Nelson v. Nelson

2025 UT App 43

THE UTAH COURT OF APPEALS

VICKI JO NELSON,
Appellee,
v.
JAMES Q. NELSON,
Appellant.

Opinion
No. 20230483-CA
Filed March 27, 2025

Third District Court, Salt Lake Department
The Honorable Patrick Corum
No. 214905299

Douglas B. Thayer, David B. Nielson, and Jessica
Griffin Anderson, Attorneys for Appellant
Jonathan Good, Attorney for Appellee

JUDGE MICHELE M. CHRISTIANSEN FORSTER authored this Opinion,
in which JUDGES RYAN M. HARRIS and RYAN D. TENNEY
concurred.

CHRISTIANSEN FORSTER, Judge:

¶1 James Q. Nelson appeals the district court’s award of
alimony to Vicki Jo Nelson. More specifically, he contests the
court’s subsidiary determination that certain funds he receives on
a monthly basis from a business entity are considered income for
alimony purposes. We conclude that the district court did not
abuse its discretion in making this determination and considering
these amounts when calculating the ensuing alimony award. We
therefore affirm.
Nelson v. Nelson

BACKGROUND

¶2 James and Vicki 1 had been married for over forty years
when Vicki filed for divorce in 2021. The district court entered a
Bifurcated Decree of Divorce in 2022, dissolving the marriage and
reserving all remaining issues for trial. A trial was held in early
2023, and the district court thereafter entered its Findings of Facts
and Conclusions of Law, as well as a Final Decree of Divorce. In
these rulings, the court ordered James to pay alimony to Vicki in
the amount of $2,285 per month. The issue raised in this appeal
concerns the court’s calculation of James’s income for purposes of
the alimony determination, and we therefore focus on the facts
related to this calculation.

¶3 In 2006, James began the development of “a multi-action,
multidirectional computer-controlled windshield wiper.” At
some point, James and Vicki’s neighbor, Dr. Jerry Nelson (Dr.
Nelson), 2 became interested in James’s wiper project. Dr. Nelson
has a dual doctorate in microbiology and immunology, and prior
to his retirement, he ran his own successful laboratory service firm
for thirty years. Together, James and Dr. Nelson formed Nelson
and Nelson Enterprises, LLC (the Company) in 2008 to develop
and eventually market the windshield wiper. For the next few
years, James continued to pour his time and efforts into the
development of the wiper—generally working “18 hours a
day”—while he and Vicki lived off their savings. When that
money ran out in 2011, James and Dr. Nelson agreed that James
would begin to receive $2,000 each month from the Company so
that he could afford to continue putting his time into the
development of the windshield wiper. As the years passed, the

1. Because the parties share a surname, we refer to them by their
given names, with no disrespect intended by the apparent
informality.

2. Although he shares a surname with the parties, Dr. Nelson is
not related to them.

20230483-CA 2 2025 UT App 43
Nelson v. Nelson

monthly amounts James received from the Company increased,
becoming as high as $8,000 per month. This money received from
the Company was used to pay for essentially all of James and
Vicki’s expenses. By the time of trial, the total amount of money
James had received from the Company was over $766,000.

¶4 The categorization of the monthly funds from the
Company was a primary issue of contention between the parties
during the court proceedings. James categorized these funds as
loans and testified that he will “[a]bsolutely” have to pay them
back “at some point out of proceeds of the sale or [his] share of
the [C]ompany.” He testified that the interest rate on the loans
was “point five percent above prime,” but he presented no
documentation setting forth the terms of this purported loan
agreement. According to James, Vicki knew that he was taking
loans from the Company.

¶5 Dr. Nelson similarly testified at trial regarding the amounts
given to James. Dr. Nelson stated that he had invested “money
into the business to give to James as a loan so that he could
develop the product and work.” Dr. Nelson also explained that
the amount of the monthly loans fluctuated some over time,
depending on how the Company was doing, and he stated, “In
the early days, . . . [w]e were starting to do really well and starting
to sell product, and I encouraged [James] to take more money . . .
because . . . he was not making as much as I thought he should for
all of the work and effort he was putting in.”

¶6 Nonetheless, Dr. Nelson maintained that the money given
to James had “all been loans” and that he would still expect
repayment even if “the business does not do well.” He did,
however, acknowledge that James “simply ha[d] no ability to
repay [him] if the [C]ompany continues on the track that it’s
been.” And when questioned regarding “the existence of a debt
instrument,” he simply responded, “James knows it’s a loan, I
know it’s a loan.”

20230483-CA 3 2025 UT App 43
Nelson v. Nelson

¶7 The accountant for the Company also testified at trial
regarding the amounts given to James. The accountant explained
how the Company had treated the amounts given to James in its
tax filings: initially, in the years 2011 to 2015, the amounts were
categorized “as a distribution reducing [James’s] equity account
below zero,” but after this treatment triggered an IRS audit of
James and the assessment of a capital gains tax, the amounts were
recategorized, from the 2016 taxes forward, “as a loan to [a]
partner.” The accountant also testified that his “understanding
[was] that [Dr. Nelson] does not intend to forgive this loan,” and
the accountant recognized that if Dr. Nelson did forgive the loan,
the forgiven amount “would be treated as a cash distribution to
James, and would be taxed at a capital gains tax rate in the year of
forgiveness.”

¶8 When Vicki was asked during trial about the amounts
James received from the Company, she testified that she did not
“know what the agreement [was] between [James] and [Dr.
Nelson],” that she had not “seen an agreement to repay” the
amounts, and that she had not “heard [James] say that he needs
to repay” them. She also testified that the money “was salary for
the job [James] was doing creating the wiper” and that James told
her as much. However, at one point during cross-examination,
Vicki acknowledged that she had “also heard James discuss that
he has to pay that money back . . . [u]nless [Dr. Nelson] died.”
And when pressed as to a statement she had made during her
deposition that she “would not be surprised if the money was
actually a loan,” she responded, “I’ve not got any documents to
see what’s going to be paid back and what’s not going to be paid
back. Is James working for free? No, James is not working for
free. . . . Why would James work for free?” She continued, “I was
told it didn’t have to be paid back, the money, the time he invested
on his own to create the product was a wage, a salary, and was
not going to be paid back.”

¶9 The district court ultimately determined “that the funds
given to [James] were not loans, but rather, salary or wages, pure

20230483-CA 4 2025 UT App 43
Nelson v. Nelson

and simple.” The court elaborated on the various reasons
supporting its decision. First, the court recognized that the initial
purpose of providing funds to James was “to prevent [him] from
seeking income away from the business.” The court also reasoned,
as to James’s motivation, “no reasonable person would ever agree
to such an arrangement that they would be required to work 18
hours a day endlessly for years and not only not get paid but have
to pay back whatever money was given to them to survive and
meet their day-to-day needs under some arrangement that has
never been defined or documented.” And the court further noted,
“[t]he total interest on these so-called loans could be something
approaching a million dollars.”

¶10 Next, the court found not credible “the testimony that Dr.
Nelson may demand repayment and sue [James] for these
amounts should this business go under,” and the court concluded
“that Dr. Nelson has no intention of ever demanding repayment
or collecting these amounts.” The court also highlighted that “Dr.
Nelson is a sophisticated businessman” and reasoned, “The very
notion that these amounts are considered as loans by anybody—
let alone someone with [Dr. Nelson’s] experience, intellect, and
business acumen—with zero documentation is not credible.”
Additionally, the court observed that “[e]ven the most basic
principles regarding contracts . . . would all seem to be violated
by this purported agreement, again with no terms set forth.” The
court found, instead, that “calling these large sums of money
‘loans’ versus salary . . . feels more like a tax loophole or tax
deferment procedure to avoid income or payroll taxes than
anything else.” Further, the court noted that Dr. Nelson’s
testimony at trial—that “[James] was not making as much as I
thought he should for all of the work and effort he was putting
in”—suggested that the funds were earnings.

¶11 In contrast, the court found credible Vicki’s testimony “that
she was never informed that these [funds] were, or might be,
considered loans.” The court determined that her testimony was
part of the “substantial evidence refuting [James’s] claims.”

20230483-CA 5 2025 UT App 43
Nelson v. Nelson

¶12 In sum, the district court found “that these are factually not
loans and the partners did not, and do not, truly consider them to
be loans,” and that “the money transferred from the business
account into [James’s] personal account is in fact his wage or
salary for his arduous and endless work in this endeavor.” Based
on these findings, the court determined that the monthly amounts
are “available for [James] to pay alimony”—indeed, the court
ruled that because the amounts are all untaxed, “the full amounts
are available to [him] to both meet his needs and meet [Vicki’s]
unmet need.” After considering the remainder of the required
alimony factors, the court arrived at a final alimony award
amount of $2,285 per month.

ISSUE AND STANDARD OF REVIEW

¶13 On appeal, James contests the district court’s
determination that the funds he receives from the Company are
not loans but are income for purposes of calculating alimony. He
asserts that our review of the district court’s determination should
be for correctness, citing case law establishing that “[t]he existence
of a contract is a question of law,” McKelvey v. Hamilton, 2009 UT
App 126, ¶ 17, 211 P.3d 390. But the district court’s task here was
not to assess whether the alleged agreement constituted a binding
contractual agreement. Instead, the court’s task was to make the
factual findings necessary for the alimony calculation, including
findings regarding James’s ability to pay. 3 See generally Utah Code

3. The district court’s ruling regarding alimony additionally
provided that even if James and Dr. Nelson had considered these
funds from the Company to be loans, the funds would
nonetheless not be loans under the relevant legal analyses because
“virtually every factor weighs against finding these were loans.”
The court further concluded “as a matter of law that these were
not loans even had the parties considered them as such, which
they do not.”
(continued…)

20230483-CA 6 2025 UT App 43
Nelson v. Nelson

§ 81-4-502(1) (requiring a court to consider “the ability of the
payor to provide support” as a “factor in determining alimony”).
“We review all aspects of the trial court’s alimony determination
for an abuse of discretion and will not disturb its ruling on
alimony as long as the court exercises its discretion within the
bounds and under the standards our supreme court has set and
so long as the trial court has supported its decision with adequate
findings and conclusions.” Miner v. Miner, 2021 UT App 77, ¶ 11,
496 P.3d 242 (quotation simplified).

ANALYSIS

¶14 James argues that the monthly amounts he receives from
the Company are “loans as a matter of law” because “[t]he
undisputed evidence at trial was that the parties consistently
treated the funds as loans and recognized them as loans.” While
James seemingly recognizes the general rule that “it is the
province of the trier of fact to assess the credibility of witnesses,”
he asserts that, here, the district court’s credibility determinations
were improper because “a finder of fact is not at liberty, under the
guise of passing upon the credibility of a witness, to disregard his
testimony, when from no reasonable point of view is it open to
doubt.” Woodward v. LaFranca, 2013 UT App 147, ¶ 7, 305 P.3d 181
(quotation simplified), abrogated on other grounds by Zavala v.
Zavala, 2016 UT App 6, 366 P.3d 422; see also Super Tire Market, Inc.
v. Rollins, 417 P.2d 132, 135 (Utah 1966) (“This is the basis for the
right of review on appeal whereby a court or jury may be
prevented from obdurately refusing to accept credible

James argues that these portions of the court’s ruling
“mischaracterized the applicable law.” But because this part of the
court’s decision provided a secondary reason set forth by the
court—stating that James’s arguments would fail “even if” James
and Dr. Nelson had intended the amounts to be loans—we need
not address it in the face of our affirmance of the court’s primary
findings on the matter.

20230483-CA 7 2025 UT App 43
Nelson v. Nelson

uncontradicted evidence without any rational basis for doing
so.”).

¶15 As an initial matter, we take issue with James’s
characterization of the evidence on this point as “undisputed.” 4
Such a characterization entirely overlooks Vicki’s testimony
that she was told by James that the money “was salary for the
job he was doing creating the wiper” and that she “was told
it didn’t have to be paid back.” And while James highlights
other statements by Vicki that seem to conflict somewhat with
this testimony, such a conflict does not render Vicki’s testimony a
nullity and the evidence “undisputed.” Instead, it remains “the
province of the factfinder to resolve evidentiary conflicts.”
Blackhawk Townhouses Owners Ass’n Inc. v. J.S., 2018 UT App 56,
¶ 33, 420 P.3d 128; see also State v. Black, 2015 UT App 30, ¶ 19, 344
P.3d 644 (“The existence of a conflict in the evidence does

4. In making his argument that it was “undisputed” that the funds
James receives are loans, James challenges the admissibility of
Vicki’s expert’s testimony regarding whether the IRS would likely
consider these amounts to be income to James. But the district
court clearly did not rely on this challenged testimony in arriving
at its decision, stating, “[T]he Court declines to examine the
details of the expert’s analysis of the federal tax code and legal
definitions of loans versus income.” Thus, to the extent there was
any error in the admission of this expert testimony, such error was
harmless. See Capozzoli v. Madden, 2024 UT App 176, ¶ 33, 561 P.3d
727 (“Under well-accepted harmless error standards, we don’t
reverse rulings unless there is a reasonable likelihood that the
error affected the outcome of the proceedings.” (quotation
simplified)); see also Steffensen v. Smith’s Mgmt. Corp., 820 P.2d 482,
489 (Utah Ct. App. 1991) (“On appeal, the appellant has the
burden of demonstrating an error was prejudicial—that there is a
reasonable likelihood that the error affected the outcome of the
proceedings.” (quotation simplified)), aff’d, 862 P.2d 1342 (Utah
1993).

20230483-CA 8 2025 UT App 43
Nelson v. Nelson

not render the totality of the evidence insufficient. It is the role of
the factfinder to examine and resolve such conflicts.”); Clarke v.
Clarke, 2012 UT App 328, ¶ 28, 292 P.3d 76 (“It is within the
province of the trial court, as the finder of fact, to resolve issues of
credibility. In so doing, the trial court is free to believe one
person’s testimony over the testimony of multiple others.”
(quotation simplified)).

¶16 Next, even if Vicki’s testimony had failed to raise a dispute
regarding the characterization of the funds, the district court
would still have been free to find the testimony of James and Dr.
Nelson on the matter not credible. “Clearly, the fact-finder is in
the best position to judge the credibility of witnesses and is free to
disbelieve their testimony. Even where testimony is
uncontroverted, a trial court is free to disregard such testimony if
it finds the evidence self-serving and not credible.” Glauser
Storage, LLC v. Smedley, 2001 UT App 141, ¶ 24, 27 P.3d 565
(quotation simplified).

¶17 Although James is correct that the fact finder’s credibility
determinations are subject to certain limits, the cases on which he
relies state that those limits are reached when “the trial court has
not articulated a reasonable basis” for its rejection of testimony,
Woodward, 2013 UT App 147, ¶ 10, or the court “refus[es] to accept
credible uncontradicted evidence without any rational basis for
doing so,” Super Tire Market, Inc., 417 P.2d at 135. See also
Woodward, 2013 UT App 147, ¶ 7 (“We may reverse a trial court’s
credibility determination if its findings in support of that
determination are clearly erroneous, that is, if they are against the
clear weight of the evidence, or if the appellate court otherwise
reaches a definite and firm conviction that a mistake has been
made.” (quotation simplified)). Such limits are far from being
reached in the instant case.

¶18 The district court determined that the testimony of James
and Dr. Nelson was not credible, and the court articulated
numerous reasons supporting this determination: (1) that the

20230483-CA 9 2025 UT App 43
Nelson v. Nelson

purpose of the money was “to prevent [James] from seeking
income away from the business” and allow him to devote his
whole efforts to developing the windshield wiper; (2) that it was
unreasonable to conclude that James had agreed “to work 18
hours a day endlessly for years and not only not get paid but have
to pay back whatever money was given to [him] to survive”;
(3) that it was unreasonable to conclude that a “sophisticated
businessman” like Dr. Nelson would loan such a significant
amount of money “with zero documentation” and that it seemed
more likely that the “loans” categorization was a “tax deferment
procedure”; (4) that the trial testimony of Dr. Nelson suggested
that the funds were earnings when he explained that increases in
the amounts were made, in part, because James “was not making
as much as [Dr. Nelson] thought he should”; and (5) that the
alleged agreement, having “no terms set forth,” would violate all
“the most basic principles regarding contracts.” Thus, the district
court articulated numerous reasonable and rational bases for its
rejection of James’s and Dr. Nelson’s testimony that the funds
were loans that would ultimately need to be repaid. And, simply
put, “we will not second guess a court’s decisions about
evidentiary weight and credibility if there is a reasonable basis in
the record to support them.” Barrani v. Barrani, 2014 UT App 204,
¶ 6, 334 P.3d 994.

¶19 James additionally takes issue with the district court’s
“failure to consider the tax consequences” of the money he
receives from the Company, and he points specifically to the
court’s finding that those amounts “are all untaxed and the full
amounts are available to [him] to both meet his needs and meet
[Vicki’s] unmet need.” Yet James concedes that because he has
been treating these amounts as loans on his tax returns, he has
“not paid income tax on those funds.” He suggests, however, that
the court’s treatment of the funds as income for purposes of the
alimony determination will mean that “there will be years of back
income tax to pay,” which will “decrease [his] ability to pay
alimony.” We are not convinced.

20230483-CA 10 2025 UT App 43
Nelson v. Nelson

¶20 Nothing in the district court’s alimony decision requires
James to alter the way he categorizes these funds on his taxes, nor
has James signaled any intention to do so. Furthermore, even
were James to now recharacterize these amounts as income on his
taxes going forward, he points to no evidence presented to the
district court regarding precisely what those tax consequences
would be. Thus, any future tax consequences to James as a result
of a recategorization of these amounts are entirely speculative at
this juncture. And “we do not generally expect courts to speculate
about hypothetical future tax consequences.” Wadsworth v.
Wadsworth, 2022 UT App 28, ¶ 97, 507 P.3d 385 (quotation
simplified), cert. denied, 525 P.3d 1259 (Utah 2022). Thus, the
district court did not abuse its discretion in this regard either. 5

CONCLUSION

¶21 The district court did not abuse its discretion in finding that
the monthly amounts James receives from the Company are
income for purposes of the alimony calculation. Nor did the court
abuse its discretion in failing to consider hypothetical future tax
consequences in its calculation of the resulting alimony award.
Affirmed.

5. Instead, if it does become the case that James recharacterizes
these funds on his taxes and, as a result, incurs a tax liability that
materially lessens his ability to pay alimony, he will be able to
petition for a modification of alimony. See Utah Code § 81-4-504(1)
(“The court has continuing jurisdiction to make substantive
changes and new orders regarding alimony based on a substantial
material change in circumstances not expressly stated in the
divorce decree or in the findings that the court entered at the time
of the divorce decree.”).

20230483-CA 11 2025 UT App 43