it.
Whether the trial court properly denied additional daycare expenses.	Moorthy seeks more daycare and extracurricular costs.	Arjuna limited income; Moorthy bears daycare costs.	No abuse of discretion; denial affirmed.

In re Marriage of Brand, 44 P.3d 321 (Kan. 2002) (retained earnings may not automatically be included; case-by-case approach; heightened scrutiny when control over distributions exists)
Taylor v. Fezell, 158 S.W.3d 352 (Tenn. 2005) (retain earnings included only if excessive or income manipulated; recognizes independent corporate entity)
In re Marriage of Joynt, 375 Ill. App. 3d 817 (Ill. App. 2007) (retained earnings of closely held S-corp; minority status; corporate assets vs. income)
In re Marriage of Lundahl, 396 Ill. App. 3d 495 (Ill. App. 2009) (retained earnings can be marital property depending on ownership and distribution control)
In re Marriage of Rogers, 213 Ill. 2d 129 (Ill. 2004) (income includes gifts; defines income broadly beyond taxable income)