Case Summaries 01/2010
(for tax years beginning after 2008, tax credit for qualified solar electric property available for part of qualified solar electric property expenditure made from subsidized energy financing; but taxpayer that buys or installs energy conservation measures does not include in income the value of any subsidy that a public utility provides for that expenditure).
(divorced taxpayer who is sole owner of home purchased in January of 2009 not eligible for first-time homebuyer tax credit because taxpayer jointly owned home with former spouse during preceding three years).
(reversing the Tax Court, court holds that Tax Court has jurisdiction to determine that partnership should be disregarded for tax purpose, but lacks jurisdiction to determine partner's outside basis in partnership interest in LLC; accuracy-related penalties also reversed; LLC involved was alleged to be a Son-of-Boss tax shelter).
(court lacks jurisdiction to hear plaintiff's claim that the IRS erred in finding that cancelled debt income was taxable income and in holding 2008 income tax refund).
(married couple ineligible for first-time homebuyer credit due to ownership of prior home within three-year period before purchase of current residence; IRS position is that, for married taxpayers, both spouses must be first-time homebuyers as of the date of purchase (if both spouses' names are on the title).
(debtors' Chapter 13 plan confirmed over creditor's argument that plan not feasible because debtors' projected income from cattle sales speculative due to condition of cattle herd; creditor failed to identify any objective fact clearly establishing that bankruptcy court erred in determining that plan was feasible based on debtors' projections; plan permissibly modified creditor's default remedies and plan does not "bifurcate" the claim into secured and unsecured portions).
(unnumbered executive order creates council of ten state governors appointed by the President (with no required confirmation by Senate) to work with federal government with express purpose of expanding military involvement in domestic security; governors to liaise with officials from Northcom, Homeland Security, National Guard and Department of Defense; order raises significant questions about the line between state and federal power and whether the order violates the Posse Comitatus Act (18 U.S.C. Sec. 1385) of 1878).
(according to policy language, defendant need not pay the replacement cost value for business property destroyed in fire that plaintiff did not actually replace).
(taxpayer not entitled to deduction for alimony on amounts paid for former wife's legal fees incurred upon their divorce because obligation to pay would not have ended upon former spouse's death; thus, amounts paid did not meet definition of "alimony" under I.R.C. Sec. 71(b)(1)).
(taxpayer unable to deduct business, dental and medical expenses due to lack of substantiation).
(taxpayer, a farming business, that purchased bulldozer ineligible for farm machinery and equipment exemption from use tax; taxpayer did not prove that bulldozer used primarily for agricultural purposes).
(a taxpayer that has purchased a solar electric system can either exclude a utility subsidy or rebate associated with the purchase, but the amount excluded is not eligible for the I.R.C. Sec. 25D credit).
(extension of time granted for decedent's estate to make QFOBI election under I.R.C. Sec. 2057).
(defendant leased combine to farmer under five-year lease with the combine to be returned to defendant at end of lease term with lessee assuming all risk from possession and operation and defendant to be held harmless; combine ultimately destroyed by fire during operation while under lease and farmer sued defendant for prior negligent repair which caused fire; defendant filed motion for summary judgment which trial court granted because farmer had no property interest in combine under the lease; trial court judgment reversed - defendant did not have insurable interest in combine, defendant's financier did).
(extension of time granted for decedent's estate to make QFOBI election under I.R.C. Sec. 2057).
(court lacks subject matter jurisdiction to here plaintiff's claim that defendant failed to issue disaster relief check; plaintiff may file complaint in U.S. Court of Federal Claims).
(military personnel must meet consecutive five-year ownership requirement for long-term homeowner credit; taxpayer at issue failed to meet test).
(specification of how a taxpayer is to report changes in the manner of how the taxpayer is grouping activities for purposes of the passive loss rules; beginning with 2011 returns, taxpayers must report changes in groupings; failure to report whether activities are grouped for taxpayers with two or more trade or business activities or rental activities will result in each trade or business activity or rental activity to be treated as a separate activity under the passive loss rules).
(plaintiff entitled to default judgment in its action to recover payment for agricultural commodities plaintiff delivered to defendant).
(trial court award of $4,456,606.70 in damages to plaintiff for damages arising from collapse of metal culverts under railroad tracks reversed; court did not have jurisdiction over negligent-breach-of-contract claim (U.S. Court of Fed. Claims had jurisdiction); negligent-inspection-and-maintenance claim barred by Exculpatory Clause).
(plaintiff owes defendant, a farm partnership, a duty to defend and indemnify claims relating to farm accident; case involves injuries to one partner's son who was injured when 850-lb. hay bale fell on him when being put on semi-trailer).
(taxpayers (married couple) not entitled to business expense deductions for payments to corporation created for tax avoidance purposes; taxpayers also not entitled to payments to their daughters due to lack of proof of legitimate business expense).
(repayments made to insurance company for fraudulently billed amounts are fully deductible business deductions (rather than non-business deductions which generate net operating losses to extent of non-business income) on joint return; deductions generated net operating loss which taxpayer carried back and claimed refunds on prior year returns; taxpayer's wife had billed the fraudulent amounts for taxpayer's dental office and taxpayer had included the fraudulent payments on his Schedule C; while wife could not deduct such amounts had she filed a separate return, court cited Helvering v. Janney, 311 U.S. 189 for proposition that the deductions to which either spouse is entitled on a joint return derive from the couple's aggregate gross income).
(taxpayer's receipt of settlement payment for emotional distress includible in gross income; amount did not result from physical injury).
(IRS determines that decedent's heirs have right to examine estate tax return as filed by the executor under I.R.C. Sec. 6103 (e)(3)(B) and are entitled to a copy of the return information).
(cash advances from taxpayer, a cooperative, to its members in exchange for products grown in the U.S. are PURPIMs; advances are included in QPAI and taxable income of taxpayer for purposes of calculating, at the taxpayer's level, the allowable I.R.C. Sec. 199 deduction).
(casualty loss deductible for year in which loss sustained that is not compensated for by insurance or otherwise; any expected reimbursement must be subtracted from the deductible loss).
(debtors' Chapter 13 plan confirmed; plan satisfied requirements of 11 U.S.C. Sec. 1325(b) and court could not redefine "disposable income" simply because amount of actual secured installment payments appeared to be disproportionate to debtors' reasonable needs).
(plaintiff was contract grower of seed corn for Monsanto and had weeds in his fields; at plaintiff's request, plaintiff sprayed weeds with a herbicide blend which Monsanto assured plaintiff was safe for the corn; however, blend contained glyphosate and Monsanto destroyed corn crop to great economic loss to plaintiff; plaintiff sued for breach of implied warranty of fitness for a particular purpose and negligence; court ruled that case presents questions that cannot be determined by jury and required expert testimony and plaintiff failed to provide sufficient evidence to show that glyphosate in blend caused damage to seed corn crop and that defendant was source of glyphosate; defendant's motion for summary judgment granted).
(taxpayer who worked as crew member on fishing boat had self-employment income; accuracy-related penalty inapplicable to former spouse).
(gifts of limited partnership interests to taxpayer's children were not gifts of present interests).