Child Support Without a Formula: The Art and Evidence of High-Income Cases in North Carolina

By Melissa J. Essick

High-net-worth child support disputes require a blend of financial sophistication and practical evidence. This guide outlines how to prepare and present these cases effectively under North Carolina law.

The Quick Backdrop

As of the 2023 update, if the parents’ combined adjusted gross income is less than $40,000 per month ($480,000/year), the court will presumptively use the North Carolina Child Support Guidelines to calculate child support, which uses “income shares” worksheets (A, B, or C) based on the custody schedule, the parents’ gross incomes, and certain add-ons like health insurance and work-related childcare.

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Right on Brand: A Conversation With the Honorable Allegra Collins

Tiqeece, a Black man with black hair, wears a blue shirt, plaid blue tie, and grey blazer. He is smiling and holding a book.By Tiqeece Brown

When you see a check mark, you think? Nike.

Four interlocked rings? Audi.

A big yellow M? McDonalds.

Branding speaks before words do.

In the legal profession, branding works the same way. With the emergence of social media, a few North Carolina Attorneys have mastered and capitalized their art of branding: Fairy Law Mother, The NCDWI Guy, and AsktheAppellateLawyer.

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Exclusions to the Net Investment Income Tax

John, a white man with dark brown hair, wears a pale blue shirt, lime green and blue tie, and black suit. By John G. Hodnette

Since its enactment on March 30, 2010, in connection with the Affordable Care Act, Section 1411 has assessed an additional 3.8% income tax on individuals, estates, and trusts on the lesser of net investment income (“NII”) or the excess of the taxpayer’s modified adjusted gross income over the threshold amount. There are a number of exclusions from the 3.8% tax. Nonresident aliens are not subject to the tax per Section 1411(e)(1). Under Section 1411(e)(2), there is an exemption for charitable trusts that are organized to support religious, charitable, scientific, literary, or educational purposes or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment) or for the prevention of cruelty to children or animals.

NII includes certain gross income or net gain from the disposition of property derived from a trade or business that is a passive activity within the meaning of Section 469 as to the taxpayer or that is trading in financial instruments or commodities (as defined in Section 475(e)(2)). Gross income or net gain from the disposition of property derived from a trade or business in which the taxpayer materially participates (as defined in Section 469) is not NII. Section 1411(c)(4) applies the same reasoning to the disposition of an interest in a partnership or S corporation in which the taxpayer materially participates. Accordingly, the rules of Section 469(h) defining material participation are key in determining whether gain from the sale of a partnership interest or stock in an S corporation is subject to the 3.8% tax.

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Federal Income Tax Update

Keith, a white man with brown hair, wears wire-rimmed glasses, a white shirt and black jacket.By Keith A. Wood

1. Taxpayer Denied a Bad Debt Deduction even though the Borrower had Cancellation of Debt Income; Kelly v. Commissioner, 139 F.4th 854 (9th Cir. 2025).

Between 2007 and 2010, Mr. Kelly loaned millions of dollars to his business entities. In December 2010, Mr. Kelly cancelled a portion of the debts his S corporations owed him. For 2010, Mr. Kelly reported $145 million in cancellation of debt (COD) income passing through his S corporations but excluded that entire amount from taxable income under the Section 108(a)(1)(B) insolvency exception. Mr. Kelly also claimed he was entitled to a nonbusiness bad debt deduction of nearly $87 million since the discharged debt write-off created COD income to his S corporations.

The IRS disallowed the bad debt deduction, arguing Mr. Kelly failed to establish the debts were completely worthless at the end of 2010, regardless of whether Mr. Kelly canceled the S corporations’ debts. Mr. Kelly contended, because the S corporations recognized cancellation of debt income under Section 61(a)(11), he must be entitled to a reciprocal worthless debt deduction under Section 166.

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Protecting the Digital Fortress: Data Privacy and Cybersecurity in Today’s Law Firm

By Martin A. Ginsburg Martin, a white man with white hair and a beard, wears a pale blue button-down shirt.

In an era defined by relentless digital evolution, law firms are entrusted not only with safeguarding justice but also with safeguarding data. From confidential client files to privileged communications and sensitive financial records, legal practitioners hold a treasure trove of information that cybercriminals are increasingly targeting.

The consequences of a breach can be severe — legal, financial, reputational. That’s why cybersecurity and data privacy are no longer IT issues; they are critical governance concerns at the heart of legal practice.

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Breaking Up is Hard to Do: Professionalism in Attorney Departures

By Amy, a white woman with brown hair, wears a black blouse and jacket. Amy E. Richardson

Few moments test the professionalism of lawyers and law firms more than a lawyer’s departure. While the North Carolina Rules of Professional Conduct — and recent ethics opinions like 2025 FEO 1 and 2021 FEO 6 — provide clear direction on what lawyers must do when a departure occurs, professionalism asks a bigger question: what should law firms and departing lawyers do to serve clients, colleagues, and the public during this transition? As a lawyer who has helped lawyers and law firms deal with departures, there are best practices that firms and lawyers should consider.

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Installment Sale Notes Owned by S Corporations

John, a white man with dark brown hair, wears a pale blue shirt, lime green and blue tie, and black suit. By John G. Hodnette

When an S corporation sells its assets, often part of the purchase price is paid via a promissory note issued by the buyer. These promissory notes are part of the purchase price and reported on the installment sale method in Sections 453, 453A, and 453B. Under that method, gain on the sale is recognized over time as installment payments are made. There is often a required interest component that is taxed at ordinary income rates. When the S corporation has sold all of its assets, it often wishes to liquidate and distribute the installment note to its owners. Absent a special rule, this plan would be problematic because the disposition of an installment note generally results in acceleration of the built-in gain of the note. Distribution in liquidation of an S corporation is generally treated as a deemed sale of the assets of the corporation.

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The Annual H. Brent McKnight Renaissance Lawyer Award

Paul, a white man with grey hair and a mustache, wears a white shirt, black tie and black blazer. By Paul B. Taylor

Each year, beginning in January, the North Carolina Bar Association Professionalism Committee reviews nominations for the H. Brent McKnight Renaissance Lawyer Award and recommends an awardee to the Board of Governors. The award is announced publicly and given to the awardee at the North Carolina Bar Association annual meeting in June.

The NCBA H. Brent McKnight Renaissance Lawyer Award was established by the North Carolina Bar Association in honor of United States District Court Judge for the Western District of North Carolina H. Brent McKnight’s contributions to professionalism and the practice of law in North Carolina, and in recognition of his enduring influence, high ideals, and example as a jurist whose life and career demonstrated the full, accomplished life of a “Renaissance Lawyer.” Judge McKnight was born in Mooresville, North Carolina, in 1952. He received a bachelor’s degree from UNC-Chapel Hill in 1974, a master’s degree from Magdalen College at Oxford University in 1976, where he attended as a Rhodes Scholar, and a law degree from the University of North Carolina School of Law in 1980.

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Lean In, Link Up: The Young Lawyer’s Guide to Leadership

By Alex, a Black woman with black hair, wears a black blouse and a blazer with black and white checks.Alex Gwynn

Back on September 13, 2025, I found myself in a lively conversation with community leaders in Durham at a Meet and Greet with the City of Durham’s Human Relations Commission (DHRC). We were deep in discussion about the Commission’s priorities, affordable housing advocacy, environmental justice, public safety, community engagement and improving race and ethnic relations.

As we talked about how the Commission could better collaborate with local organizations and leaders already doing this work, one community leader paused, looked at me and said, “What you’re doing is leaning in.”

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Checking In: December 16, 2025

Compiled by Jessica Junqueira

Baker Donelson Opens New Office in Winston-Salem

Baker Donelson has opened a new office in Winston-Salem. Fourteen attorneys have joined the firm, and nine are NCBA members. Seven individuals have joined as shareholders: Andrew “Drew” Felts, Kelly Otis, Jasmine Pitt, Donald Pocock, Kiki Scarff, Bryan G. Scott and Robert H. “Rob” Wall. Two individuals, Walker Helms and Hannah Mashburn, have joined as associate attorneys.

Drew, a white man with brown hair and a beard, wears a white shirt and a blue suit. Andrew “Drew” Felts practices commercial real estate law. He represents developers, investors, landlords, tenants, lenders and other market participants. He has advised clients in matters of renewable energy. He is licensed in North Carolina, South Carolina and West Virginia. He holds a law degree from West Virginia University College of Law and a bachelor’s degree from the University of North Carolina at Chapel Hill.

Kelly, a white woman with light brown hair, wears a purple blouse and black suit. Kelly Otis works with purchasers, sellers, and developers through every stage of commercial real estate transactions. These include acquisitions, development, financing, leasing and dispositions. She has assisted clients with complex title issues and the impacts of development. She holds a law degree from Wake Forest University School of Law and a bachelor’s degree from Purdue University.

Jasmine, a Black woman with black hair, wears a light purple blouse with a black suit. Jasmine Pitt practices commercial litigation in state and federal courts. She has experience in complex business disputes, insurance coverage matters and bad faith litigation involving various commercial policies. She holds a law degree from Wake Forest University School of Law and a bachelor’s degree from Wake Forest University. Read more

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