Welcome!
The Center for Agricultural Law and Taxation (CALT) at Iowa State University, created by the Iowa Board of Regents in 2006, provides timely, critically objective information to producers, professionals and agribusinesses concerning the application of important developments in agricultural law and taxation (federal and state legal opinions of relevance, as well as critical legislative developments), and is a primary source of professional educational training in agricultural law and taxation. CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.
Current and Upcoming Events
2012 Summer Seminars
More details coming soon!
2012 CALT September Seminars
- Agricultural Law Seminar - Thursday, September 13
- Farm Estate and Business Planning Seminar - Friday, September 14
2012 Farm Income Tax Schools - Dates and Locations
- October 29-30: Mason City (North Iowa Area Community College)
- November 7-8: Waterloo (Hawkeye Community College)
- November 8-9: Denison (Boulders Conference Center)
- November 12-13: Ottumwa (Bridge View Center)
- November 19-20: Muscatine (Clarion Hotel)
- November 27-28: Sheldon (Northwest Iowa Community College)
- December 11-12: Red Oak (Red Coach Inn)
- December 17-18: Ames (Quality Inn and Suites)
2011 Farm Income Tax Schools
We have workbooks available yet to purchase.
Click here to download handouts.
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Ag Law and Taxation Items of Interest
Case Points Out Importance of Getting Business Understandings in Writing
January 24, 2012 - A recent opinion of the U.S. Circuit Court of Appeals for the Eighth Circuit exposes how a hog feeding arrangement can go bad, especially when no written contract is in place. It's an interesting display of law and economics. Read our summary here.
U.S. Supreme Court Says California "Downer Livestock" Law Preempted by Federal Law
January 24, 2012 - A unanimous Supreme Court has reversed an opinion of the U.S. Circuit Court of Appeals for the Ninth Circuit and held that the Federal Meat Inspection Act preempts a recently enacted California law that criminalized the processing or selling of the meat from non-ambulatory animals and required immediate euthanization of such animals. Read our article about the Court's decision here.
Oil and Gas Lease Leads to Numerous Legal Matters
January 23, 2012 - A Kansas oil and gas lease ended up generating a whole bunch of legal issues.
Estate Liable for Injuries Caused by Decedent's Flying Body Parts
January 23, 2012 - A recent opinion from the Illinois Court of Appeals is reminiscent of the famous 1928 Palsgraf opinion. It includes a train, a platform and a very unusual and unexpected event that caused injury.
First Batch of Iowa Opinions for the New Year
January 23, 2012 - The Iowa Court of Appeals has issued some opinions of relevance to rural landowners, agribusiness operators and fiduciaries of estates. This time, the opinions involve: (1) whether a nonpurchase-money mortgage is subject to a surviving spouse's dower interest; (2) problems with soil compaction; (3) the distribution of a decedent's estate; (4) whether a boundary was established by a written fence agreement; and (5) a mechanic's lien for improvement costs.
"Top Ten" Ag Law and Tax Developments of 2011
January 11, 2012 - There were numerous developments in the ag law and tax area in 2011 that were significant, but only ten could make the list. You can read our list of the ten most significant ones here.
More Legal Developments on Roundup Ready Crops
January 7, 2012 - Another federal court has dismissed an environmental group's challenge to the deregulation of Roundup Ready alfalfa.
Superpriority Status For Livestock Feed Supplier Without Need to Follow Statutory Certified Request Procedure
December 30, 2011 - The Iowa Supreme Court has held that a livestock supplier can beat out a prior perfected security interest even if the statutory certified request procedures are not followed. Those rules are just too "cumbersome" to be followed. See our updated article on the Iowa Ag Supply Dealer's Lien.
Year-End Musings: New Legislation, Expiring Provisions and Planning Pointers
December 29, 2011 - The end of a year and the beginning of a new one bring new tax provisions, others that expire and some planning opportunities and challenges. Here are our end of the year thoughts.
Big Damage Award Affirmed for Rice Farmers
December 11, 2011 - On December 8, the Arkansas Supreme Court upheld a damage award of almost $50 million for Arkansas rice farmers impacted by the introduction of GMO rice.
U.S. Supreme Court Agrees to Hear Case Involving Challenge to Health Care Act, But Will They Decide the Constitutional Issue?
November 26, 2011 - The U.S. Supreme Court recently agreed to hear various issues involving the 2010 health care act. They could either uphold it as constitutional, find it unconstitutional, or essentially put it back in the lap of the Congress. Here's our updated article with all of the details.
President Signs Bill Authorizing Tax Credits for Firing (and Re-Hiring) Veterans
November 22, 2011 - Legislation creating new tax credits for employing certain veterans has been signed into law. But, the legislation won't necessarily result in an increase in employment of such persons due to no prohibition in the law barring the receipt of the tax credits if a veteran is fired and another hired in their place.
Generation-Skipping Tax Planning Is A Tax Shelter Activity?
November 13, 2011 - New IRS final regulations state that generation-skipping transfer tax (GSTT) planning is a reportable transaction under the tax shelter reporting/disclosure rules. What those rules say is that when a practitioner advises a taxpayer concerning a transaction that the IRS determines to be essentially the same (in the IRS view) as a tax avoidance transaction that is a "listed" transaction, such advicde triggers the application of penalties for non-disclosure. GSTT planning is not yet a "listed" transaction, but fiduciaries such as trustees and executors will have to report whenever a trust or estate that they are the associated fiduciary for engages in a GSTT transaction and the trustee or executor provides "material aid, assistance or advice" on the transaction. Reporting is also required if the fiduciary receives gross income over a threshold amount and the taxpayer at issue entered into the GSTT transaction. T.D. 9556, Nov. 10, 2011, finalizing Treas. Regs. Sec. 26.6011-4, 301-6111-3 and 301-6112-2, eff. Nov. 14, 2011.
Estate Planning Article Updated
November 5, 2011 - Our technical article on the estate, gift and GSTT rules for 2010-2012 has been updated to incorporate all of the recent guidance from the IRS. Some of that guidance raises new questions. For instance, is there really a Form 706 filing requirement to preserve portability of the unused estate tax exclusion in the first spouse's estate for use in the surviving spouse's estate when the first spouse's estate is valued at less than $5 million? Recent IRS guidance on the issue doesn't follow the statute. Also, for Iowa decedents, if a federal Form 706 is filed for the sole reason of making the portability election, that is not enough, by itself, to require the filing of an Iowa Form 706. Read our updated article here.
Full Repeal of the Estate Tax Leads to Significant Deficit Reduction
October 22, 2011 - A new study on the federal estate tax concludes that reducing the estate tax provides more deficit reduction than does higher estate taxes. That's an important point for the "Super Committee" to take into consideration. The study concludes that complete repeal of the estate tax would account for 30.18% of the $1.2 trillion in deficit reduction that the "Super Committee" is required to come up with over the next 10 years. To read the study click here.
W-2 Reporting for Foreign Ag Workers
October 21, 2011 - IRS recently reiterated that, beginning in 2011, payments of $600 or more to foreign ag workers that have been temporarily admitted to the United States on H-2(A) visas must be reported on Form W-2. Of course, this will require that the worker have a valid Social Security number or taxpayer identification number. That could cause confusion for some practitioners and taxpayers. The confusion could result from the fact that payments to these workers are not subject to withholding for Social Security or Medicare purposes because their compensation is not deemed to be "wages" for withholding purposes. As such, the payments may only get reported on Form 1099-Misc as "Other Compensation." We will go over the finer points of this at the tax schools this fall.
Aerogenerator Ban Upheld Against Takings Claim
October 21, 2011 - The Kansas Supreme Court has upheld a Wabaunsee County, Kansas, ban on the development of large-scale wind generators in the county against a constitutional taking claim. The court said that the language of the zoning rules in the county gave the county commissioners the complete authority to grant conditional use permits or not. Thus, a landowner has no vested property right to put in generators unless the board grants a conditional use permit. Without a vested property right, there is nothing that has been taken. The Court also held that the ban was not facially discriminatory against interstate commerce because it banned all wind generators no matter where the electricity was sold. It was a complete, non-discriminatory ban. But, the court remanded for further factual development on whether the ban imposed a burden on interstate commerce that was clearly excessive in relation to the local benefits the ban provided. We will post an article on this court case in the coming days.
Potpourri of Tax Items
October 21, 2011 - In recent days, a number of inflation adjusted amounts for 2012 have been announced by IRS and the Social Security Administration. You can find some of the most relevant numbers on the IRS page and the Elder Law page. Also, the estate tax exemption climbs to $5,120,000 for deaths in 2012, the maximum reduction for property subject to a special use valuation election will be $1,040,000. The present interest annual exclusion will remain at $13,000 for gifts made in 2012.
IRS Provides Guidance on Filing Protective Claims For Estate With Outstanding Claims
October 17, 2011 - In 2009, IRS finalized regulations concerning the treatment of an estate's outstanding claims at the time of the decedent's death. Now, IRS has provided guidance in Rev. Proc. 2011-48 on how to file protective claims to keep the statute of limitations from preventing an amended return from being filed. See our updated article here.
More Ag-Law and Taxation Court Opinions Summarized
October 5, 2011 - The current batch of court opinions from Iowa and elsewhere involve a joint tenant's unilateral withdrawal of funds in a joint account, claim preclusion, the notice required in a tax sale, actions against fellow shareholders in a closely-held corporation, whether an occupation tax is constitutional, the allocation of a dependency deduction in divorce, a boundary case, and a patent infringement case involving GMO seeds.
For 2011 Deaths, Form 706 Instructions Finalized; For 2010 Deaths, Form 8939 Finalized
September 29, 2011 - The IRS has finalized the instructions for Form 706 for estates of decedents dying in 2011. The final instructions largely follow a prior draft, but do give additional insight into the portability of the deceased spousal unused exclusion amount (DSUEA). The instructions reiterate the the election to use the DSUEA in the estate of the surviving spouse in 2011 or 2012 is made by timely filing Form 706 in the first spouse's estate. If a Form 706 is filed in the first spouse's estate and the election is not desired, an attachment stating such can be attached to Form 706 or "No election under Section 2010(c)(5)" can be written at the top of the Form. Failure to file a Form 706 in the first spouse's estate (irrespective of whether any tax is due) results in no unused exclusion amount being available to the surviving spouse if the surviving spouse dies in 2011 or 2012. The instructions point out that at the death of the surviving spouse in 2011 or 2012, a copy of the predeceased spouse's Form 706 and calculation of the unused exclusion amount must be shown on page 1 of the surviving spouse's Form 706. The executor must also complete Part 4 of Form 706 and indicate on the Explanation line that the election was made in the first spouse's estate. If the surviving spouse had more than one spouse during life, the executor must list the names and Social Security numbers of each prior spouse and the reason for the termination of each prior marriage. To view the final instructions for the 2011 Form 706, click here.
October 3 is the filing deadline for estates of decedents dying on January 1, 2011. An automatic six-month extension for filing form 706 for 2011 deaths is available by filing Form 4768. IR-2011-97.
The IRS has also finalized Form 8939 for deaths in 2010. This is the "Large Transfers Return" which is used to elect out of the estate tax for 2010 deaths and make income tax basis allocations to the decedent's property. To view the final Form 8939, click here. To read the instructions for Form 8939, click here. The instructions point out that no basis increase is available if the executor does not establish the market value of the assets (i.e., cost basis) to which a basis increase is being allocated. A reasonable estimate is not acceptable. Also, it appears that assets cannot be lumped together and valued and then placed under general headings on Form 8939. IRS also stated that if an executor takes a position on Form 8939 that is beyond that allowed by Rev. Proc. 2011-41, none of the safe harbors of Rev. Proc. 2011-41 apply. But, courts view Rev. Procs. differently. They are, at best, low-level IRS authority that are not the final authority on the issue or issues addressed by the Rev. Proc. On the other hand, the instructions do allow an executor to approximate the decedent's date of acquisition of an asset. As for fractional interests, IRS stated that a basis increase amount is limited to the property that was "owned by" the decedent. For, property that isn't distributed by Jan. 17, 2012, the instructions do not provide any guidance.
The IRS has also finalized Publication 4895, "Tax Treatment of Property Acquired From a Decedent Dying in 2010" which is accessible here.
Department of Labor Proposes New Child Farm Labor Rules
September 24, 2011 - The U.S. Department of Labor is proposing to change some of the rules that govern minors working in certain agricultural operations. Comments will be accepted through October. Read our summary of the rules here.
Two Tort-Related Decisions
September 24, 2011 - The Iowa Supreme Court has decided a case involving a claim of wrongful discharge, and the Wyoming Supreme Court has ruled in a case involving the state's liability for injuries sustained by a guest at a state park.
IRS Announces Extended Period For Livestock Sales Due to Severe Weather Conditions
September 22, 2011 - It has been a dry year in numerous parts of livestock-raising areas in the U.S. Livestock owners in counties experiencing prolonged drought are eligible for an extended replacement period for livestock that had to be sold because of the dry conditions. To read-up on the rule for sales of livestock due to severe weather conditions (including drought), involuntary conversion treatment and the counties that have experience prolonged drought, click here.
The Due Date For Form 8939 Slides to 2012
September 13, 2011 - IRS Shifts Due Date For Form 8939. As we have been noting at our seminars, the IRS has actually been targeting sometime in early 2012 for the filing deadline for Form 8939 - the election out of estate tax for a 2010 decedent's estate. Now it's official. The due date has been moved to January 17, 2012. Read about the recent development here.
Adverse Possession Not Established - Kansas
September 13, 2011 - The Kansas Court of Appeals has ruled that an adverse possession claimant did not meet the requirements to claim title to a tract of real estate. Read our summary here.
IRS Issues Draft of Form 706 for Estates of Decedents Dying in 2011
September 12, 2011 -The IRS has released a draft of Form 706 for 2011 deaths. Click here to view the Form. Of particular interest is that lines 9-11 of Part 2 refer to the "applicable exclusion amount" rather than "applicable credit amount." Surely, IRS will change those lines before finalizing the form. One does not deduct the "applicable exclusion amount" from the "gross estate tax" of line 8 (which is what lines 9-11 purport to do).
The instructions for the Form specify that the mere filing of the Form 706 constitutes the election required by I.R.C. Sec. 2010(c)(5)(A) to allow the surviving spouse to take into account for estate tax purposes, the deceased spouse's unused exclusion amount. Click here to view the instructions. If portability is not desired, then an attachment must be made to Form 706 in the first spouse's estate, indicating that the surviving spouse is not making the election or "No Election Under Section 2010(c)(5)" can be written at the top of the first page of Form 706. Remember, however, that portability only applies to estates of decedents dying in 2011 and 2012. So, both spouses must die before 2013 for portability to even apply (or at least one spouse dies before 2013 and the surviving spouse makes a significant taxable gift before 2013). The Joint Committee on Taxation's explanation is clear on this point when they state, in reference to the portability provision of the 2010 law, "...neither the EGTRRA rules nor the new rules of the provision will apply to estates of decedents dying, gifts made, or generation skipping transfers made after December 31, 2012." [emphasis added]
Form 706 For 2010 Released
September 7, 2011 - The IRS has released the final version of Form 706 for 2010 United States Estate (and Generation-Skipping Transfer) Tax Returns. Click here to view the form. For estates of decedents dying from January 1, 2010, through December 16, 2010, the form is due on September 19, 2011. For decedents dying December 17, 2010, through December 31, 2010, the form is due nine months after the date of death.
