CALT :: Ag Law & Taxation Case Annotations

O’Brien v. Leegin Creative Leather Products, Inc., No. 101,000, 2012 WL 1563976 (Kan. Sup. Ct. May 4, 2012)(U.S. Spreme Court opinion in Leegin Creative Leather Products v. PSKS, Inc., 551 U.S. 877 (2007) inapplicable to class of consumers that sued a unit of Leegin Creative Leather Products, Inc. on basis that unit’s pricing policy for retailers amounted to price-fixing under Kansas antitrust laws; trial court had granted summary judgment for unit on basis that the plaintiff class had not presented sufficient evidence that class had paid higher prices due to the unit’s pricing policies; Kansas Supreme Court reversed because class had presented enough evidence to infer that unit’s pricing policy was “subject to an inference” that it was utilized for the purpose of price fixing and price control; unit had, beginning in 1997, given retailers “pricing guidelines” where the price of goods subject to the guidelines were about twice the wholesale cost; as a result of Court’s decision, case returns to trial court for further review in accordance with Kansas competition law).
In re Processed Egg Products Antitrust Litigation, No. 11-cv-3520, MDL No. 2002,08-md-02002, 2011 WL 6396462 (E.D. Pa. Dec. 20, 2011)(direct purchasers of egg products claim that egg and egg product producers and trade groups conspired to fix prices and restrict supply of shell egg and egg products in violation of Kansas Restraint of Trade Act; case remanded for lack of subject matter jurisdiction with court noting that case might join pending multidistrict litigation at later time; in subsequent action, In re Processed Egg Products Antitrust Litigation, MDL No. 2002,08-md-02002, 2012 WL 1137100 (E.D. Pa. Apr. 4, 2012), the egg producers moved for partial dismissal of time-barred claims by indirect purchasers from various jurisdictions recognizing indirect purchaser antitrust claims; argument focused on whether allegations plead were sufficient as to toll the various statutes of limitations; motion granted due to pleading deficiencies; claims dismissed without prejudice and plaintiffs may seek to amend complaint regarding fraudulent concealment and equitable tolling allegations).
Allen, et al. v. Dairy Farmers of America, Inc., No. 5:09-cv-230, 2011 U.S. Dist. LEXIS 141898 (D. Vt. Dec. 9, 2011)(court denies plaintiff's petition for class certification; case involves plaintiff's claim that defendant conspired or attempted to conspire to monopolize market for milk in violation of Sherman Act Sec. 2, price fixing in violation of Section 1 of Sherman Act and conspiracy to restrain trade in violation of Sec. 1 of Sherman Act).
In re Fresh and Process Potatoes Antitrust Litigation, No. 4:10-MD-2186-BLW, 2011 U.S. Dist. LEXIS 138777 (D. Idaho Dec. 2, 2011)(potato farmers not exempt from Sherman Antitrust Act; conduct involved acreage reductions, production restrictions and collusive crop planning and is not exempted from antitrust scrutiny by the Capper-Volstead Act which exempts farmer cooperatives from some federal antitrust provisions; case involves request for class action status by wholesale potato buyers and consumers against United Potato Growers of America (a national farmers' cooperative consisting of 10 state and regional cooperatives; court refused to dismiss lawsuit stating that court needs to conduct "a factually-intense inquiry" about the role of integrated farmer-packers in the cooperative).

Bankruptcy

Hall, et ux. v. United States, No. 10-875, 2012 WL 1658486 (U.S. Sup. Ct. May 14, 2012)(in affirming Ninth Circuit, Court holds that plain language of 11 U.S.C. Sec. 1222(a)(2)(A), in coordination with I.R.C. Secs. 1398 and 1399, results in taxes arising post-petition in Chapter 12 being the debtor's responsibility; no separate taxable entity from the debtor created in Chapter 12 and taxes do not constitute administrative claims in accordance with 11 U.S.C. Sec. 503(b)).
In re Long, No. 11-10418, 2012 WL 1605473 (Bankr. D. Kan. May 7, 2012)(debtor was Kansas resident at time petition filed, but had not resided in Kansas for 730 days before petition date; debtor lived in Nebraska during the the entire 180 day period preceding the 730-day period; Nebraska state bankruptcy exemptions are only available to Nebraska residents and bar Nebraska residents from claiming federal exemptions, so debtor claimed more generous federal exemptions in accordance with 11 U.S.C. Sec. 522(d); trustee objected; court overruled trustee's objection to debtor claiming federal exemptions becaue Nebraska's territorial limitations not preempted by 11 U.S.C. Sec. 522; when debtor can establish residency for greater part of 180-day period, that state's laws apply to debtor's exemption rights and if those rights are denied by operation of law, federal exemptions may be claimed; 11 U.S.C. Sec. 522(b) does not pre-empt territorial limitation).
In re Erickson, No. 11-20066, 2012 WL 1453967 (Bankr. D. Wyo. Apr. 26, 2012)(debtor filed Chapter 12 and initial plan was denied confirmation as was first amended plan and second amended plan; debtor proposed third amended plan and proposed to sell 40 acres from Idaho property to pay creditors along with changing farming operations and drive truck to insure plan payments made; court determined that third amended plan was feasible, but that it was not equitable or in good faith to parse out the 40 acres from the balance of the land in the bankruptcy estate with hopes that unsecured creditors would receive a distribution; plan not confirmed because it failed to ensure that unsecured creditors would receive the same as if case were a Chapter 7 case (11 U.S.C. Sec. 1225(a)(4)).
In re Arroyo, No. 08-11216-FJB, 2012 WL 1435738 (Bankr. D. Mass. Apr. 24, 2012)(debtor was 52 years old and had student loan debt of between $260,000 and $320,000; debtor did not have any dependents or any physical problem that would negatively impact debtor's ability to earn a living as a licensed psychologist; evidence also showed that income had somewhat increased over time; debtor not entitled to "undue hardship" exception to non-discharge of student loan debt under 11 U.S.C. Sec. 523(a)(8)).
In re Reinhart, No. 09-0428, 2012 WL 1409284 (10th Cir. Apr. 24, 2012)(debtor started Keogh retirement plan in 1992 and plan fell out of compliance with tax rules; about 10 years later, debtor filed bankruptcy under claimed funds in retirement account were exempt under Utah law even if plan not qualified for beneficial tax treatment; Utah Supreme Court, on certified question, said state law exempts funds in Keogh account if plan substantially complies with tax code; court holds that account substantially complies and funds exempt; but, contributions within one year of petition date not exempt, along with earnings on such contributed amounts).
In re Wiley, No. BR 11-02462-JDP, 2012 WL 1131936 (Bankr. D. Idaho Apr. 3, 2012)(in case of first impression under Idaho law, court held that a Chapter 7 debtor must make election concerning how to receive annuity payments by before petition filed for annuity benefits to be exempt (up to a maximum amount); court determined that not making such election before petition date would frustrate legislative intent of capping amount of exempt monthly benefits).
In re Werth, No. 11-21046, 2012 WL 1142547 (Bankr. D. Kan. Mar. 31, 2012)(debtors, married couple, opened two I.R.C. §529 Education Savings Accounts for benefit of husband’s two children from prior marriage and filed Chapter 7 petition less than five months later; debtor moved for order directing turnover of funds in accounts; accounts held to be property of bankruptcy estate because wife owns accounts and contributions made within year preceding petition date; no state or federal exemption applies; while Bankruptcy Code provides special treatment for domestic support obligations, such treatment does not include earmarking pre-petition assets for post-petition obligations; accounts held to be non-exempt property of bankruptcy estate; see also In re Bourguignon, 416 B.R. 745 (Bankr. D. Idaho 2009)).
In re Clifton, No. 09-02379-8-RDD, 2012 WL 1028039 (Bankr. E.D. N.C. Mar. 26, 2012)(Chapter 11 case in which debtor had interest in I.R.C. Sec. 401k retirement plan and claimed plan as exempt; case converted to Chapter 7; plan funds rolled over into IRA and then debtor withdrew funds after debtor turned 59 and 1/2; trustee claimed that IRA not scheduled or disclosed to court and is non-exempt; trustee requested turnover of withdrawn amounts; debtor claimed that 401(k) funds were ERISA qualified and claimed as exempt in Debtor's original schedules and that funds rolled over into IRA and continue to be exempt; record showed that at petition date funds frozen in I.R.C. Sec. 401(k) plan and was listed on original exemption schedules; lack of evidence that funds came from other than the plan; no penalty on withdrawals).
In re Meyer, No. 11-24099, 2012 WL 955310 (Bankr. E.D. Wis. Mar. 22, 2012)(Chapter 7 case involving debtors with primarily credit card debt and mortgage; debtors had income above median income level for debtors’ household size; trustee moved to dismiss case on basis that debtors’ adjusted monthly income was high enough that made it presumptively abusive for debtors to continue under Chapter 7 rather than repaying debts in context of Chapter 13; debtors claimed that “means test” (11 U.S.C. §707(b)) which limited them to deduction not to exceed $1,775 annually as school expense per child violated First Amendment right to send their children to religious school and barred them from receiving a discharge; means test facially neutral and does not bar debtors from practicing their religion; government has compelling interest in ensuring fair and efficient application of Bankruptcy Code; debtors’ attempt to use Bankruptcy Code to subsidize private school expenses runs counter to government’s compelling interest; debtors’ personal financial situation was cause for debtors not being able to send children to religious school).
In re Duckworth, No. 11-8002, 2012 WL 986766 (Bankr. C.D. Ill. Mar. 22, 2012)(declaratory judgment action brought by trustee for guidance on disbursement of equipment sale and crop insurance proceeds in Chapter 7 bankruptcy and avoidance of bank’s security interest due to errors in agreement; Agricultural Security Agreement for loan by bank failed to correctly identify date value was given for first loan; no dispute value provided so all requirements of enforceability satisfied because mistake in description of secured debt does not render otherwise valid security agreement unenforceable; no allegations of being misled by incorrect representation in suit; bank’s later loan not secured because bank failed to include future advances or dragnet clause in security agreement; court agreed with Fifth Circuit decision (In re Cook, 169 F.3d 271 (5th Cir. 1999)) that Federal Crop Insurance Act pre-empts UCC Article 9, which means exclusive method for creditor to obtain lien in undisbursed proceeds is through FCIA authorized assignment process).
In re McGough, No. 0937932, 2012 WL 843753 (B.A.P. 10th Cir. Mar. 14, 2012)(under 11 U.S.C. Sec. 548(a)(2)(A), bankruptcy trustee could avoid portion of charitable contributions debtors made to church over two-year period before bankruptcy filing that exceeded 15 percent of debtors' gross annual income; trustee's argument that statute requires debtors' contributions (which exceeded 15 percent threshold in both preceding years) be avoided in their entirety is rejected).
In re Carter, No. 11-6073, 2012 WL 789320 (B.A.P. 8th Cir. Mar. 13, 2012)(state court judgment entered for estate against debtor and writ of execution issued which ordered sheriff to sell debtor’s vehicle to satisfy judgment; estate paid creditor amount of loan secured by vehicle and sheriff schedule sale which never occurred because debtor filed Chapter 7; debtor claimed portion of their interest in vehicle exempt under Iowa law and filed motion to avoid estate’s judgment lien which is avoidable under 11 U.S.C. §522(f)(1); bankruptcy court denied debtor’s motion; on appeal B.A.P. affirmed on basis that lien not judgment lien but consensual lien under Iowa law; when loan paid off, estate stepped into shoes of bank under Iowa Code §626.37 and held non-avoidable consensual lien; thus, amount estate advance to pay off loans secured by bank’s lien against debtor’s vehicle not secured by judicial lien).

Business Planning

S. 2343 (cloture vote, May 8, 2012)(bill would have applied payroll tax to taxpayers with incomes over $250,000 by requiring such persons to include for payroll tax purposes income received from an S corporation or limited partnership interest in a professional services business where 75 percent or more of the gross revenue is derived from the services of three or fewer shareholders or where the S corporation is a partner in a professional services business; bill failed on cloture vote by garnering only 52 votes; no Republicans voted for the bill and only one Democrat voted against it (Reid (D-NV))
Estate of Lockett, T.C. Memo. 2012-123 (decedent formed FLP and moved into assisted living facility simultaneously; two years later, decedent funded partnership with personal assets and trust subsequently dissolved; while decedent sole owner of FLP, two children listed as general partners even though contributing nothing to FLP; FLP loaned funds to decedent's children with such loans documented but with no terms except to establish interest payments; some assets kept out of FLP for decedent's care; upon decedent's death, 40% discount claimed on FLP assets; court held that no discounts allowable because decedent owned 100 percent of FLP interests and FLP agreement said that FLP would dissolve upon one partner acquiring interests of all others; decedent owned all assets individually and assets includible in decedent's estate at full FMV).
Priv. Ltr. Rul. 201214014 (Dec. 22, 2011)(partnership that was converted to corporation via series of transactions in attempt to facilitate public offering treated as I.R.C. §351 exchange).
Estate of Turner, et al. v. Comr., T.C. Memo., 138 T.C. No. 14 (2012), on reconsideration from, T.C. Memo. 2011-209 (decedent, president of lumber company who had invested heavily in bank and stock appreciated highly in value, transferred assets to FLP; transfer not bona fide sale, but done primarily for tax reasons and no legitimate non-tax reason existed for transfers, thus, included in gross estate under I.R.C. Sec. 2036(a); decedent retained possession and enjoyment of assets transferred to partnership via implied agreement; commingling of personal and partnership assets present; payment of premiums on life insurance policies for benefit of children and grandchildren via Crummey-style trusts were gifts of present interests eligible for annual exclusion even though payments were paid directly to the insurance company instead of the grantor transferring the premium payments to the trust and the trust remitting the proceeds to the insurance company with the trustee providing notice to the beneficiaries of their withdrawal rights simultaneous with the contributions of the premium amounts to the trust; to have present interest gift treatment, court noted that key question is whether beneficiary had "legal right to demand" withdrawal; under trust terms, beneficiaries had absolute right and power to demand withdrawals after each direct or indirect transfer to the trust; thus, indirect funding irrelevant to demand right; lack of notice did not affect "legal right to demand" withdrawals, and was not a problem in Crummey case; IRS has not conceded issue, and it remains important to properly contribute premium amounts to trust and notice of withdrawal right be given to beneficiaries; on reconsideration, estate claimed that under decedent's will, assets pulled back into estate via I.R.C. §2036(a) passed to surviving spouse and because surviving spouse had right to pecuniary marital bequest that allowed surviving spouse to receive assets equal to amount necessary to reduce estate tax to zero, marital deduction resulted in no estate tax deficiency; court held that marital deduction not available for FLP interest or FLP assets gifted during decedent's lifetime; Treas. Reg. §20-2056(c)-2(a) specifies that property interest passes to surviving spouse only if it passes to spouse as beneficial owner, but decedent’s assets first transferred to FLP and then decedent gifted FLP interests to persons other than surviving spouse; consequently, property passing to person other than surviving spouse cannot also be considered as passing to surviving spouse for purposes of marital deduction; value of transferred assets in decedent’s estate for tax purposes, but are owned by FLP or non-spousal partners and would not be includible in surviving spouse’s estate).
Martignon v. Comr., T.C. Memo. 2012-18 (petitioner established partnership with another person to operate a restaurant, but got frozen out of the business by the partner; partner issued K-1 to, but distributed no cash; petitioner didn't report income; court pointed out that petitioner subject to tax on distributive share whether or not received; no penalty imposed).

Civil Liabilities

Pyle v. Moles, No. F060873, 2012 WL 1594147 (Cal. Ct. App. May 8, 2012)(appeal from trial court opinion regarding ownership of grapes grown on leased premises; entire case hinged on whether tenant abandoned lease and gave landlord legal right to retake premises and sell crop; trial court determined lease was not abandoned so landlord’s actions in selling grapes gave rise to conversion because tenant and bank had sufficient possessory interest in crop and awarded damages reduced by landlord’s costs in harvesting crop; court dismissed landlord’s counter-claims against tenant; landlord appealed; appellate court found substantial evidence existed and upheld trial court’s factual determination that tenant did not abandon lease; dismissal of landlord’s claims also upheld; claim for abuse of process failed because no allegations of court-issued process; intentional interference with contract claim also failed because landlord had no legal right to sell crop).
Brownstein v. Baker Equine Hospital, No. B228740, 2012 WL 1534804 (Cal. Ct. App. May 2, 2012)(show horse was operated on by outpatient veterinary hospital; after complications from trachea removal placed for surgery, horse received additional veterinary care and was ultimately euthanized; owner brought suit against veterinary center and individual veterinarians; jury verdict for plaintiff as against veterinarian center and damages awarded for costs of additional care required; veterinarian center appealed; appellate court found substantial evidence existed to establish veterinarian center failed to establish policy to determine medical fitness for discharge of horse after surgery; appellate court also found substantial evidence established to show causal connection between center’s negligence and other conditions requiring treatment of horse for which plaintiff was awarded damages; trial court affirmed on both issues).
Tracey v. Solesky, No. 53 (Md. Ct. App. Apr. 26, 2012)(child was severely injured when bitten by a “pit bull” dog; 89 year-old landlord was sued for the incident; trial court dismissed case because no proof under common law principles whether landlord knew of dog’s vicious propensities; intermediate appellate court reversed finding fact question generated; on further appeal, highest court held “pit bulls” and “mixed-breed pit bulls” are inherently dangerous and created strict liability standard for any person owning, harboring, or controlling such breed specific dogs in lieu of traditional common law liability; dissent filed, in which justice criticized court’s departure from common law and judicial notice of evidence outside the record; dissenter outlined difficulty in determining when dogs are “mixed-breed pit bulls” and differences in standards of liability for other breeds).
Beckwith v. Weber, Nos. S-11-0101, S-11-0245, 2012 WL 1415598 (Wyo. Apr. 25, 2012)(personal injury suit brought after plaintiff fell off horse while participating in trail ride; jury verdict entered for defendant finding injuries were result of inherent risk of horseback riding as defined by state recreational use statute; plaintiff appealed regarding jury verdict form and instructions given and court’s award of costs to defendant; plaintiff sought to impose liability for failure to provide skilled guides as “promised” in the acknowledgment of risk form she signed, which would have waived the benefit of the recreational use statute; plaintiff sought jury verdict form with question regarding provision of skilled guides and other instructions regarding duties imposed by this theory; district court refused requested verdict form with question regarding provision of skilled guides and related jury instructions; appellate court upheld district court’s refusal as theory sought by plaintiff was not related to jury question of whether injuries were caused by inherent risk of activity and verdict rendered found no negligence of defendant, so instructions would not have affected verdict; appellate court also affirmed trial court’s award of costs to defendant as prevailing party).
Gossett v. Crockett, No. 2010-CA-002079-mr, 2012 WL 1365958 (Ky. Ct. App. Apr. 20, 2012)(plaintiffs brought personal injury lawsuit against farmer after plaintiffs were in motorcycle accident caused by slick substance on highway; firefighters called to field-fire at accident scene next day and believed farmer used fuel as accelerant, which was slick substance plaintiffs encountered; jury returned verdict in defendant’s favor; plaintiffs appeal alleging prejudicial error in defendant’s closing arguments when counsel stated the “prospect of financial ruin” had affected defendant for two years; after statement, plaintiffs requested permission to admit evidence of defendant’s insurance, but judge gave admonishment to jury instead; appellate court agreed argument was improper, but held not so prejudicial that admonishment could not cure it; additional evidence presented that other causes for slick substance were plausible; one judge dissented because he believed statement was too inflammatory for admonition to cure.)
City of Lincoln Center v. Farmway Co-op, Inc., No. 105,962, 2012 WL 1222268 (Kan. Ct. App. Apr. 12, 2012)(city charged grain elevator with violating local ordinance prohibiting excessive noise and nuisances; elevator challenged ordinance as void for vagueness in proscribing conduct; court agreed ordinance failed to provide defined and objective standard for prohibited conduct and held ordinance unconstitutional).
Bloomer v. Shauger, 2012 N.Y. Slip Op. 02740, 2012 WL 1205672 (N.Y.A.D. Apr. 12, 2012)(plaintiff filed personal injury claim based on negligence and strict liability after losing a finger in bizarre accident; defendant, plaintiff’s neighbor, owned two horses that were inseparable; one horse died and defendant began digging grave for horse; after little progress had been made, plaintiff came to the property and finished digging the grave; plaintiff put his hand on halter of distressed horse when defendant returned to area with lead line, which spooked horse and caused horse to move head and sever plaintiff’s finger; defendant moved for summary judgment and trial court granted motion; appellate court affirmed on both counts; negligence claim dismissed because state no longer recognizes common law negligence claim for injuries caused by domestic animals; horse’s demeanor on the day was not atypical or a dangerous propensity nor was normal activity of walking away from lead line cause of plaintiff’s injury, so claim dismissed).
Hastings v. Sauve, No. 2012 N.Y. Slip Op. 02535, 2012 WL 1129275 (N.Y.Ct. App. Apr. 5, 2012)(appeal of grant of summary judgment for defendant in personal injury case; plaintiff hit cow in roadway; plaintiff alleged negligence against plaintiff, but court held that claim could only proceed via strict liability following evidence of animal’s vicious tendencies; negligence claim dismissed due to failure to plead viable claim; no evidence presented of animal’s tendencies so strict liability claim would also have failed if pled; judgment affirmed, but court noted displeasure in its inability to allow claim for negligence to proceed due to facts of case).
Western Industries-North, L.L.C. v. Lessard, No. 1:12cv177 (E.D. Va. Mar. 21, 2012)(employee of extermination company that offered dog-sniffing bed-bug detection services fired employee because he was moonlighting; company filed suit to recover bed-bug sniffing dog in possession of employee and enforce non-compete agreement; company filed Motion for Preliminary Injunction; in ruling on Motion, court found question of fact regarding ownership of dog, so motion denied regarding recovery of dog; court granted injunction regarding enforcement of non-compete agreement with exception of New York City due to size of market (most “bed-bug infested” city in 2011) and single inspection in city during term of employment).
Sierra Pacific Holdings, Inc. v. County of Ventura, No. B232307, 2012 WL 920322 (Cal. Ct. App. Mar. 20, 2012)(plane crashed during emergency landing when trying to avoid barrier erected within runway protection zone; plaintiff brought suit for damages alleging state tort principles; defendant filed motion in limine to preclude evidence of any safety standards other than FAA regulations and in particular the FAA Advisory Circular claiming its safety standards preempted state law; district court agreed and plaintiff admitted FAA regulations complied with and all claims based on state tort law; appellate court reversed and held that Advisory Circular does not contain mandatory standards and are not regulations with the force of law, so they cannot preempt state law; state law remedies still applicable; and Advisory Circular admissible for appropriate standard of care; case remanded to district court to vacate order granting motion in limine).
Kelly v. Scherber, No. A11-1380, 2012 WL 896433 (Minn. Ct. App. Mar. 19, 2012)(plaintiff’s property stored in defendant’s barn; separate dispute occurred regarding damage to real property, defendant locked barn and would not let plaintiff retrieve his property in May 2004; plaintiff discovered property missing 15 months later; brought civil suit in August 2010 for civil conversion; conversion occurs when possessor exercises any dominion contrary to owner’s rights; summary judgment granted because claim brought more than six years after May 2004 when conversion occurred; case affirmed on appeal and dismissed).

Contracts

Waddle v. Elrod, No M009-02142-SC-R11-CV, 2012 WL 1406451 (Tenn. Sup. Ct. Apr. 24, 2012)(action brought to enforce settlement agreement reached before trial that included transfer of real property; adverse party sought to void agreement under Statute of Frauds; court held Statute of Frauds applies to settlement agreements involving any transfer of interest in real property; electronic writings between parties analyzed under state electronic communications statute and were deemed signed writings sufficient to satisfy Statute of Frauds; settlement agreement enforced).
Brooks Cotton Co., Inc. v. Williams, No. W2011-01415-COA-R9-CV, 2012 WL 1392370 (Tenn. Ct. App. Apr. 23, 2012)(farmer allegedly entered into oral agreement to sell cotton crop, but failed to deliver to plaintiff; plaintiff sued and farmer argued oral contract unenforceable under Statute of Frauds; plaintiff filed summary judgment motion to resolve issue that farmer was merchant for purposes of exception to Statute of Frauds under UCC; trial court granted motion determining farmer was merchant; farmer appealed and argued statute did not include farmers within definition of merchants; appellate court held that experienced commercial farmers in state could fall within definition of merchant for purposes of exception; appellate court, however, reversed trial court order and remanded for trial because fact question presented regarding whether farmer was merchant, which was incapable of resolution by summary judgment).
Southern States Cooperative, Inc. v. Melick Aquafeeds, Inc., No. 11-12296, 2012 WL 1320118 (11th Cir. Apr. 17, 2012)(fish farm brought breach of warranty suit against supplier for providing feed not meeting guarantees of fat and protein ratio causing decline in fish growth; competing experts testified regarding causal link between food and fish growth; defendant filed motion for directed verdict, which was deferred; jury returned verdict of $770,229.30 in lost profits for fish farm; defendant renewed motion, which was denied; defendant appealed two issues: trial court’s admission of expert’s testimony because theories were unscientific and unreliable and impermissible damages awarded; appellate court held expert’s testimony did not create substantial prejudice to defendant and no specificity of deficiencies in expert’s scientific analysis provided; award sufficiently proved through evidence that plaintiff’s expenses remained stable but profits lost in amount jury awarded; appellate court affirmed on both issues).
T.W. Phillips Gas and Oil Co. v. Jedlicka, No. 19 WAP 2009, 2012 WL 1033691 (Pa. Sup. Ct. Mar. 26, 2012)(lessor brought declaratory judgment to declare oil and gas lease terminated because prior lessee failed to maintain production “in paying quantities” when loss of $40 occurred one year in 1950s; suit filed after new lessee made plans to drill additional wells on property; appellate court relying on Young v. Forest Oil Co., 45 A. 121 (Pa. 1899), held that when production on well has been marginal or sporadic, such that for some period profits did not exceed operating costs, the phrase “in paying quantities” must be construed with reference to operator's good faith judgment; lower court judgment affirmed on consideration of operator's good faith judgment and conclusion oil and gas lease at issue produced in paying quantities; dissent disagreed with court’s interpretation of Young and called for two-part test for determining paying quantities: profits must exceed operating expenses and if profits exceed operating expenses, then lessee's good faith judgment is considered).

Criminal Law

U.S. v. Kirkwood, No. CR11-5488RBL, 2012 WL 1631969 (W.D. Wash. May 9, 2012)(search warrant issued based on observations of defendant’s "magic mushroom" growing operations made by officers in wooded area outside defendant’s rural home in clearing but still on part of defendant’s property; defendant brought motion to suppress evidence of psychedelic mushroom cultivation operation obtained by warrant; defendant argued his entire property encompassed privileged curtilage and was his “yard”; court disagreed and held, that while rural homes can have a more expansive curtilage than urban homes, open clearing separating defendant’s home and outbuildings from wooded area functioned as curtilage; area was suitable for activities intimately associated with home and use of area associated with home use versus areas of farm activities; motion to suppress evidence denied).
State v. Nakatsu, Nos. 29542, 29543, 29559, 2012 WL 934038 (Haw. Ct. App. Mar. 20, 2012)(appeal from criminal conviction as repeat offender of driving without license and driving without motor vehicle insurance policy; court found no merit in defendant’s stated defense that he was not subject to the laws of the state because he is a resident of the "Kingdom of Hawaii"; court also found no merit in defendant’s claim he was using his 1990 Mazda Miata convertible on the open highway as a "road machine" or "implement of husbandry" because he was using it to obtain water and feed for the animals on his farm and, thus, was exempt from driver's licensing requirements under state law; all other defenses found to be without merit and convictions and sentencing upheld).

Environmental Law

Big Oak Farms, Inc. v. U.S., No. 11-275L, 2012 WL 1570878 (Fed. Cl. May 4, 2012)(motion to dismiss suit alleging 5th Amendment taking when Army Corp artificially breached levee and flooded farm during 2011 Mississippi River flood; Corp failed to establish immunity from liability under Flood Control Act of 1928; court reviewed claim under two-part framework established for flooding cases in Ridge Line, Inc. v. U.S., 346 F3d 1346, 1355 (Fed. Cir. 2003), which requires examination of intent behind government action and whether invasion appropriates benefit to government at expense of property owner; court dismissed first claim for failure to allege recovery under Ridge Line; court examined second claim based on floodway operation plan because plaintiffs failed to allege greater number of floods occurred under plan than would have occurred otherwise; court dismissed final claim alleging takings for sand and gravel deposits because deposits did not appropriate a benefit to government; court granted motion to dismiss all claims).
Arkansas Game & Fish Commission v. United States, 637 F.3d 1366 (Fed. Cir. 2011), cert. granted, No. 11-597 (U.S. Sup. Ct. Apr. 2, 2012)(U.S. Supreme Court agreed to hear case where lower court held that deviations by U.S. Army Corps of Engineers from operating plan for dam that caused increased flooding downstream to wildlife management area that plaintiff owned were only temporary and not “inevitably recurring” and did not constitute taking of flowage easement; Fed. Cir. opinion reversed Court of Federal Claims opinion holding that action constituted taking of temporary flowage easement over plaintiff’s property – damages of $5,778,758 awarded).
Sackett v. United States Environmental Protection Agency, No. 10-1062 (U.S. Sup. Ct. Mar. 21, 2012), rev'g., 622 F.3d 1139 (9th Cir. 2010)(CWA does not preclude pre-enforcement judicial review of EPA administrative compliance orders; such preclusion would violate due process; plaintiff had filled-in approximately one-half acre of property with dirt and rock in preparation to build a house, but EPA issued a compliance order alleging that parcel was wetland subject to CWA permit requirements; plaintiff sought hearing with EPA to challenge finding, but hearing not granted and defendant continued to assert jurisdiction; plaintiff then sued in federal district court seeking injunctive and declaratory relief, but trial court granted defendant's motion to dismiss for lack of subject matter jurisdiction because, according to court, CWA precludes judicial review of compliance orders before EPA starts enforcement action; case affirmed on appeal; U.S. Supreme Court reversed, noting that compliance order constitutes "final agency action" under the Administrative Procedure Act, and owners did not have adequate remedy at law).
Comer v. Murphy Oil USA, Inc., No. 1:11CV220-LG-RHW, 2012 WL 933670 (S.D. Miss. Mar. 20, 2012)(lawsuit re-filed against oil companies for release of by-products that allegedly led to "global warming," which plaintiffs claimed produced conditions that formed Hurricane Katrina; previous suit dismissed by district court, Court of Appeals panel overturned district court dismissal, but review by court en banc could not occur due to lack of quorum; appellate decision lawfully vacated before loss of quorum; motion to dismiss present suit granted by district court based on res judicata and collateral estoppel of district court opinion in first lawsuit; as a precaution court also dismissed for lack of standing, presentation of non-justiciable political question claims; pre-emption of state law claims by federal law; statute of limitations, and failure to state a claim for relief; plaintiffs' claims completely dismissed).

Estate Planning

Estate of Morgens v. Comr., No. 10-73698, 2012 WL 1548087 (9th Cir. May 3, 2012), aff'g., 133 T.C. 402 (2009) (donees were recipients of QTIP property as a result of remainder interest created under terms of decedent's will that paid gift tax on such gifts within three years of decedent's death; gift tax amount included in decedent's gross estate in accordance with I.R.C. Sec. 2035(b)(estate tax three-year "gross-up" rule); while I.R.C. Sec. 2519 imposes gift tax when all or portion of QTIP trust is distributed during beneficiary spouse's lifetime to beneficiaries other than the spouse, spouse can recover taxes from beneficiaries from the donees; gift taxes paid under I.R.C. Sec. 2519 subject to gross-up rule and is consistent with policy of I.R.C. Sec. 2035(b) to prevent death bed transfers that would incur gift tax (gift tax is exclusive and estate tax is inclusive); I.R.C. Sec. 2207A does not shift gift tax liability to QTIP recipients).
In re Estate of Stevens, No. 2011 CA 26, 2012 WL 1493747 (Ohio Ct. App. Apr. 27, 2012)(decedent's will gave executor (friend of decedent) option to buy decedent's farmland for $3,000/acre if notice to exercise option given within 30 days of appointment as executor and option exercised within 45 days after notice given; option to lapse if not timely exercised; specification given as to how option to be exercised; notice given and option exercised four days after will admitted to probate and executor appointed; granddaughter opposed executor's intent to proceed with administration of estate on basis that executor failed to comply with option period in will which (she claimed) required real estate transaction to be completed within 45 days of notice; court disagreed, noting that will was silent as to time of closing of transaction, but plainly did not require transaction to be completed within 45 days; intent to complete occurred within reasonable time after death (8 months); court affirmed trial court order that estate proceed with administration and complete real estate transaction at issue).
Priv. Ltr. Rul. 201217012 (Jan. 13, 2012)(IRS allowed late allocation of GSTT exemption to lifetime transfer to irrevocable trust; trust created and funded before rule allowing for automatic allocation of any unused GSTT exemption to indirect skips; gift tax return did not allocate any GSTT exemption which wasn't discovered until after transferor's death; at time of ruling request, no taxable distributions or terminations had taken place; IRS proposed regulations in 2008 establishing more rigorous documentation requirements for return preparers and advisors, not yet finalized).
Priv. Ltr. Rul. 201217011 (Jan. 18, 2012)(extension of time granted to divide testamentary QTIP trust and make reverse QTIP election with respect to a portion of the trust and allocate decedent's unused GSTT exemption to that particular portion; decedent's will created pecuniary marital QTIP for surviving spouse and residuary credit shelter trust for children and grandchildren; upon surviving spouse's death, balance in QTIP to be added to residuary trust and upon death of last of decedent's children, remaining amount to be distributed per stirpes to grandchildren and more remote descendants; scrivener failed to divide QTIP trust into GST exempt and non-exempt portions and did not make reverse QTIP election; at time of ruling request (after death of surviving spouse) trustee had made no taxable distributions or terminations).
Estate of Lockett, T.C. Memo. 2012-123 (decedent formed FLP and moved into assisted living facility simultaneously; two years later, decedent funded partnership with personal assets and trust subsequently dissolved; while decedent sole owner of FLP, two children listed as general partners even though contributing nothing to FLP; FLP loaned funds to decedent's children with such loans documented but with no terms except to establish interest payments; some assets kept out of FLP for decedent's care; upon decedent's death, 40% discount claimed on FLP assets; court held that no discounts allowable because decedent owned 100 percent of FLP interests and FLP agreement said that FLP would dissolve upon one partner acquiring interests of all others; decedent owned all assets individually and assets includible in decedent's estate at full FMV).
In re Estate of Bockwoldt, No. 09-1914, 2012 WL 1232307 (Iowa Apr. 13, 2012)(court recognized recovery of attorney fees for extraordinary services rendered because of litigation concerning attorney fee request under Iowa Code § 633.19; attorneys’ request must comply with Iowa Rule of Probate7.2(3) and include itemized bill, written statement regarding necessity of expenses or services, responsibilities assumed, extra work involve and importance of matter to estate).
Virginia S.B. 110 (effective Jul. 1, 2012)(enactment of decanting statute which allows a trustee to exercise discretionary distribution power by appointing trust principal or income to the trustee of a second trust that may have different terms; beneficiaries of second trust must include only beneficiaries of original trust; when trustee's power to distribute income and principal is subject to ascertainable standard, distributions from second trust must be limited by same ascertainable standard and such distribution power must be exercisable in favor of same current beneficiaries, unless court approves otherwise, with exception made for distributions to special needs trust).
A.O.D. 2012-01, 2012 WL 1191148 (IRS AOD Apr. 11, 2012)(IRS has acquiesced in result only in Alan Baer Revocable Trust Dated February 9, 1996 v. United States, No. 8:06CV774, 2010 WL 1233917 (D. Neb. Mar. 23, 2010) where the court allowed a marital deduction for stock that was subject to a contingent bequest; the decedent, owner of stock in a private, closely held, telecommunications company, died in 2002 leaving his shares to 23 beneficiaries through a trust; bequests contingent on trustee selling stock at profit (in excess of decedent's cost basis); balance of shares passed to qualified residual interest trust (QTIP trust) for surviving spouse; marital deduction claimed for QTIP and for which the estate claimed a marital deduction; IRS moved for summary judgment, but court denied motion allowing estate to show that contingency would never occur in accordance with I.R.C. Sec. 2056(b)(7)(b)(ii)(II) and assuming that taxpayer properly elected QTIP treatment on estate's return; IRS acquiesced in result only because the stock was of negligible value and the court’s decision was, thus, irrelevant; but, IRS position remains that test for QTIP treatment is a bright-line test and not the "so remote as to be negligible standard" of the court).
King v. Lynch, 204 Cal. App. 4th 1186, 139 Cal. Rptr. 3d 553 (2012)(married couple established joint revocable trust; trust terms specified that income to be distributed to grantors during their lives for their support and then upon the last of them to die, trustee to make specified distributions to children and grandchildren; wife became incapacitated and husband amended trust on numerous occasions, but trust terms required changes to be in writing with both grantors signing and then providing changes to trustee; such procedure not followed, but trustee attempted to carry out changes upon discovering them; amendments significantly reduced amount ultimately received by children and grandchildren; court determined that amendments invalid – trust terms control).
Estate of Palumbo, et al. v. United States, No. 11-2371, 2012 WL 1071731 (3d Cir. Apr. 2, 2012), aff'g., Estate of Palumbo, et al. v. United States, No. 2:10-cv-00760, 2011 U.S. Dist. LEXIS 23602 (W.D. Pa. Mar. 9, 2011)(estate entitled to $11.7 million charitable deduction for amount paid to charitable trust in settlement of dispute with decedent's son concerning residuary estate; court concluded that decedent wanted residuary estate to pass to charitable trust, but failed to do so do solely to scrivener's error (all other testamentary instruments had provided for a charitable residuary bequest, but 1999 will failed to include it due to scrivener's error); I.R.C. Sec. 2056 has been narrowly construed to curtail marital deduction abuses, but I.R.C Sec. 2055 is designed to encourage charitable gifts; bona fide dispute existed as to whether charity had legal right to residuary estate; case distinguishable from Bach v. McGinnes, 333 F.2d 979 (3d Cir. 1964) on basis that no bona fide dispute concerning charity's legal entitlement to bequest existed in Bach; estate denied fees and costs because charitable trust not a "prevailing party" for purposes of fee recover - trust did not pay any costs, estate did).
Priv. Ltr. Rul. 201214022 (Dec. 14, 2011)(scrivener mistakenly included power in residuary trust in decedent’s will that gave surviving spouse the ability to appoint principal to any persons, including surviving spouse’s estate; scrivener stated that provision should have stated, “Spouse could appoint the principal in whatever manner she desires, except not to herself, her estate, or the creditors of her estate”; surviving spouse filed court petition to reform residuary trust to correct scrivener’s error and court granted petition for reformation; reformation consistent with state law and did not constitute general power of appointment under I.R.C. §2041(b) and reformation did not constitute exercise or release of general power of appointment under I.R.C. §2514(b) so as to constitute a gift by the decedent).
Estate of Turner, et al. v. Comr., T.C. Memo., 138 T.C. No. 14 (2012), on reconsideration from, T.C. Memo. 2011-209 (decedent, president of lumber company who had invested heavily in bank and stock appreciated highly in value, transferred assets to FLP; transfer not bona fide sale, but done primarily for tax reasons and no legitimate non-tax reason existed for transfers, thus, included in gross estate under I.R.C. Sec. 2036(a); decedent retained possession and enjoyment of assets transferred to partnership via implied agreement; commingling of personal and partnership assets present; payment of premiums on life insurance policies for benefit of children and grandchildren via Crummey-style trusts were gifts of present interests eligible for annual exclusion even though payments were paid directly to the insurance company instead of the grantor transferring the premium payments to the trust and the trust remitting the proceeds to the insurance company with the trustee providing notice to the beneficiaries of their withdrawal rights simultaneous with the contributions of the premium amounts to the trust; to have present interest gift treatment, court noted that key question is whether beneficiary had "legal right to demand" withdrawal; under trust terms, beneficiaries had absolute right and power to demand withdrawals after each direct or indirect transfer to the trust; thus, indirect funding irrelevant to demand right; lack of notice did not affect "legal right to demand" withdrawals, and was not a problem in Crummey case; IRS has not conceded issue, and it remains important to properly contribute premium amounts to trust and notice of withdrawal right be given to beneficiaries; on reconsideration, estate claimed that under decedent's will, assets pulled back into estate via I.R.C. §2036(a) passed to surviving spouse and because surviving spouse had right to pecuniary marital bequest that allowed surviving spouse to receive assets equal to amount necessary to reduce estate tax to zero, marital deduction resulted in no estate tax deficiency; court held that marital deduction not available for FLP interest or FLP assets gifted during decedent's lifetime; Treas. Reg. §20-2056(c)-2(a) specifies that property interest passes to surviving spouse only if it passes to spouse as beneficial owner, but decedent’s assets first transferred to FLP and then decedent gifted FLP interests to persons other than surviving spouse; consequently, property passing to person other than surviving spouse cannot also be considered as passing to surviving spouse for purposes of marital deduction; value of transferred assets in decedent’s estate for tax purposes, but are owned by FLP or non-spousal partners and would not be includible in surviving spouse’s estate).
United States v. MacIntyre, No. H-10-2812, 2012 WL 1067283 (S.D. Tex. Mar. 28, 2012)(case involves estate of J. Howard Marshall, II who was married for the last 14 months of his life to Anna Nicole Smith (Vicki Lynn Marshall); J. Howard had been married to Eleanor Stevens from 1931-1961 and, as part of divorce proceedings, certain shares of stock were transferred to three CRATs and a GRIT with Stevens named income beneficiary of the GRIT; J. Howard later sold the stock back to the corporation at a value less than market value; sale constituted gift to other shareholder and GRIT; GRIT had terminated after 10 years with property passing to E. Pierce Marshall; J. Howard died shortly after sale of stock at less than market value; because GRIT had terminated, trust not in existence to pay resulting gift tax assessed against shareholders; issue involved liability for gift tax; court determined that income beneficiary rather than remainder responsible for payment of tax because income beneficiary treated as donor and benefited from increase in income distributions from trust; at time of gift donor (J. Howard's estate) was not going to pay gift tax, so gift tax liability of trust corpus).
Wandry v. Comr., T.C. Memo. 2012-88 (married couple gifted membership units in LLC to children and grandchildren; transfers made in accordance with dollar value of gifts and were determined by a fraction (numerator was state dollar amount and denominator was value of entire company as determined by IRS or court); IRS claimed gifts were of fixed fractional interests in LLC and, as a result, LLC unit value understated; court determined that defined value clause reallocated LLC membership units among parties in conformance with formula in which unit value as of transfer date was "unknown constant"; Proctor (142 F.2d 824 (4th Cir. 1944) not controlling; McCord (5th Cir.), Christiansen (8th Cir.) and Petter (9th Cir.) controlling, each of which involved use of a defined value clause providing that any amount later determined to exceed the stated gift value passed to charity; case appealable to 10th Cir.).
Ruby v. Ruby, No. 1-10-3210, 2012 WL 555913 (Ill. Ct. App. Feb. 17, 2012)(dispute between trustee, defendant, and beneficiaries, plaintiffs, regarding gift from bank account specified in decedent’s will but later transferred to trust account; plaintiffs sought relief to receive promised monetary gifts from decedent; defendant argued gift had been adeemed when all assets transferred to trust account, enforcement of in terrorem clause in will also revoked gift, and that defendant entitled to half of trust account as joint tenant of account; trial court granted summary judgment to defendant that ademption could apply to testamentary trust and gift was adeemed; court held in terrorem clause not applicable; both parties appealed; on appeal, court held intent of decedent was for gift to occur despite transfer of account and assets into trust because transfer occurred within short period of time after will drafted; summary judgment overturned and case remanded to trial court for determination of appropriate gift under terms of will; appellate court also held in terrorem clause not applicable and joint tenancy in bank account did not entitle defendant to one-half of account).

Insurance

Connell v. Plastridge, No. 11-P-195, 2012 WL 85910 (Mass. Ct. App. Mar. 19, 2012)(manure spill from pig farm not covered under insurance policy because of pollution exclusion clause; farm brought claim against insurance agent for negligence in failing to sell pollution coverage; district court granted agent’s summary judgment motion holding evidence established farm would not have been eligible for pollution coverage; appellate court upheld summary judgment because no facts presented by farm to establish special duty owed by agent to ensure adequate coverage for insured; all other claims dismissed for lack of evidence).
Nat’l Farmers Union Property and Casualty Co. v. Garfinkel, No. 11CA0230, 2012 WL 860366 (Colo. Ct. App. Mar. 15, 2012)(appeal of summary judgment opinion regarding interpretation of insurance policy exceptions to coverage; after fire on pasture ground caused personal injuries, parties sought opinion regarding application of homeowner’s insurance to claim; insurance company claimed two policy exceptions excluded coverage for fire on leased pasture land; appellate court held “business exclusion” required continuity or regularity of the activity and whether a profit motive existed; district court determined no business exclusion present, but appellate court remanded for further development of facts and application to announced test for business use due to lease on property and homeowner’s work on the land; appellate court held “owned premises” but not insured exclusion, however, was not applicable because homeowner must be titled owner of property if policy states “owned” (rather than “owned” or controlled) and here property titled to LLC not homeowner).

Real Estate

Cousins v. McNeel, No. 2110039, 2012 WL 1560236 (Ala. Ct. App. May 4, 2012)(property owner brought declaratory judgment action to determine boundary and trespass claim for cutting and removing timber from disputed area; neighbor filed counterclaim against seller for breach of warranty deed; court held that based on 1979 deed and established legal principles interpreting deed, plaintiff property owner owned disputed section of land and awarded damages for timber; trial court did not make any ruling regarding claim for breach of warranty deed against seller; neighbor appealed all issues; trial court’s opinion regarding ownership of disputed portion and award for cutting timber affirmed; appellate court found trial court held disputed land belonged to plaintiff so seller breached warranty deed by conveying property he did not own; appellate court held that trial court erred in denying neighbor’s breach of warranty claim and remanded for determination of damages).
Williams Bros. Inc. v. Peck, No. 11–P–1203, 2012 WL 1450293 (Mass. Ct. App. Apr. 30, 2012)(plaintiff landowner owner brought action that easement over estate had been extinguished when parcels affected came under common ownership for short period of time; servient land was briefly transferred to common owner in 1976 before parcels severed again shortly thereafter; plaintiff’s title did not include easement; defendants purchased property with expectation of easement still listed on their deed; after clearing trees and preparing land for cranberry bog, plaintiff brought suit; court agreed registration system did not abrogate common-law doctrine of merger and easement was extinguished; court held parties expecting use of easement have duty to ensure privilege still exists).
EnerVest Operating, LLC v. Sebastian Mining, LLC, No. 11-1985 (8th Cir. Apr. 27, 2012)(coal ownership and oil, gas, and other mineral rights in property were separately conveyed in different deeds; coal bed methane (CBM) gas rights in property were not specifically enunciated in any conveyance; parties moved for summary judgment on stipulated facts that included deeds to determine ownership of CBM rights; district court held CBM was conveyed to gas owners who were entitled to royalties; coal owners appealed; appellate court held coal rights were narrowly granted in language of deed but rights conveyed to gas owners were broadly granted; appellate court held that minerals with no known commercial value at time of conveyance not factually relevant when language of deeds provided clear notice of grantor's intent; argument that mineral owners would destroy coal owners' rights to coal in effort to collect CBM was unpersuasive to defeat language of conveyance; gas owners had CBM rights; district court order affirmed).
Philipello v. Taylor, No. 10-11-00014-CV, 2012 WL 1435171 (Tex. Ct. App. Apr. 25, 2012)(dispute regarding 1/4 interest in mineral rights to property acquired through series of deeds; trial court held Duhig v. Peavy-Moore Lumber Co., Inc., 144 S.W.2d 878 (Tex. 1940) doctrine applied, which requires that when there is a reservation in deed to one person and title is granted to another both the reservation and title grant cannot both be given effect; instead, the reservation fails; therefore 1/4 reserved interest ineffective, so interest failed to pass to plaintiff as subsequent owner; appellate court affirmed on appeal but for different reasons; held Duhig doctrine inapplicable; intent of parties clearly conveyed thorough all contracts relating to transfers which clearly made transfer subject to previous reservations and conveyances; further plaintiff’s deed clearly referenced reservation, so plaintiff had notice and could not procure greater interest than for which bargained and paid).
Demars v. Washington County, No. 82-CV-10-2449, 2012 WL 1450016 (Minn. Tax Ct. Apr. 24, 2012)(petitioners owned 23-acre tract with one acre used to raise asparagus, 18 acres for horse pasture, one acre for hay storage, 2 acres for farm buildings and enclosed areas for horses and one acre for home and garage; property held to satisfy requirements for ag land classification for ad valorem property tax purposes under MN Stat. Sec. 273.13, sub. 23(e); tract devoted primarily to agricultural use).
Abernathy v. Bertram, et al., No. 33A04-1106-CC-317, 2012 WL 1382987 (Ind. Ct. App. Apr. 23, 2012)(plaintiff entered into farm cash lease agreement with landlord; plaintiff planted fall wheat for harvest next spring/summer; tenant failed to pay rent and landlord hired defendant to harvest crop; crop sold to elevator for $3,293.74; plaintiff sued landlord for breach of contract and quantum meruit and sued defendant for conversion, and trial court awarded plaintiff $3,950 (amount received on sale of crop plus value of straw, less $2,000 for rent owed); trial court rejected conversion claim and did not award plaintiff amount of crop insurance allegedly owed; court affirmed on all points - no "total loss" of crop pursuant to crop insurance policy and no evidence provided of amount of partial loss; conversion claim fails because no proof of knowing or intentional exertion of unauthorized control over tenant's wheat crop - mens rea not proven).
McCoy v. Barr, No. 105,362 (Kan. Sup. Ct. Apr. 6, 2012)(two-acre family cemetery reserved by original landowner when deeding land to his son in 1888; cemetery property landlocked by surrounding property; surrounding property conveyed to current owner in 1973; county assessed property taxes against cemetery property, which went unpaid; third party purchased cemetery property for hunting and petitioned court for easement; surrounding property owner cross-claimed against third party and county arguing sale of cemetery property void and against public policy; county counter-claimed to partition cemetery portion from remainder of cemetery property and acquire easement for public access to cemetery; surrounding property owner filed summary judgment for issues raised claiming easement to cemetery had been abandoned by original owners and whether cemetery land obtained by adverse possession; trial court determined tax foreclosure on cemetery void and set aside sale and found no adverse possession of property could be established; court ordered county to take control of cemetery and granted easement across surrounding property for public access to and from cemetery; surrounding property owner appealed whether an easement existed, scope of easement, and public visitation of cemetery; appellate court held no evidence of actual relinquishment of easement by original grantors, so easement still existed; appellate court remanded to trial court regarding scope of easement and whether cemetery required public access as these issues were not capable of resolution by summary judgment).
Estate of Becker v. Murtagh, 2012 N.Y. Slip Op. 02417, 2012 WL 1080325 (NY Ct. App. Apr. 3, 2012)(case involves adverse possession claim between neighbors concerning beachfront boardwalk and dock; in 1960s, owners of adjoining lakefront properties relied on placement of wooden jetty as boundary line; plaintiff used jetty to support a dock and an extension to an existing boardwalk; plaintiff allowed neighbors to use and access both; prior owner of defendant’s property surveyed land in 1980s and discovered jetty, dock, and boardwalk part of her property, but no dispute arose; after defendant purchased property, he refused plaintiff access to dock and boardwalk; plaintiff claimed adverse possession of property; disputed issues in claim included whether hostility and exclusivity elements were met; district court found them lacking and ruled for defendant; plaintiff appealed; appellate court held hostility shown by plaintiff’s claim of right to property adverse to prior neighbor’s interests; mutual mistake regarding true boundary did not negate hostility; exclusivity also established even though plaintiff allowed friends to use area, because prohibited access to general public; appellate court held plaintiff used and controlled land for 21 years sufficient to establish adverse possession; district court decision reversed).
Richardson v. Board of Commissioners of Owen County, No. 60A01-1106-PL-228, 2012 WL 1066103 (Ind. Ct. App. Mar. 30, 2012)(plaintiffs had no standing to challenge county decision to vacate portion of roadway providing access to cemetery in which daughter buried; county had not maintained road for decades prior to vacating road; plaintiffs not abutting landowners to vacated roadway; plaintiffs suffered no special injury under law; and alternative routes to access cemetery available to plaintiffs).
Spickler v. Ginn, No. SAG–11–305, 2012 WL 1035699 (Maine Sup. Jud. Ct. Mar. 29, 2012)(quiet title action to settle dispute regarding land conveyed to two different parties; first grantee did not record her deed after property conveyance until 1986; second grantees from same grantor recorded their deed in 1984; trial court jury found second grantee had actual notice of conveyance to first grantee; subsequent conveyances by second grantees to related parties were also found to have had notice of first grantee's interest; first grantee deemed owner of property; second grantee appealed only the legal conclusion from the jury's factual findings; appellate court clarified Maine's statute as "race-notice", meaning subsequent grantees who record their deed first can beat earlier grantees so long as the subsequent grantees had no actual notice of the earlier grantee's interest; based on jury findings of fact establishing second grantees all had notice of first grantee's interest prior to first grantee's recordation of property deed, court affirmed and vested title in first grantee).
Cahoon v. Hinckley Town Appeal Authority, No. 20110043–CA, 2012 WL 1033942 (Utah Ct. App. Mar. 29, 2012)(plaintiff appealed denial of request by municipality for building permit for fence; plaintiff argued property line of front yard began in middle of street and ordinance ambiguous; court affirmed denial of permit, finding ordinance clearly and unambiguously did not contemplate inclusion of street in front yard's measurement).

Regulatory Law

Bureau of Labor Statistics Report (U.S.D.L.-12-0816, May 4, 2012)(U.S. economy added only 115,000 jobs in April; unemployment rate declined to 8.1 percent as a result of the labor force participation rate falling from 63.8 percent to 63.6 percent (a 30-year low) which translates into 342,000 persons leaving the labor force; unemployment rate is 1.25 percent higher than what Obama Administration promised it would peak at if 2009 “stimulus” bill passed; rate is 39.7 percent higher than what Obama Administration projected unemployment would be in April of 2012 if “stimulus” bill passed; rate is 26.6 percent higher than what Obama Administration projected unemployment would be if “stimulus” bill not passed; number of jobs created must be 125,000 each month and labor market must add 285,000 jobs monthly for the next 4 years to achieve pre-recession unemployment rate by 2016; average duration of unemployment was 39.1 weeks).
U.S. Fish and Wildlife Service Draft Environmental Assessment (Apr. 19, 2012)(USFWS proposal to amend regulations at 50 C.F.R. part 17, which implement the Endangered Species Act (ESA), to create special rule providing for the conservation of the polar bear; interestingly, while initial reason polar bears added to list of threatened and endangered species was loss of habitat due to "global warming", none of four alternative means examined for protecting polar bears included control of "greenhouse gas" emissions; rather focus is on regulating impact of direct human contact with polar bears).
City of Lincoln Center v. Farmway Co-op, Inc., No. 105,962, 2012 WL 1222268 (Kan. Ct. App. Apr. 12, 2012)(city charged grain elevator with violating local ordinance prohibiting excessive noise and nuisances; elevator challenged ordinance as void for vagueness in proscribing conduct; court agreed ordinance failed to provide defined and objective standard for prohibited conduct and held ordinance unconstitutional).
Robinson Township, et al. v. Commonwealth of Pennsylvania, et al., No. 284 M.D. 2012 (Pa. Comw. Ct. Apr. 11, 2012)(court issues preliminary injunction against portion of state law that attempted to override local zoning laws related to fracking; local rules remain effective until legally challenged and invalidated; state law effective date delayed for 120 days).
Bureau of Labor Statistics Report (U.S.D.L.-12-0614, April 6, 2012)(U.S. economy added only 120,000 new jobs in March; labor force participation rate was 63.8 percent, resulting in unemployment rate of 8.2 percent; unemployment rate would be 10.9 percent if labor force participation rate remained the same as when President Obama took office; 8.2 percent unemployment rate 2.5 percent higher than what Obama Administration promised unemployment would peak at if 2009 "stimulus" bill passed; rate is 42 percent higher than was Obama Administration projected unemployment would be in March of 2012 if stimulus bill not passed; unemployment rate is 14 percent among blacks; 2.4 million persons marginally attached to labor force - an unchanged amount from March 2011).
In re Towamencin Township, No.1310 C.D. 2011, 2012 WL 1098260 (Pa. Cmwlth. Ct. Apr. 3, 2012)(township appealed zoning board approved variances enabling dairy farm to build silo and erect cellular towers on top of silo in an effort to modernize operations by storing grain in new silo that was presently stored in “hag bags”, and obtaining lease payments from wireless provider; neighboring property owners supported application; township appealed claiming variance granted is substantial variation from zoning code rather than mere reasonable adjustment; appellate court found antenna and silo is not use variance as use will remain agricultural and will “penetrate the Township’s skyline, impinging on the rights of no one”; likewise variance not an unpermitted dimensional variance because it sustains reasonable pre-existing use of land and owner unable to maintain current use without variance; further substantial evidence existed of economic detriment to dairy farm if variance denied; zoning board decision affirmed.)
King County v. King County Dept. of Development and Environmental Services, Nos. 66432-8-I, 66433-6-I, 66434-1-I, 2012 WL 1071395 (Wash. Ct. App. Apr. 2, 2012)(farmers were operating organic materials processing on a farm; county issued citations after neighbors complained that farmers operating unauthorized “materials processing facility” in critical area; hearing examiner found use was valid nonconforming use and no demonstration made that area was wetland or flood hazard; county department appealed and brought in hearing examiner to challenge authority to issue part of its ruling; lower court ruled in favor of department; hearing examiner and farmers appealed; appellate court found the farmers were preparing material processing facility at time ordinance went into effect, so their prospective intent was in existence and is a legal nonconforming use; county code included detailed process for determining flood hazard and not simply “100 year flood” designations by FEMA as argued by department, so department failed to prove farmers were in flood hazard zone; appellate court also found hearing examiner’s opinion did not preclude application of additional review of whether farmers in critical area, so examiner did not exceed authority; lower court opinion reversed and hearing examiner opinion reinstated).
Richardson v. Board of Commissioners of Owen County, No. 60A01-1106-PL-228, 2012 WL 1066103 (Ind. Ct. App. Mar. 30, 2012)(plaintiffs had no standing to challenge county decision to vacate portion of roadway providing access to cemetery in which daughter buried; county had not maintained road for decades prior to vacating road; plaintiffs not abutting landowners to vacated roadway; plaintiffs suffered no special injury under law; and alternative routes to access cemetery available to plaintiffs).
Farm-To-Consumer Legal Defense Fund, et al. v. Sebelius, 734 F.Supp.2d 668 (N.D. Iowa 2010)(plaintiff, activist group that advocates for legalization of raw milk, challenges 21 C.F.R. part 1250.61 and 21 C.F.R. part 131.110 which prohibits raw milk for human consumption in interstate commerce as unconstitutional as applied to plaintiff's members and other plaintiffs named in suit; court partially denied defendant's motion to dismiss by ordering proceedings in case to be stayed 60 days to allow plaintiffs time to decide whether to file citizen petition with FDA; if citizen petition filed, court will delay suit until administrative proceedings completed or until FSA fails to take action within time required by law; if citizen suit petition not filed, court will reconsider defendant's motion to dismiss; primary question in case is whether regulations at issue applies to and prohibits persons traveling from one state where it is illegal to buy raw milk to another state where it is legal to make such a purchase and then return to the original state where the raw milk is then consumed; in later opinion, Farm-To-Consumer Legal Defense Fund v. Sebelius, No. C 10-4018-MWB, 2012 WL 1079987 (N.D. Iowa Mar. 30, 2012), on renewed motion to dismiss and alternative motion for summary judgment, issue before court was whether plaintiffs had standing to pursue challenges to validity of regulations; court noted that plaintiffs failed to allege that FDA had applied or tried to apply regulations to them; no threat of injury in fact and FDA has made it clear that it has no intention of enforcing regulations against any of plaintiffs; FDA has never taken nor does it intend to take any enforcement action against an individual who purchased and transported raw milk across state lines solely for personal consumption; case dismissed).
Fletcher, et al. v. Haas, et al., No. 11-10644-DPW, 2012 WL 1071713 (D. Mass. Mar. 30, 2012)(state (MA) law prohibiting permanent residents from obtaining firearms license violates Second Amendment).
Rondigo, LLC v. Township of Richmond, No. 08–cv–10432, 2012 WL 1021726 (E.D. Mich. Mar. 27, 2012) (plaintiffs owned farm and sought to start composting business on their property; citizens objected and formed organization to object; plaintiffs sued government actors and private citizens and organized non-profit; suit made claims in violation of 42 U.S.C. § 1983, 42 U.S.C. § 1985(3), which prohibits conspiracies to violate constitutional rights, and 42 U.S.C. § 1986, which provides a cause of action against individuals who knew about and had the power to stop a § 1985 conspiracy, but failed to do so; claims for defamation also made based on statements in objecting to composting business; government actors previously dismissed; private citizens moved to dismiss remaining claims; court granted dismissal of § 1983 claim and defamation claims based on Noerr–Pennington immunity, which allows private citizens to petition government officials to take actions; § 1985 and § 1986 claims dismissed because plaintiffs failed to plead racial or class-based animus underlying conspirators' actions as required for recovery).

Secured Transactions

Martinek Grain & Bins, Inc. v. Bulldog Farms, Inc., No. 05-10-01392-CV, 2012 WL 1345380 (Tex. Ct. App. Apr. 18, 2012)(farmer and wife purchased 200-acre property in 1950s which was dedicated as homestead in 1980s; farmer signed promissory notes on behalf of farms but none secured by homestead; farmer defaulted on notes; in March 2003, farmer and wife transferred homestead to irrevocable trust; in December 2006, creditor brought suit for breach of promissory notes; in February 2008, correction warranty deed filed expressly reserving life estate in homestead to couple; in March 2008, farmer died; creditor brought suit alleging fraudulent transfer; wife died shortly thereafter; motion for summary judgment filed by some, but not all parties to creditor’s suit; district court granted motion and dismissed all claims; creditor appealed; appellate court held dismissal of claims against parties not filing motion was error; court held summary judgment proper for moving parties, because homestead is exempt property, homestead passed to wife free of creditor’s claim upon farmer’s death, and homestead lost status as community property liable for debts when farmer died; because wife was not personally liable for debt, homestead not subject to farmer’s guarantee).
In re Baker, No. 10-80055, 2012 WL 669519 (Bankr. N.D. N.Y. Feb. 29, 2012)(Chapter 7 case involving dairy operation; defendant sold cows to debtor and held perfected security interest in cows that debtor sold pre-petition and received $27,764.20 for net proceeds of sale of 22 cows; defendant filed claim in debtor’s bankruptcy case for $55,787.54 representing amount of unpaid balance owed debtor; at time of sale to debtor, defendant delivered Certificate of Registration for each cow containing name of cow, identification of defendant as former owner, handwritten vaccination number, sketch of cow showing markings and ear tag i.d. number; at time of sale by debtor, some ear tags missing; bankruptcy trustee claims that collateral description in UCC-1 misleading because ear tags were used in description and were missing at time of sale such that security interest ineffective; question of first impression as to how to perfect security interest in specific cows; court held that custom in farming industry relevant; cows routinely lose ear tags, are not fungible and are identifiable by numerous methods; while ear tag identification contained errors, name of each cow included in description; defendant’s UCC-1 effective irrespective of erroneous or outdated ear tag designations).

Taxation

C.C.A. 201219022 (Apr. 16, 2012)(when an S corporation makes its subsidiary a QSSS before the year in issue, the subsidiary is treated as a disregarded entity whose items get reported on the parent's return; the presence of a disregarded entity as a partner removes the partnership from the exception for small partnerships that could have been used to avoid late filing penalties applicable to partnership tax returns (10 or fewer partners; all items of income, deductions, credits, etc., from the partnership are properly reported on timely basis on partners' individual retursn; parntership allocation percentages are identical for all partnership tax attributes).
Priv. Ltr. Rul. 201219001 (Feb. 3, 2012)(ag cooperative with farmer members with net proceeds distributable to farmer-members; some of net proceeds capitalized into inventory ("c-Check"); c-Check payments to members are PURPIMs and are to be reported in Box 3 of Form 1099-PATR; cooperative can disregard such payments when computing its Sec. 199 deduction).
Kim v. Comr., No. 113390, 2012 WL 1608605 (7th Cir. May 9, 2012)(petitioner, at age 56, moved funds from employer’s retirement plan to IRA and then withdrew about $240,000 from IRA before reaching age 59 and ½; even though petitioner not subject to 10 percent penalty for withdrawal of funds before rolling them into IRA the funds were withdrawn from an IRA before age 59 and ½ and are subject to 10 percent penalty in accordance with I.R.C. §72(t)(3)A); accuracy-related penalty imposed).
S. 2343 (cloture vote, May 8, 2012)(bill would have applied payroll tax to taxpayers with incomes over $250,000 by requiring such persons to include for payroll tax purposes income received from an S corporation or limited partnership interest in a professional services business where 75 percent or more of the gross revenue is derived from the services of three or fewer shareholders or where the S corporation is a partner in a professional services business; bill failed on cloture vote by garnering only 52 votes; no Republicans voted for the bill and only one Democrat voted against it (Reid (D-NV))
Saadian v. Comr., T.C. Sum. Op. 2012-44 (petitioner loaned $200,000 in 1988 to distant relative and received promissory note in return; monthly payments were not initially made until 1990 and only partial interest payments were made from 1990-2000; last payment of any kind made in 2003; borrower died in 2004 and efforts to collect from decedent’s sons failed; petitioner deducted loan as non-business bad debt on 2006 return; court denied deduction because debt became worthless before 2006; no formal claim made in decedent’s estate or that decedent’s sons legally obligated to pay loan; court determined that petitioner’s decision not to enforce debt was for personal reasons).
Scalone v. Comr., T.C. Sum. Op 2012-40 (minor child of ex-spouses lived with mother but was primarily supported by father and separation agreement specified that father entitled to dependency exemption; mother never signed a Form 8332 specifying that she wouldn't claim exemption for child; father attached separation agreement to tax return which was signed by both mother and father; separation agreement complies substantially with basic requirements of Form 8332 - immaterial that spouse's Social Security agreement not on agreement nor was fact that separation agreement not incorporated into divorce decree, nor was fact that mother's relinquishment of exemption dependent on father being current with child support; I.R.C. does not require mother to give father signed Form 8332).
IRS Notice 2012-34, IRB 2012-1 (IRS intends to delay effective date of proposed regulations for reporting of debt instruments and options by brokers (and others) in accordance with I.R.C. Sec. 6045B from Jan. 1, 2013 to Jan. 1, 2014).
Dunlap, et al. v. Comr., T.C. Memo. 2012-126 (plaintiffs owned NYC condominiums and sold donated facade easement to charitable organization; appraiser failed to testify at trial and appraisal not entered into evidence; facade already protected by NYC's Landmarks Preservation Commission, so easement not worth anything as easement restrictions not more restrictive than existing regulations applicable to subject condominiums; charitable deduction denied, but penalties not applied).
Rev. Proc. 2012-26, I.R.B. 2012-20 (IRS inflation adjusted figures for HSAs for 2013; annual contribution limitation for persons with self-only coverage will be $3,250 and for family coverage it is $6,450; HDHP defined (for 2013) as having annual deductible of at least $1,250 for self-only coverage and $2,500 for family coverage and where annual out-of-pocket expenses do not exceed $6,250 for self-only coverage and $12,500 for family coverage).
Performance Marketing Assoc., Inc. v. Hamer, No. 2011-CH-26333 (Cook County Cir. Ct. Apr. 25, 2012)(state (IL) “Amazon” tax law enacted in 2011 ruled unconstitutional).
Priv. Ltr. Rul. 201216034 (Jan. 11, 2012)(power of trust beneficiary to withdraw trust contributions causes beneficiary to be treated as owner of part of trust over which withdrawal power has not lapsed; beneficiary can be treated as owner of balance of trust; trust is permissible S corporation shareholder if, based on facts, beneficiary treated as owner of entire trust; beneficiary’s estate includes amount from trust that beneficiary can withdraw in year of death less what has already been withdrawn in year of death).
Reesink v. Comr., T.C. Memo. 2012-118 (I.R.C. §1031 case; petitioners, married couple, established investment intent with respect to replacement property; time interval between acquisition of replacement property and sale of principal residence critical, along with petitioners' attempt to rent replacement property before establishing occupancy; petitioners acquired house with intent to rent out, but inability to satisfactorily do so resulted in taxpayers selling present home and moving into house they acquired with intent to rent out).
Priv. Ltr. Rul. 201216007 (Jan. 9, 2012)(real estate investment trust (REIT) can qualify for non-recognition treatment under I.R.C. §1031; facts involved series of like-kind exchanges involving related parties where receipt by the parties of some non-like-kind property did not disqualify transactions from non-recognition treatment under I.R.C. §1031(f); each related party must transfer replacement property into series of exchanges that also enter into like-kind exchange; REIT and related parties must hold replacement properties for at least two years after date of last transfer of property in the series of exchanges).
Priv. Ltr. Rul. 201216029 (Dec. 13, 2011)(cost of cell towers fixed to land or to buildings are 15-year MACRS property and 20-year ADS property; cell towers are inherently permanent structures and are not personal property).
Priv. Ltr. Rul. 201216017 (Jan. 12, 2012)(coal produced under particular process and certain chemical additives satisfies definition of “refined coal” in accordance with I.R.C. §45(c)(7) if such coal produced from feedstock coal that is same source or rank as “tested coal” and satisfies I.R.C. §45(c)(7)(B) qualified emission reduction test).
Priv. Ltr. Rul. 201216011 (Jan. 17, 2012)(taxpayer, farmers' cooperative, marketed farm products by "agreement sales" which involve the co-op buying the products and reselling them with net profits accounted for on cooperative basis; such payments to patrons constitute PURPIMS and that co-op's DPAD to be computed without regard to any deduction for such payments).
REG-137589-07 (Apr. 24, 2012)(IRS proposed regulations concerning the deductibility of expenses incurred for lodging when not traveling away from home and when such lodging is for the employer and constitutes a working condition fringe; effective on or after date published as final regulations in the Federal Register).
Home Concrete & Supply LLC v. United States, No. 11-139 (U.S. Sup. Ct. Apr. 25, 2012), aff'g., 634 F.3d 249 (4th Cir. 2011)(three-year statute of limitations under I.R.C. Sec. 6501(e)(1)(A) (instead of 6-year statute under I.R.C. Sec. 6501(e)(1)(A)) applies to omission of income exceeding 25 percent of gross income as a result of overstated basis; Fourth Circuit decision affirmed, which is consistent with opinions of Ninth Circuit and Federal Circuit).
Storey v. Comr., T.C. Memo. 2012-115 (petitioner made movie and deducted production expenses; IRS disallowed deduction under hobby loss rules, but court found requisite profit intent present under I.R.C. Sec. 183; petitioner also made Sec. 181 election to expense production costs and established substantial compliance with statutory requirements for election; IRS post-trial brief detailing petitioner's lack of conformity with requirements of regulations not admissible evidence and too lengthy).
Nebraska Legislation, L. 1113 (effective, Jul. 18, 2012)(new law lists what an agent acting under a duly executed power of attorney can do on the principal's behalf; specified actions include preparing, signing, and filing tax returns at the federal and state level and taking all other tax actions necessary on behalf of the principal).
Trupp v. Comr., T.C. Memo. 2012-108 (petitioner, lawyer, incurred $72,000 in horse-related expenses in purported attempt to stimulate horse-law related practice; petitioner showed only $2,000 in horse-related income for year in question with balance of income from non-horse related clients or former clients; horse activity and law activity not combinable pursuant to Treas. Reg. Sec. 1.183-1(d)(1) due to lack of sufficient interconnection; court rejected petitioner's argument that combined horse activity and law practice was "capital asset" that might increase in value; petitioner's lack of records, lack of profit motive, lack of participating in any equestrian events resulted in lack of profit motive; burden of proof not shifted to government).
White v. Comr., T.C. Memo. 2012-104 (medical service corporation made contributions to I.R.C. Sec. 419 multi-employer benefit plan; contributions not deductible as ordinary and necessary business expenses under I.R.C. Sec. 162 because facts indicated that contributions made on behalf of owner of corporation and owner's wife to fund personal investment in whole life insurance policies that largely accumulated cash value just for them; petitioner had full control over policies).
Lapointe v. Comr., T.C. Memo. 2012-107 (petitioner's postnuptial agreement specified that, in the event of divorce, ex-spouse entitled to retain ownership of petitioner's MLB proceeds and $50,000 annual payments and specified that agreement inured to benefit of parties and was binding on heirs, executors, legal representatives and assigns; after divorce, petitioner claimed payments under agreement as alimony; deduction denied because payments survived death of ex-spouse; court agreed with IRS resulting in no alimony deduction for payor spouse and no taxable income for ex-spouse).
Priv. Ltr. Rul. 201214003 (Dec. 21, 2011)(capitalized interest while property is being produced must be treated as part of the property’s total cost for purposes of bonus depreciation safe harbor which specifies that physical work of significant degree begins (for accrual basis taxpayer) when more than 10 percent of total cost of property incurred (not counting land cost and cost of any preliminary activities).
Lubyanitskaya v. Comr., T.C. Memo. 2012-95 (petitioners, married couple, claimed deductions for vehicle, meals, entertainment and home office expenses alleged to be related to husband’s construction business; no evidence offered to substantiate claimed amounts; petitioners failed to establish that they didn’t understand communications from IRS in English).
Uyemura, et al. v. Comr., 2012 T.C. Memos. 101-103 (petitioners purchased solar panels from vendor under a "buy one get two free" promotion; promotion also allowed petitioner to find another customer ("ratepayer") or let vendor hook petitioner up with ratepayer; petitioner purchased installations on installments and any associated ratepayer would pay utility bill to vendor-provided entity with any profit after payment of taxes and debt service remitted to petitioner; petitioner claimed Sec. 179 deduction for installation cost and also claimed Sec. 48 energy credit; several petitioners admitted to not doing anything except claiming tax deductions; while one petitioner claimed to have sold five other units for vendor, nothing else done with respect to the units; one petitioner claimed to have visited his ratepayer's residence monthly to inspect equipment and consult with ratepayer concerning solar service; court holds that none of petitioners satisfy any of the material participation tests under Sec. 469; no business records maintained; Sec. 179 deduction not allowed for lack of trade or business).
Manalo v. Comr., T.C. Sum. Op. 2012-30 (petitioner was a real estate professional as a full-time real estate broker (worked at least 750 hours in real estate trades or businesses as an owner and worked more in real estate than in all of petitioner's other jobs), but did not satisfy the material participation test in either of petitioner's rental real estate activities; petitioner did not keep daily log of time spent on rental activities; accuracy-related penalties not imposed).
Chief Counsel Advice 201214031 (Mar. 15, 2012)(I.R.C. §6324(a)(2) imposes personal liability on transferees of non-probate property to the extent of value of transferred property rather than imposing a lien on the transferred property; to enforce personal liability, IRS can bring action under I.R.C. §7402 or impose liens on transferee’s property).
Priv. Ltr. Rul. 201214005 (Dec. 14, 2011)(taxpayer, C corporation on accrual method, requested consent to revoke first-year bonus depreciation election that was inadvertently made; revocation permitted to revoke election within 60 days of date of letter).
Zeluck v. Comr., 2012 T.C. Memo. 98 (petitioner invested in oil and gas leasing partnership by contributing $110,000 cash and $200,000 note (termed “subscription note”); petitioner claimed non-passive loss of $275,045 on 2001 return; on 2002 return, petitioner deducted $15,003 and reported $16,000 income from partnership; in 2003, partnership distributed $32,407 to petitioner in termination of petitioner’s partnership interest; note not paid-off; court determined that note was genuine debt in 2002 and not 2003 due to lack of payments made after 2002 and termination and liquidation of partnership; under at-risk rules of I.R.C. §465, petitioner had zero risk in 2003 and amount at risk became non-genuine and petitioner had $200,000 gain for 2003 under I.R.C. §465(e)).
The Direct Marketing Association v. Huber, No. 10-CV-01546-REB-CBS (D. Colo. Mar. 30, 2012)(state (CO) law subjecting out-of-state retailers to sales and use notification and reporting requirements (Colo. Rev. Stat. §39-21-112(3.5)) violated Commerce Clause; permanent injunction issued; court noted that Quill Corp. v. North Dakota, 504 U.S. 298 (1992) prohibits states from imposing the same obligations on out-of-state retailers with no physical presence in the taxing jurisdiction); defendant failed to meet “very high burden of proof under the strict scrutiny standard” to overcome facial invalidity of the Colorado law”).
IRS Program Technical Assistance (Apr. 4, 2012)(for innocent spouse purposes, denial of first-time homebuyer credit (FTHBC) is to be treated as deficiency under I.R.C. §6211 (b)(4); manner in which denied FTHBC allocated between spouses depends on reason for denial and the subsection of I.R.C. §6015 under which innocent spouse relief is sought)
Chief Counsel Advice 201213023 (Dec. 21, 2011)(cost of conversion kits used to improve casino slot machine’s productivity need not be capitalized under the pre-2012 repair regulations, but is unclear under present regulations).
Priv. Ltr. Rul. 201213016 (Dec. 20. 2011)(rider option in annuity contract that couldn't be cancelled and would provide long-term care benefits during coverage period constituted "insurance" in accordance with I.R.C. Sec. 7702B(b)(1), and such long-term care benefits not included in owner's income by virtue of I.R.C. Sec. 104(a)(3); under policy, monthly long-term care benefits provided for reimbursement of long-term care services while insured chronically ill and benefits ceased if insured recovered from chronic illness).
Mitchell v. Comr., 138 T.C. No. 16 (2012)(petitioners, married couple, established FLP and via FLP donated an easement to qualified done; donated land subject to purchase money mortgage, but at time of donation deed of trust securing debt not subordinated to easement held by qualified donee; when petitioner ultimately got debt subordinated two years after donation; easement required to be perpetual - chance that easement would cease must be “so remote as to be negligible; court holds that remoteness has nothing to do with subordination, and subordination must be in place at time of donation – Treas. Reg. §1.170A-14(g)(2); until time of subordination, foreclosure proceedings could have been brought which would have eliminated the easement; immaterial that petitioner had funds at all times to pay off debt because mortgages are never too remote to be negligible ; accuracy-related penalty not imposed).
Priv. Ltr. Rul. 201212021 (Dec. 27, 2011)(surviving spouse could transfer pre-deceased wife’s IRA to separate IRA established in his own name via trustee-to-trustee transfer in spite of the fact that wife died before changing beneficiary designation forms from her estate to him; IRS did not apply general rule that would have treated IRA as inherited IRA because surviving spouse was sole beneficiary and estate executor; wife fell ill before getting beneficiary designation changed).
Sewards v. Comr., 138 T.C. No. 15 (2012)(petitioner, employee of Sheriff’s Department, sustained career-ending injury on-the-job; petitioner had several retirement plans to choose from; petitioner initially chose plan that didn’t take his injury into account, but then switched to plan that did take into account his injury and was awarded retroactive coverage to beginning of initial plan; petitioner received full service retirement amount of $12,861 monthly; 1099-R issued showing service-connected amount taxable, followed by amended 1099-R stating that taxability had not been determined; five years later County told petitioner that 50 percent of pension taxable, but petitioner never reported the income; income exemption of I.R.C. §104(a)(1) inapplicable to payments determined by reference to employee’s age or length of service; petitioner’s pension set payments at greater of 50 percent of final compensation or full retirement allowance and is based on age or length of service; petitioner’s service retirement benefit exceeded guaranteed amount so benefit amount increased to service retirement benefit amount reference by length of service; thus, portion in excess of guaranteed amount included in income; understatement penalty not imposed).
IRS News Release IR-2012-37 (as a result of failure of MF Global, taxpayers that hedged through MF Global may have received forms 1099 late; such late 1099s posed particular problem for farmers filing by March 1 without need to pay estimated tax; news release notes that IRS forgiving late penalties for affected farmers; IRS specifies that procedure to receiving waiver of estimated tax penalty is to complete Form 2210-F and attach short statement to Form stating that taxpayer received late Form 1099 from MF Global and write at top of Form “MF Global; electronic submission not possible; if return already filed and penalty assessed, IRS should be contacted and relief potential identified).
Trzeciak v. Comr., T.C. Memo. 2012-83 (petitioner was real estate professional who owned 14 single-family homes in Columbus, Ohio, but lived in Dayton, Ohio; petitioner traveled between homes and showed them to prospective tenants, handling complaints, working with contractors and handling paperwork with respect to homes; petitioner claimed time driving between Dayton and Columbus toward 750-hour test; IRS claimed that driving time not part of real estate activity, but is commuting; losses limited to $3,000 annually; petitioner made no mention of whether office in the home existed that was used exclusively for the rental activities; petitioner make I.R.C. §7430(c)(4)(E) qualified offer and doesn’t receive response from IRS; petitioner raises point concerning existence of home office and that it was mentioned from the beginning of the litigation; at time of petition, petitioner had not mentioned office in the home existed; court determined that “substantial justification” of IRS position is measure at petitioner date, and home office not mentioned by petitioner at that time and IRS under no obligation to inquire about existence of home office; IRS position upheld as reasonable and petitioner’s attorney fees denied).
Ryberg v. Comr., T.C. Sum. Op. 2012-24 (petitioners, married couple, were both employed full-time but also jointly operated a horse breeding activity and the husband was involved in a drag racing activity; both activities generated substantial losses since inception; under nine-factor analysis, court determined that horse breeding activity engaged in with requisite profit intent with seven of the factors in petitioners’ favor; losses sustained from 1998-2006 in horse breeding activity fully deductible; husband’s drag racing activity not engaged in with requisite profit intent because six of nine factors in government’s favor and continuous losses since 1990 resulted in 20-year timeframe of losses exceeded any reasonable start-up time; drag racing losses deductible only to extent of income).
C.C.A. 201212009 and 20122010 (Oct. 7, 2011)(taxpayer proposed to make charitable contribution of taxpayer's "appropriative interest" in water rights; such interest treated as separate property interest under state law, but contribution of less than taxpayer's entire interest in property not deductible unless it is a remainder interest in annuity or unitrust, taxpayer's undivided interest in entire property, a remainder interest in a farm or residence or a conservation easement; unidentified Rev. Rul. (probably Rev. Rul. 88-37 (overriding interest in oil and gas lease same as underlying working interest)) referenced leading to conclusion that interest at issue not to be treated as distinct property interest from taxpayer's underlying water right and that deduction not allowable; second ruling notes that taxpayer should have argued that contribution was of a conservation easement because conservation easement deductible under partial interest rule because it is considered to be gift of undivided portion of donor's entire interest in subject property (Treas. Reg. Sec. 1.170A-7(b)(1)(ii)).
Barker v. Comr., T.C. Memo. 2012-77 (petitioner, NASA employee, in spare time developed communications system but was unable to secure patent; petitioner incurred many expenses and claimed records destroyed in hurricane; losses non-deductible due to lack of profit intent and failure to satisfy I.R.C. Sec. 183).
Chief Counsel Advice 201212020 (Nov. 16, 2011)(estate fiduciary without enough property to pay all claims of estate must pay federal tax claim before other claims; if other claims paid first, fiduciary personally liable to extent of payments turned over to creditors other than U.S. if fiduciary had notice of claim of U.S. before distribution to other creditors made).
Taproot Administrative Services, Inc. v. Comr., No. 1070892, 2012 WL 933908 (9th Cir. Mar. 21, 2012), aff'g., 133 T.C. 202 (2009)(petitioner ineligible for S corporation status because its shareholder was a Roth IRA, an ineligible shareholder; petitioner taxable as C corporation for tax year at issue; ownership of custodial IRA and Roth IRA could not be attributed to shareholder for purposes of S corporation eligibility; S corporation status terminated at time custodial IRA acquired corporate stock).

Water Law

In re Ballot Title No. 3, No. 12SA8, 2012 WL 1259027 (Colo. Sup. Ct. Apr. 16, 2012)(court holds that proposed initiative 2011-2012 No. 3, its title, its ballot title and submission clause contains a single subject as constitutionally required; title involves the public's rights in the waters of natural streams; if sufficient signatures can be gathered, initiative will be included on ballot in November of 2012; if approved, "Public Trust" doctrine would be applied to water in the state and would declare that unappropriated water in natural streams is dedicated to the use of the people of Colorado and that the state has superior authority over water in areas of property and contract law).
In re Ballot Title No. 45, No. 12SA22, 2012 WL 1259041 (Colo. Sup. Ct. Apr. 16, 2012)(court holds that proposed initiative 2011-2012 No. 45, its title, its ballot title and submission clause contains a single subject as constitutionally required; title involves placing limits on water diversions with intent of protecting public's interest in water, and allows for prohibition of diversions that would irreparably harm the public ownership interest in water).
Severance v. Patterson, No. 09-0387, 2012 WL 1059341 (Tex. Sup. Ct. Mar. 30, 2012) (court states that it will reconsider it prior opinion concerning the scope of the Open Beaches Act (OBA); in prior opinion, court limited reach of OBA by finding that doctrine of avulsion operated to limit or eliminate public beach assessments after storm events – state (TX) rolling easement law does not cross property lines with result that public access to dry-sand beach under OBA lasts until original parcel over which easement established is lost to erosion; doctrine of custom inapplicable to establish public easement over beachfront property irrespective of beach movement, and doctrine of avulsion applicable to fix boundaries for public dry-sand beach easement).

Archived Ag Law Cases

Whiskeytown Lake, CA