Inclusion of Significant Gifts & Unreported Earnings in Gross Income for Child-Support Purposes – A Commentary on Toppenberg v. Toppenberg, 2025 ND 121

1. Introduction

Parties: Kristina M. Toppenberg (plaintiff-appellant) and Zach D. Toppenberg (defendant-appellee), with the State of North Dakota as statutory real party in interest.
Court: Supreme Court of North Dakota, opinion by Chief Justice Jensen.
Procedural Posture: Appeal from a Williams County District Court order modifying Zach’s child-support obligation downward from $1,814 to $875 per month after his relocation and alleged income reduction.
Key Issues on Appeal:

Whether the district court properly granted the motion to modify child support given Zach’s voluntary employment change.
Whether the court’s calculation of Zach’s net income correctly excluded sizeable gifts ($30,000) and unreported wages ($24,000).

The Supreme Court affirmed the grant of modification but reversed the calculation, holding that large gifts and unreported earnings must be included in gross income under North Dakota’s child-support guidelines. The decision refines the evidentiary burdens in voluntary employment-change cases and clarifies the compulsory inclusion of significant gifts in support calculations.

2. Summary of the Judgment

The Court held:

It was not clearly erroneous to find that Zach’s move to Arizona and new employment were not undertaken “for the purpose of reducing his child-support obligation.” Thus, modification of the support amount was permissible.
The district court erred as a matter of law by failing to count (a) $30,000 in parental gifts and (b) $24,000 in omitted wages as part of Zach’s gross income. Both items are explicitly encompassed by N.D. Admin. Code § 75-02-04.1-01(4)(b).
The case is remanded for recalculation of net income and support obligation incorporating the above amounts.

3. Analysis

3.1 Precedents Cited and Their Influence

Schwalk v. Schwalk, 2014 ND 13 – Establishes obligor’s burden to show that a voluntary employment change was not made to avoid support and allows imputation of income when that burden is not met. The Court distinguished Schwalk, noting Zach provided extensive testimony and documentation on his motives and job search.
Carrier v. State, 2025 ND 41 – Emphasizes “appropriate and reliable information” standard; the Court applied Carrier to accept Zach’s documentation on wages but relied on it again to correct the omission of gift income.
Bickel v. Bickel, 2020 ND 212 – Sets review standards (law, fact, discretion). Guided the Court’s mixed-standard analysis.
Pomarleau v. Pomarleau, 2022 ND 16 – Clarifies discretion in imputing income when an obligor’s earnings decline. The Court cited Pomarleau to stress that imputing higher earnings is permissible but not mandatory.
Williams v. Williams, 2023 ND 240 – Reaffirms the presumptive correctness of guideline calculations and need for reliable income evidence.

3.2 Legal Reasoning

The opinion essentially bifurcates the analysis:

Modification Threshold – Under N.D.C.C. § 14-09-08.4(4) a motion filed more than one year after the order requires the court to conform support to the guidelines unless rebutted. Because Zach met the documentation burden and the court found his job change was not “for the purpose” of reducing support, the threshold for modification was satisfied.
Income Determination – The Court scrutinized the guideline definition of “gross income” in N.D. Admin. Code § 75-02-04.1-01(4)(b). Gifts beyond $1,000 annually and wages, salaries, overtime are mandatory inclusions. The district court’s failure to include $30,000 in parental gifts (earmarked for legal fees and living expenses) and $24,000 in unreported wages constituted legal error because these funds fall squarely within the regulatory definition.

3.3 Impact of the Judgment

Clarifies Mandatory vs. Discretionary Income Components – The case draws a bright line: sizeable monetary gifts and any discoverable unreported income must be incorporated. Courts have no discretion to ignore them.
Burden of Proof Re-confirmed – Obligor still bears the burden to show a job change was not a ploy to slash support. Adequate testimony and documentation can satisfy this burden, but incomplete financial disclosure will backfire.
Practical Ramifications for Family-Law Litigants – Attorneys must now proactively investigate gifts from family, litigation loans, and discrepancies between tax returns and pay records. Expect increased discovery requests for bank statements and family-assistance records.
Administrative Consistency – Child-support agencies and district courts receive explicit direction to include all gifts over $1,000 and previously undisclosed earnings, promoting uniform statewide calculations.
Potential for Broader Application – Though this case arises in child support, the reasoning could inform other contexts where “gross income” is statutorily defined (e.g., spousal support or public-benefit eligibility).

4. Complex Concepts Simplified

Imputed Income: When a court pretends (imputes) that a parent is still earning their potential higher income rather than their current lower income, usually to prevent manipulation of support obligations.
Voluntary vs. Involuntary Job Change: A voluntary change is chosen by the parent; if the purpose is to avoid paying support, the court may penalize by imputing higher income. An involuntary change (lay-off, health issues) normally justifies recalculating support based on actual income.
Gross Income vs. Net Income: Gross income is the total money received from all sources; net income is what remains after allowable deductions (taxes, other mandated deductions) under the guidelines.
Gifts Over $1,000 Rule: North Dakota guidelines treat gifts and prizes that exceed $1,000 in a year as part of gross income for child-support calculations.

5. Conclusion

Toppenberg v. Toppenberg, 2025 ND 121, advances North Dakota family law by cementing two crucial principles:

An obligor who produces credible evidence of involuntary income decline (health issues, relocation for family care, diligent job search) may secure a downward modification without automatic income imputation.
Courts commit legal error if they omit sizeable gifts or unreported wages from an obligor’s gross income—such amounts are categorically includable under administrative regulation § 75-02-04.1-01(4)(b).

The decision promotes transparency in financial disclosures and safeguards children’s interests by ensuring that all available resources—including family gifts—are considered. Going forward, litigants should expect rigorous scrutiny of financial records, and practitioners must counsel clients on the comprehensive definition of gross income to avoid adverse outcomes on appeal.