Current Ag Law & Taxation Cases and Rulings

Last updated: November 6, 2009

1. Neb. Dept. of Rev. (Rev. Rul. 01-09-02 (Oct. 30, 2009)(involves construction of state net metering statute - states sales tax is imposed on the gross amount of electricity sold to a custormer-generator because value of excess purchased by local distribution utility is separate transaction that does not reduce gross receipts of local distribution utility).
2. Ind. Dept. of Rev. (Ltr. of Finding 09-0546 (Oct. 28, 2009)(taxpayer not entitled to exemption from sales and use tax on purchase of ATV; taxpayer failed to prove that ATV was used directly in farm production).
3. Duncan  v.  LaBarge, No. 096027 (8th Cir. Nov. 5, 2009)(no abuse of discretion by bankruptcy court in dismissing debtors' case for failure to file required credit counseling certificate; debtors failed to establish exigent circumstances meriting a waiver of the requirement).
4. Barr, et ux. v. Comr., T.C. Memo. 2009-250 (petitioners, married couple, had ordinary rather than capital gain income from the surrender of life insurance policy; surrender not a sale or exchange of a capital asset; accuracy penalty upheld for failure to report).
5. Bruen, et al. v. Comr., T.C. Memo. 2009-249 (petitioner entitled to equitable innocent spouse relief from one-half of joint income tax liability owed with former spouse becuase petitioner did not have reason to know that former spouse would not pay one-half of tax liability as ordered by family court during divorce proceedings).
6. Iowa Dept. of Rev. Policy Ltr. 09300065 (Oct. 8, 2009)(out-of-state photographer providing services in Iowa must collect and remit use tax on purchase price of a disc mailed to a customer in Iowa because the photographer distributed tangible personal property).
7. Scroggin v. Wyeth, No. 08-2711 (8th Cir. Nov. 2, 2009)(plaintiff's state law claim for failure to warn not preempted by federal law because there was no evidence that FDA would not have permitted the strengthening of the labels of Premarin, Prempro and Provera in a manner consistent with Arkansas law; defendants failed to show that the state requirements obstruct the purposes of federal drug labeling regulation).
8. ECC 200944035 (Aug. 21, 2009)(IRS concedes that an overstatement of basis is not an omission from gross income for purposes of extending the statute of limitations under I.R.C. Sec. 6501(e)(1) and that an item must be fully omitted to be covered by I.R.C. Sec. 6501(e)(2)).
9. ECC 200944049 (Mar. 30, 2009)(taxpayer failed to provide clear and convincing evidence that payments made to executive were reasonable compensation).
10. Priv. Ltr. Rul. 200944002 (Jul. 15, 2009)(grantor's contribution to trust was taxable gift; no ruling made on whether trustee's discretion to distribute income and principal of trust to grantor causes trust's assets to be included in grantor's estate via I.R.C. Sec. 2036).
11. Priv. Ltr. Rul. 200944012 (Jul. 27, 2009)(owner and lessor of condemned commercial real estate has three years to acquire qualifying like-kind replacement property; three-year period begins from the end of the tax year in which owner and lessor took actual or constructive receipt of the proceeds from the condemnation).
12. ILM 200944027 (Jul. 22, 2009)(both NRSA and non-NRSA grant payments (stipends) from university to postdoctoral fellows are subject to FICA tax because they are compensation for services under I.R.C. Sec. 117(c) and because there is an employment relationship between the university and the postdoctoral fellows receiving the payments)
13. Zimmerman, et al. v. Board of County Commissioners, No. 98,487, 2009 Kan. LEXIS 1073 (Kan. Sup. Ct. Oct. 30, 2009)(court upholds defendant's ordinance banning commercial wind farms; defendant properly followed state statutory procedures in adopting ordinance prohibiting wind farm construction and such prohibition was reasonable based on defendant's consideration of aesthetics, ecology, flora and fauna of Flint Hills; court cited numerous adverse effects of commercial wind farms including, damage to local ecology, prairie chicken habitat - including breeding grounds, nesting and feeding areas and flight patterns, and unsightly nature of large wind turbines as well as negative impact on property values, agriculture and nature-based tourism; parties ordered to submit additional briefing and prepare for oral argument on whether defendant's ordinance constituted a "taking" of plaintiffs' property rights without just compensation, and whether the ordinance violates the Commerce Clause by discriminating against interstate commerce).
14. Keene v. Zoning Board of Adjustment, Etc., et al., No. 5D07-3058, 2009 Fla. App. LEXIS 16130 (Fla. Ct. App. Oct. 30, 2009)(horseback riding school and the boarding and stabling of horses on private landowner's property adjacent to plaintiff's property is properly characterized as a commercial-agricultural use that is impermissible under county's development Code; defendant's issuance of special use permit allowing such usage improper).
15. Verma v. Tilley Farms, Inc., No. 1 CA-CV 07-0576, 2009 Ariz. App. LEXIS 748 (Ariz. Ct. App. Oct. 29, 2009)(state statute allowing timeframe for buyer of real estate to rescind purchase contract once seller provides buyer with affidavit concerning certain statutorily required attributes of the land upheld as constitutional and seller compliance with statute is mandatory unless waived by buyer; as applied to buyers in the case who had actual knowledge of a federal flood easement over the property at issue, two buyers allowed their statutory rescission rights to lapse and are bound by the purchase contracts, but third buyer properly invoked rescission right).
16. Riceland Foods, Inc. v. Pearson, et al., 2009 Ark. 520 (2009)(landlord's lien for unpaid rent for farm lease not enforceable against plaintiff who bought grain from tenant without notice that tenant had failed to pay rent; plaintiff was an "innocent purchaser" and no facts present that would have put plaintiff on notice that it was purchasing crops grown on leased land which would have given rise to a duty of plaintiff to inquire about the possibility of a landlord's lien).
17. In re Estate of Humphreys, No. E2009-00114-COA-R3-CV, 2009 Tenn. App. LEXIS 716 (Tenn. Ct. App. Oct. 28, 2009)(farmer died intestate and implied partnership deemed to exist with surviving spouse entitling her to one-half of assets of farm business with balance disbursed to decedent's estate; while Schedule F filed only in decedent's name, Schedule F included incomes of both decedent and surviving spouse).
18. Rhode Island Fisherman's Alliance, et al. v. Rhode Island Department of Environment Management, et al., No. 08-2390 (1st Cir. Oct. 23, 2009)(court uphholds trial court's refusal to remand case and decision to dismiss plaintiff's claim that defendant violated state regulations by retroactively imposing federal restrictions on lobster trapping).
19. Iowa Dept. of Rev. Policy Letter, 09300060 (Aug. 25, 2009)(dyed diesel fuel seller need not pay sales tax on environmental protection charge; separately stated, legally imposed fees are excluded from taxable sales price of tangible personal property).
20. Westfield Insurance Co. v. Hunter, et al., No. CA2009-05-134, 2009 Ohio App. LEXIS 4743 (Ohio Ct. App. Oct. 26, 2009)(insurance policy coverning residence inapplicable to injuries sustained in ATV accident on farm property because accident "arose out of a premises" that was not an "insured location").
21. In re Estate of Hedke, 278 Neb. 727 (2009)(trial court's determination that primary heir of decedent did not unduly influence decedent's will and trust reversed - evidence established that heir improperly influenced decedent in making her will; trial court's order finding deed transfering property to trust valid and that heir had misappropriated decedent's assets while serving as attorney-in-fact vacated - sibling contesting will lacked standing to recover assets for the estate and trial court did not have jurisdiction over claims; sibling did have authority, as trust beneficiary, to challenge primary heir's actions while servign in capacity of trustee; case remanded for further findings and determinations concerning primary heir's transactions during the trust's winding-up period).
22. Iowa Dept. of Rev. Policy Letter, 09300059 (Sept. 16, 2009)(bottled beverage comprised mostly of water and without sweeteners (Evolv) is considered food for human consumption that is exempt from sales tax).
23. Swift & Co., et al. v. Department of Revenue, et al., No. S-09-1095 (Neb. Sup. Ct. Oct. 23, 2009)(cleaning service contracts for the cleaning of meat processing plants and the tangible personal property contained in the plants are subject to sales tax; Defendant's regulation so specifying upheld).
24. Powell, et al. v. Tosh, et al., No. 5:09-CV-000121-TBR, 2009 U.S. Dist. LEXIS 98564 (W.D. Ky. Oct. 22, 2009)(plaintiff class asserts numerous claims against defendant hog producers for nuisance and damages related to nuisance claims; plaintiffs filed suit in state trial court, but defendant sought removal to federal court; plaintiffs' motion to remand denied; Class Action Fairness Act (which vests jurisdiction in such matters in federal district court) applicable and exceptions not applicable).
25. CCA Ltr. Rul. 200943034 (Aug. 25, 2009)(I.R.C. Sec. 170(f)(14) deduction reduced by amount which bears the same ratio as the rehabilitation tax credits allowed for the 5 preceding tax years over the FMV of the building on the date of the contribution).
26. CCA Ltr. Rul. 200943033 (Aug. 24, 2009)(guidance on charitable contributions of facade easements).
27. CCA Ltr. Rul. 200943029 (Jun. 23, 2009)(grants contained in Sec. 1603 of ARRA of 2009 are not tax credits and receipt of grant is not taxable income to recipient; recovery by Treasury of any overpayment (or recapture) to be handled as a debt owed to the government requiring the Justice Department to sue to recover if not voluntarily repaid to Treasury).
28. CCA Ltr. Rul. 200943028 (Sept. 8, 2009)(qualified small business owner does not include in income any interest paid by the Small Business Administration to the lender and has no interest deduction for the payment).
29. Deere & Co, et al. v. Comr., 133 T.C. No. 11 (2009)(petitioner not entitled to millions of dollars in research credits claimed under I.R.C. Sec. 41; in calculating the amount of the credit, petitioner omitted annual gross receipts from petitioner's foreign branches (overseas divisions) in computing average gross receipts for the four preceding tax years; the Congress did not expressly exclude foreign receipts from the calculation ).
30. Consolidated Edison Co. of New York, Inc., et al v. United States, No. 1:06-cv-00305T (Fed. Cl. Oct. 21, 2009)(plaintiff's lease-in, lease-out transaction was true lease that possessed economic substance; related deductions allowable).
31. Cavoto v. Hayes, No. 08 C 6957, 2009 U.S. Dist. LEXIS 96868 (N.D. Ill. Oct. 19, 2009)(ex-mother-in law defendant's filing of Form 1099-C with her tax return reporting debt forgiveness income of ex-son-in-law not actionable fraud; even though defendant not "applicable entity" under I.R.C. Sec. 6050P that is required to make such filing, such filing not actionable under I.R.C. 7434 if filing is truthful and accurate).
32. Illinois Dept. of Rev. Policy Ltr. (St. 09-0126-GIL, Sept. 28, 2009)(helicopter used in production agriculture for aerial surveillance and pollination may qualify for farm machinery and equipment exemption from retailers' occupation tax under 86 Ill. Adm. Code Sec. 130.305).
33. Cate v. Woods, No. 06-09-00014-CV, 2009 Tex. App. LEXIS 8125 (Tex. Ct. App. Oct. 21, 2009)(trial court erred in granting specific performance of land sale contract; no written contract in existence that expressed essential contract terms; no fraud by "seller" because no contract in existence; no trespass by "seller" because "seller" was owner of property).
34. In re Agric., No. NO. A-3283-06T3, 2009 N.J. Super. LEXIS 229 (N.J. Sup. Ct. Oct. 21, 2009)(validity of regulations that implement and enforce state Water Supply Management Act largely upheld; some regulatory amendments invalid because they are ultra vires).
35. Phelps v. Phelps, No. 2009AP557, 2009 Wisc. App. LEXIS 811 (Wisc. Ct. App. Oct. 20, 2009)(elements of adverse possession not established).
36. In re Estate of Schisler, No. M2008-02479-COA-R3-CV,  2009 Tenn. App. LEXIS 699 (Tenn. Ct. App. Oct. 19, 2009)(substantial and material evidence present to support trial court's determination that decedent's will invalid because two of decedent's children had confidential relationship with decedent and unduly influenced decedent to execute will).
37. McCormick v. Comr., T.C. Memo. 2009-239 (petitioner had only minimal amount of cancellation of debt income attributable to discharged credit card debt; petitioner reasonably disputed income reported on Form 1099-C and IRS failed to produce any reasonable and probative information independent of information returns).
38. Red 11, LLC v. Conservation Commission, No. AC 29092, 117 Conn. App. 630 (2009)(sufficient evidence present to support defendant's determination that plaintiff violated town's wetland regulations and that exemption for farming activities did not apply).
39. Smith v. Comr., T.C. Memo. 2009-237 (petitioner not entitled to relief from joint and several liability under I.R.C. Sec. 6015).
40. Sloan v. Comr., T.C. Sum. Op. 2009-162 (petitioner not entitled to claimed business expense deductions for musicion and band business, not entitled to deductions for business use of home, and is a common law, rather than statutory employee).
41. Bogus v. Comr., T.C. Sum. Op. 2009-160 (petitioner denied loss deductions arising from dog racing activity under passive loss rules; petitioner did not participate in the activity on a basis that was regular, continuous and substantial; only self-serving, undocumented and uncorroborated testimony presented as to level of petitioner's involvement in the activity).
42. Comer, et al. v. Murphy Oil USA, et al., No. 07-60756, 2009 U.S. App. LEXIS 22774 (5th Cir. Oct. 16, 2009)(plaintiff class, residents and landowners of lands and property along the Mississippi Gulf coast have standing to assert public and private nuisance, trespass and negligence claims against defendants for emission of greenhouse gasses that allegedly contributed to "global warming" that allegedly caused a rise in sea levels and added to the ferocity of Hurricane Katrina which combined to destroy plaintiffs' private property and public property that was useful to them; claims were not non-justiciable political questions; but, plaintiffs' unjust enrichment, fraudulent misrepresentation and civil conspiracy claims dismissed for lack of standing; case remanded; case could have been dismissed for plaintiffs inability to establish proximate causation, but trial court had dismissed case without relying on that ground so appellate court did not address the issue; case remanded and it is anticipated that trial court will dismiss case due to plaintiffs inability to establish causal connection).
43. Jones v. Sparks, No. 2008-CA-002006-MR, 20009 Ky. App. LEXIS 200 (Ky. Ct. App. Oct. 16, 2009)(plaintiff's thirteen-year use of road over defendant's property via oral agreement did not give rise to easement; no written agreement executed and facts do not support easement by estoppel, no easement by implication because common ownership not present, and no easement by way of necessity because plaintiff has other access route to property).
44. IRS Notice 2009-84 (provides limited administrative exception to ability of IRS to examine Form 706 in connection with certain protective claims for refunds that are timely filed; if claim for refund ripens and becomes ready for consideration after expiration of period of limitations on assessment in I.R.C. Sec. 6501, IRS will limit review of Form 706 to evidence relating to deduction under I.R.C. Sec. 2053 that was the subject of the protective claim).
45. Priv. Ltr. Rul. 200942022 (Jul. 9, 2009)(farmers' cooperative that markets commodities for its members and provides supplies to its farmer members can treat its payments to members and participating patrons as "per-unit retain allocations paid in money"; for purposes of computing cooperative's domestic production deduction (I.R.C. Sec. 199) the cooperative's qualified production activities income and taxable income are to be computed without regard to any deduction for payments to members and participating patrons).
46. Organica Pastures Dairy Co., et al. v. State, No. H033022, 2009 Cal. App. Unpub. LEXIS 8237 (Cal. Ct. App. Oct. 15, 2009)(plaintiff, producer of raw milk sold to consumers challenged constitutionality of state law requiring raw milk sold to consumers to contain no more than 10 coliform bacteria per milliliter of milk; trial court denied plaintiff's motion for preliminary injunction that would stay enforcement of provision; plaintiff's request for dismissal of appeal granted).
47. Gates v. Sprint Spectrum, L.P., No. 08-3003 (10th Cir. Oct. 14, 2009)(defendant's placement of cell phone antenna on electricity transmission tower located on plaintiff's property constituted (under Texas law) permanent rather than temporary trespass because neither existence nor nature of nuisance changed over time; result is that any alleged injury occurred before plaintiff acquired real estate at issue and any cause of action vested in property owner at time of injury; thus, plaintiff lacked standing to sue).
48. Hickerson v. State, No. 08-1033 (AET), 2009 U.S. Dist. LEXIS 95067 (D. N.J. Oct. 13, 2009)(plaintiff operates commercial organic orchard on leased land adjacent to public land on which hunting occurs and claims that his farming activities have been harmed by lead shot from firearms discharged onto the farming property by making plaintiff unable to meet federal standards for organic production and allowable poisons in food; on various motions for summary judgment, plaintiff's substantive due process claim denied - plaintiff not alleging that defendant has banned plaintiff from being an organic farmer; plaintiff's procedural due process claim denied - plaintiff failed to show that defendant deprived plaintiff of protected property right; plaintiff's Fifth Amendment claim denied - claim not ripe).
49. Iowa Dept. of Rev. Policy Letter No. 09300058 (Aug. 17, 2009)(sales of solar-powered attic fans not subject to sales and use tax; fans convert solar radiation into electrical energy).
50. Florida Dept. of Rev. Tech. Adv. No. 09A-042 (Aug. 20, 2009)(purchase of propane pool heater for use at tropical fish farm exempt from sales and use tax because heater used exclusively on farm).
51. Sanderson Farms, Inc. v. Occupational Safety and Health Review Commission, No. 08-61028, 2009 U.S. App. LEXIS 22442 (5th Cir. Oct. 12, 2009)(plaintiff liable for $6,300 payment to estate of employee who died in fire started by employee's blowtorch when pallet of frozen chicken fell on him; structure on which frozen chickens stored unstable).
52. Martin, et ux. v. Comr., T.C. Memo. 2009-234 (petitioner who incorporated his real estate business properly classified as employee because he was a corporate officer that performed substantial services for the corporation; corporation cannot deduct employment taxes and petitioner not entitled to additional business expense deductions beyond what IRS allowed).
53. Deneselya, et ux. v. Comr., T.C. Summ. Op. 2009-157 (petitioners (married couple) not entitled to automobile expense deductions associated with husband's appraisal business due to failure to meet strict substantiation requirements of I.R.C. Sec. 274(d).
54. In re "Agent Orange" Product Liability Litigation, No. MDL 381, CV 08-2266 (JBW), 2009 U.S. Dist. LEXIS 94637 (E.D. N.Y. Oct. 10, 2009)(defendants, manufacturers of "Agent Orange," not liable for alleged injuries and other damages associated with leaking of barrels containing "Agent Orange" due to government contractor defense; "Agent Orange" manufactured pursuant to government contract, delivered to government at specified location after government inspection and stored by government after delivery).
55. In re Landgrebe, et ux., No. 08-26271 (Bankr. D. Colo. Sept. 23, 2009)(non-refundable child tax credit is not exempt property under Colorado law; debtor's claimed exemption for child tax credit disallowed and debtor ordered to turn over prepetition portion of 2008 income tax refund to bankruptcy estate).
56. N.D. Atty. Gen. Op. No. 2009-L-14 (Oct. 9, 2009)(for purposes of the $40,000 non-farm income limitation to be eligible to claim the tax exemption for a farm residence, homeowner may defer W-2 income in an amount which lowers the off-farm income to less than $40,000, can offset W-2 non-farm income with Schedule C or D non-farm losses to reduce the net non-farm income, and can offset Schedule C income so that the resulting total net of non-farm income is less than $40,000).