Section 154.062 Self-Employment Income | Marriage of Quillen and Daniel (2026)

In the Matter of the Marriage of Christina Marie Quillen and Paul Arthur Daniel, 05-25-00304-CV, October 06, 2026.

On appeal from 254th Judicial District Court, Dallas County, Texas

Synopsis

Self-employment income is a child-support resource under Texas Family Code § 154.062(b), reduced only by deductions and qualifying business expenses established by the evidence. Because the obligor failed to substantiate his claimed business expenses adequately, evidence of substantial business deposits supported an implied finding of net resources sufficient to impose the then-maximum guideline award of $2,760 per month for three children.

Relevance to Family Law

Quillen is significant whenever a divorce or SAPCR involves a closely held business, irregular compensation, or an obligor whose reported personal income does not reflect the cash moving through the business. The opinion confirms that a trial court need not accept an owner’s tax-return income, financial statement, or characterization of business deposits at face value. Counsel must develop evidence showing what the business received, which expenditures were ordinary and necessary to produce that income, what personal benefits the business furnished, and how those figures translate into statutory net resources.

The case also has consequences beyond child support. The same bank records, expense classifications, owner benefits, and credibility disputes may affect business valuation, reimbursement claims, characterization and division of marital property, temporary support, and requests for attorney’s fees. The governing calculations are not necessarily identical, however: taxable income, business value, cash flow, and child-support resources answer different legal questions.

Case Summary

Fact Summary

Christina Marie Quillen and Paul Arthur Daniel had three children, married in 2020, and separated in 2022. After Quillen filed for divorce, the parties resolved most property matters through a partial mediated settlement agreement. The remaining parent-child issues were tried to the court.

The final decree appointed the parties joint managing conservators and ordered Daniel to pay $2,760 per month in child support. That amount equaled 30% of the $9,200 monthly net-resources cap in effect at the time of trial—the maximum presumptive guideline award for three children.

The central evidentiary dispute concerned Daniel’s jewelry business. Daniel testified that he earned approximately $16,000 in 2022 and $38,000 in 2023. His financial information statement reported gross monthly income of $6,400 and monthly expenses of $7,985.

Other evidence presented a materially different picture. Quillen introduced bank records showing that the jewelry store received deposits averaging approximately $43,000 per month, or roughly $513,000 annually, between January 2023 and May 2024. Daniel agreed that the deposit figures were accurate and that he had no employees during the relevant period, but he maintained that the deposits were gross business proceeds rather than personal income.

On appeal, Daniel argued that the account showed average monthly revenue of $42,820.74 and average monthly expenditures of $42,637.85, leaving only $182.89 in monthly profit. He contended that the trial court improperly treated gross business receipts as resources without accounting for the expenses necessary to operate the business.

Neither party requested findings of fact or conclusions of law. The trial court therefore made no express finding identifying Daniel’s net resources or explaining its treatment of particular business receipts and expenditures.

The decree also contained a drug-and-alcohol-testing provision stating that a positive result could be the subject of a request to reconsider conservatorship, possession, or access. Daniel separately challenged that language as an impermissible advisory opinion.

Issues Decided

• Whether legally and factually sufficient evidence supported an implied finding that Daniel’s monthly net resources reached or exceeded the $9,200 guideline cap.

• Whether the trial court could consider the jewelry business’s receipts when Daniel did not sufficiently establish that the claimed expenditures were ordinary and necessary expenses required to produce the business income.

• Whether the $2,760 award represented a guideline award or an unsupported deviation requiring findings under Texas Family Code § 154.130.

• Whether the decree’s statement that a positive drug or alcohol test could support a future request to reconsider conservatorship, possession, or access constituted an impermissible advisory opinion.

Rules Applied

• Texas Family Code § 154.062(b): Resources are broadly defined and include income actually received from all sources, including wage, salary, and self-employment income.

• Texas Family Code § 154.062(d): The court calculates net resources by applying the deductions authorized by statute, including applicable taxes and certain insurance-related expenses.

• Texas Family Code § 154.063: Each party has an affirmative obligation to furnish information sufficient to identify that party’s net resources and ability to pay child support. The required financial disclosure includes tax returns, financial statements, and current pay information.

• Texas Family Code § 154.065: Self-employment income consists of business income less ordinary and necessary expenses required to produce that income. The trial court has discretion to exclude certain deductions or expenses that may be allowable for federal tax purposes but do not appropriately reduce income available for child support.

• Texas Family Code §§ 154.066, 154.067: A trial court may consider earning potential when an obligor is intentionally unemployed or underemployed and may assign income to assets that are not currently producing income.

• Texas Family Code § 154.123(b)(10), (15): In applying the guidelines, the court may consider benefits furnished by a business entity and the positive or negative cash flow generated by a business or other property.

• Texas Family Code §§ 154.125 and 154.126: At the time of trial, the guideline cap was $9,200 in monthly net resources. The guideline percentage for three children was 30%, producing a maximum presumptive guideline award of $2,760 per month.

• Texas Family Code §§ 154.122 and 154.130: A guideline award is presumed to be in the child’s best interest. An award varying from the guidelines may require findings identifying the parties’ resources and explaining the variance.

• Iliff v. Iliff, 339 S.W.3d 74 (Tex. 2011): Child-support awards are reviewed for abuse of discretion. A court abuses its discretion by acting arbitrarily or unreasonably or by failing to apply controlling legal principles correctly.

• In re J.Y.O., 709 S.W.3d 485 (Tex. 2024): Legal and factual sufficiency are not independent grounds of error in reviewing a discretionary family-law ruling, but they remain relevant to whether the trial court had sufficient evidence on which to exercise its discretion.

• Worford v. Stamper, 801 S.W.2d 108 (Tex. 1990): When no findings of fact or conclusions of law are requested or filed, reviewing courts imply all findings necessary to support the judgment and affirm on any legal theory supported by the evidence.

• In re T.W.B., No. 05-24-01434-CV, 2026 WL 1809835 (Tex. App.—Dallas June 23, 2026, no pet. h.) (mem. op.): A trial court is not categorically prohibited from considering gross business receipts when determining an obligor’s net resources.

Application

The Fifth Court of Appeals began with the broad statutory definition of child-support resources. Self-employment income is not limited to the amount a business owner identifies as salary, reports as personal compensation, or places on a financial information statement. The analysis may extend to business receipts, cash flow, owner benefits, and other amounts actually available to the obligor.

Daniel’s evidence did not bind the trial court. As factfinder, the trial judge could assess his credibility, resolve conflicts in the financial evidence, and decline to accept his self-reported income figures. The claimed annual earnings of $16,000 and $38,000 were difficult to reconcile with deposits averaging approximately $43,000 per month and with Daniel’s reported personal expenses.

The appellate court did not hold that every dollar deposited into a business account automatically becomes the owner’s net resource. Instead, the critical point was evidentiary: an owner seeking to reduce business receipts by claimed expenses must establish that those expenses were ordinary and necessary to produce the income. A recitation of aggregate account outflows or reliance on tax treatment does not necessarily satisfy that burden. The Family Code also permits a trial court to reject expenses that may be deductible for tax purposes but do not fairly reduce income available for child support.

Daniel had the statutory obligation to furnish sufficient information to permit an accurate calculation of his net resources. Given the substantial deposits, his control of the business, the absence of employees, and the deficiencies in the proof supporting his expense position, the trial court could infer that his monthly net resources reached the $9,200 cap.

That implied finding was particularly important because neither party requested findings of fact or conclusions of law. The appellate court therefore implied all findings necessary to support the decree and upheld the award on any legal theory supported by the record. Once net resources of at least $9,200 were implied, applying the 30% guideline for three children produced $2,760 per month. The award was therefore a guideline award, not an unexplained deviation requiring variance findings under § 154.130.

As to the testing provision, the decree did not purport to decide the merits of a future modification proceeding. It stated only that a positive test could become the subject of a request to reconsider conservatorship, possession, or access. Because the provision did not predetermine a future controversy or dispense with the legal requirements governing later relief, it was not an impermissible advisory opinion.

Holding

The court held that self-employment income constitutes a child-support resource under Texas Family Code § 154.062(b), subject to the statutory deductions and the treatment of ordinary and necessary business expenses under §§ 154.062(d) and 154.065. The evidence supported an implied finding that Daniel’s monthly net resources equaled or exceeded the $9,200 cap then applicable to the guidelines.

The court further held that the $2,760 monthly award was supported as the maximum presumptive guideline obligation for three children. Because the award could be sustained as 30% of the capped net resources, it was not an unsupported deviation requiring findings explaining a variance from the guidelines.

The court also held that the drug-and-alcohol-testing language did not constitute an impermissible advisory opinion. The provision permitted a party to request future reconsideration based on a positive test but did not adjudicate the outcome of any future conservatorship, possession, or access dispute.

The Fifth Court of Appeals affirmed the final divorce decree.

Practical Application

For the party seeking support, Quillen supports discovery directed beyond tax returns and personal pay records. Business bank statements, merchant-processing records, credit-card accounts, general ledgers, invoices, owner draws, payments of personal expenses, loan applications, and cash-flow records may provide a more accurate picture of available resources than the owner’s reported salary.

For the self-employed obligor, the case underscores that gross-receipts evidence cannot be answered merely by pointing to aggregate withdrawals from the business account. Each material expense category should be supported by admissible records and testimony establishing its business purpose, its relationship to income production, and the absence of a personal component. Counsel should be prepared to explain transfers, credit-card payments, cash withdrawals, inventory purchases, debt service, depreciation, related-party transactions, and payments made on the owner’s behalf.

The distinction between tax accounting and child-support accounting must remain central. A deduction allowable under federal tax law is not automatically an ordinary and necessary expense for purposes of Texas Family Code § 154.065. Depreciation, accelerated deductions, vehicle expenses, home-office expenses, travel, meals, and payments to affiliated entities warrant particular scrutiny.

The absence of findings was also outcome-determinative. When the record contains conflicting evidence and the resulting award can be supported by an implied calculation, the appellant faces a difficult standard of review. A party anticipating an appeal should timely request findings identifying gross resources, accepted business expenses, statutory deductions, net resources, the applicable percentage, and any basis for deviation from the guidelines.

Practitioners should also verify the guideline cap applicable at the time of the relevant hearing or order. Quillen applied the $9,200 cap in effect at trial; it should not be treated as permanently fixing the cap for later proceedings.

Finally, business-income evidence often performs multiple functions in a divorce. Counsel should coordinate the child-support presentation with business valuation, property characterization, reimbursement, fraud-on-the-community, and attorney’s-fee theories while preserving the distinct legal standards governing each claim.

Checklists

Proving Self-Employment Resources

• Obtain complete business and personal bank statements for a meaningful historical period.
• Subpoena merchant-processor, payment-platform, and credit-card records.
• Compare reported revenue with deposits, invoices, sales records, and the general ledger.
• Identify transfers between business, personal, and affiliated accounts.
• Trace owner draws, distributions, shareholder loans, and cash withdrawals.
• Identify personal expenses paid directly by the business.
• Obtain tax returns, Forms 1099 and K-1, profit-and-loss statements, and balance sheets.
• Compare financial disclosures made in the litigation with loan, lease, and credit applications.
• Determine whether the business furnishes vehicles, housing, insurance, travel, meals, or other owner benefits.
• Present a calculation connecting the evidence to statutory monthly net resources.

Substantiating Business Expenses

• Categorize each material expense rather than relying on total account outflows.
• Establish that each claimed deduction was ordinary and necessary to produce business income.
• Authenticate invoices, receipts, contracts, payroll records, and canceled checks.
• Separate inventory purchases from personal acquisitions and capital expenditures.
• Explain debt payments, including the allocation between principal and interest.
• Identify noncash deductions such as depreciation and amortization.
• Segregate personal, mixed-purpose, and related-party expenditures.
• Explain unusual transfers, large cash payments, and recurring rounded-dollar withdrawals.
• Address whether tax deductions should also reduce resources for child-support purposes.
• Use a forensic accountant when the business records do not permit a reliable calculation without expert analysis.

Defending the Child-Support Calculation

• File a complete and internally consistent financial information statement.
• Reconcile testimony with tax returns, bank deposits, and reported living expenses.
• Do not characterize gross receipts as unavailable without proving the corresponding expenses.
• Prepare demonstrative schedules showing gross income, allowable expenses, statutory deductions, and resulting net resources.
• Address business-paid personal benefits affirmatively rather than waiting for cross-examination.
• Explain why reported expenditures exceed reported income, if applicable.
• Preserve objections to unauthenticated summaries and unsupported financial assumptions.
• Offer complete underlying records rather than selected excerpts.
• Request express findings on disputed revenue and expense categories.
• Confirm the guideline cap and percentage in effect at the time of the hearing.

Preserving Error and Preparing for Appeal

• Timely request findings of fact and conclusions of law.
• Request additional or amended findings if the initial findings omit net resources or the basis for the award.
• Secure a ruling on objections to financial exhibits and summary evidence.
• Make an offer of proof for excluded business records or expert testimony.
• Identify whether the award follows the guidelines or varies from them.
• If the court varies from the guidelines, request the findings required by § 154.130.
• Ensure that the reporter’s record includes all testimony explaining the business records.
• Preserve legal and factual sufficiency challenges to express or implied findings.
• Frame appellate complaints within the abuse-of-discretion standard.
• Distinguish an erroneous resource calculation from a discretionary deviation based on statutory factors.

Drafting Drug- and Alcohol-Testing Provisions

• State clearly what event authorizes testing and how testing will be conducted.
• Identify the approved facility, testing method, deadlines, and allocation of costs.
• Define the consequences of a missed, diluted, adulterated, or positive test.
• Avoid language that automatically predetermines a future modification without the required judicial process.
• Preserve the right to request appropriate relief based on future evidence.
• Clarify that any future modification remains subject to governing statutory standards.
• Address possession arrangements pending adjudication only through enforceable and appropriately tailored terms.

Citation

In the Matter of the Marriage of Christina Marie Quillen and Paul Arthur Daniel, No. 05-25-00304-CV (Tex. App.—Dallas Oct. 6, 2026, no pet. h.) (mem. op.).

Full Opinion

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