Case Summaries 08/2010
(in 4-2 ruling, court upholds defendant's power to overrule local opposition to transmission lines coming inland from planned offshore 130-aero generator wind power station known as the Cape Wind Project on Nantucket Sound; project had been denied permit from Cape Cod Commission and applied to defendant for a single permit that would consist of all state and local permits for Cape Wind project; Chief Justice dissented noting that ruling clears way for oil drilling rigs and nuclear power plants to be developed off-shore of Nantucket Sound and Cape Cod; Chief Justice notes that defendant has usurped state's fiduciary responsibility to the state's citizens and failed to consider in-state impacts of the wind power station, including inherent economic inefficiency of wind-generated electricity and, as such "seriously undermines the public trust doctrine").
(plaintiffs have road easement through defendant's property; easement language ambiguous and road easement provided the only reasonably convenient access to building on tract).
(Medicaid benefit application case; value of plaintiff's farmland properly not counted as an available resource because plaintiff used the farmland in the course of plaintiff's business and it produced an annual return consistent with its fair market value; regulation at issue (13 C.S.R. Sec. 40-2.030(8)(B)) [Missouri Code of State Regulations] did not require plaintiff to personally work the farm or physically use the land, but merely profit from the land personally; no cap on exemption for business property under 42 U.S.C. Sec. 1382b(a)(3)).
(KS estate tax applies to estates of decedent's dying during 2007 through 2009, but "pick-up" tax (amount equal to the federal credit for state death taxes) continues to apply to estates through 2016).
(KS estate tax is repealed for estates of decedent's dying during 2010).
(damage award of $61,263 to plaintiff for death loss of pigs raised under contract; damage award upheld on appeal as supported by evidence).
(court denied creditor’s motion to convert debtor’s Chapter 12 case to Chapter 7 case; after filing bankruptcy petition, debtor properly formed LLC and transferred assets to it for estate planning purposes).
(trial court's order regarding easement upheld over portion of deceased parents' farm property).
(plaintiff fell through hay drop in barn to concrete floor below injuring his back and neck in fall; trial court judgment affirmed that defendant, possessors of land and barn in question, had no reasonable duty to inspect premises by sliding roll of carpet over hay drop to see if hay drop cover would be dislodged - which is how the cover became dislodged and plaintiff subsequently fell through).
(operation of beach club and parking lots by tax-exempt homeowner association subject to unrelated business income tax; income not rent from real estate as defined by I.R.C. Sec. 512(b)(3) and didn't substantially promote community welfare).
(petitioner not entitled to certain business-related deductions and charitable deduction due to lack of substantiation).
(farm-related expenses not trade or business expenses; on expectation of inheriting portion of farmland, petitioners (married couple) moved mobile home to property, made portion suitable for building, bought 20 chickens, 2 emus, goat and horse and sold eggs for $1/dozen along with emu feathers; goat soon sold because it was "scary"; electric fencing installed; no books maintained; nearly $20,000 "farming" loss disallowed; husband's primary job was as pilot; no accuracy-related penalty imposed because returns prepared by professional tax preparer).
(CODI reported to petitioner on 1099-C related to charged-off loan from mid-1990s of which petitioner had no notice and involved different taxpayer with same address and social security number as petitioner; court holds that IRS needs more than 1099-C to assess tax; taxpayer was insolvent in year tax actually discharged, thus no CODI).
(cancellation of plaintiff's agricultural lot lease due to plaintiff's default on loan from defendant's Hawaiian Home Farm Loan Fund does not violate intent, spirit, purpose or applicable rights or duties under the Hawaiian Homes Commission Act of 1920).
(buyer of farmland enrolled in the CRP breached real estate purchase contract upon refusal to assume existing CRP contract on the property; trial court grant of summary judgment for buyer reversed and case remanded).
(driveways of adjacent properties met at common point and formed a continuous driveway making it possible to access each property from two streets; no adverse possession elements or prescriptive easement grounds present for either party).
(buyer of farmland enrolled in the CRP breached real estate purchase contract upon refusal to assume existing CRP contract on the property; trial court grant of summary judgment for buyer reversed and case remanded).
(appellant appropriates and stores surface water for the benefit of public users lacks standing to bring judicial review proceeding under the Administrative Procedure Act to challenge a defendant's ground water appropriation).
(court affirms Tax Court decision that petitioner had taxable gain in accordance with Treas. Reg. Sec. 1.1502-13(g)(4); loans to S corporation did not amount to indebtedness and did not establish a basis against which losses could be taken).
(petitioner not entitled to deduct payments made to ex-spouse because the payments were not made in accordance with a divorce decree or separation agreement and, as a result, did not qualify as alimony under I.R.C. Sec. 71).
(petitioner filed motion seeking determination she was common law wife of decedent and, therefore, entitled to estate tax refund due to marital deduction; motion denied because claim not filed in good faith and fraud and negligence penalties imposed; estate entitled to some administrative expenses).
(petitioner, a pipefitter, had indefinite employment rather than temporary employment and, as such, was not away from his home as required by I.R.C. Sec. 162(a)(2) with the result that no deduction was allowed for his work-related commuting expenses).
(case involves taking of permanent easement and the compensation thereof owed to the disaffected landowner).
(FLSA case involving donning and doffing of uniforms and safety gear; defendant's motion for summary judgment granted as to time spent donning and doffing and volunteering, but denied as to other claims).
(defendants' entitled to summary judgment on plaintiff's claims of abuse-of-process and malicious prosecution based on actions defendants took in furtherance of state law to inspect plaintiff's farm for existence of animal feedlot for possible regulatory action).
(restrictive covenant determined to be null and void).
(defendant, farmer, determined to be "merchant" for purposes of merchant's confirmatory memo rule and, consequently, can't use statute of frauds as a defense to his failure to perform under oral contracts for sale of grain; defendant has been farmer since 1973, owns 836 acres, took ag and ag business classes in college, makes all marketing decisions and sells crops to various buyers, and is experienced in cash sales and use of futures contracts).
(sole member of limited liability company liable for company's unpaid employment taxes; check-the box regulations upheld; opinion follows other circuit court opinions on the issue).
(the "timely mailed/timely filed" rule inapplicable to amended returns that show increase in tax due; I.R.C. Sec. 7402 only applicable to returns "required to be filed"; submissions of amended returns that are timely when mailed, but beyond statute of limitations for assessment of tax when received, cannot be assessed tax for increased tax shown on return; "timely filed/timely mailed" rule does apply to amended returns which include claim for refund).
(federal government's suit against defendant, insurance agent, for alleged violations of False Claim Act, reinstated; trial court's award of summary judgment for defendant on all claims reversed and case remanded to district court for further proceedings on government's claim that defendant defrauded government by causing ineligible farmers to make claims against insurance policies that were issued by private insurance company and reinsured by government corporation).
(court determined that petitioner had unreported income based on bank deposit analysis deriving from capital gain triggered by sale of partnership interest; business expense deductions denied due to lack of substantiation).
(plaintiff lacks standing to bring tortious interference with business relations claim against defendant couched in tax violations; parties provide pest control services in same market and plaintiff classifies workers as employees while defendant classifies similar workers as independent contractors; plaintiff claims defendant's classification violates federal and state employment tax laws; defendant's classification allows defendant to avoid payment of employment tax and other taxes which allows them to pay higher wages to workers and gives them a competitive advantage in the market; court notes that neither federal or state tax law provide a private cause of action for their enforcement).
(case involves dispute between siblings related to several family-owned farms; partition action and dispute over property ownership).
(specific performance of real estate contract improperly awarded; buyer did not have sufficient financing to purchase lots at issue).
(motocross racing activity not engaged in for profit; expenses deductible only to extent of income from the activity).
(plaintiff, activist group that advocates for legalization of raw milk, challenges 21 C.F.R. part 1240.61 and 21 C.F.R. part 131.10 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).
(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, 2012 U.S. Dist. LEXIS 46290 (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).
(plaintiff, real estate developer, sought rezoning of property from "agricultural" to "commercial/industrial"; defendant denied plaintiff's request and trial court granted developer's motion to leave to present additional evidence and remanded case to defendant to hold hearing; use variance not approved; trial court's decision affirmed; no spot zoning involved).
(plaintiff, estate executor, filed claim for refund of estate tax and IRS moved for summary judgment; under I.R.C. Sec. 6511(b)(2)(A), amount of refund limited to portion of tax paid within look-back period immediately preceding filing of claim (3 years plus the period of time for filing return); executor got extension for filing return and then got second extension; court held that IRS had no authority to grant second six-month extension; look-back period did not cover period during which payment made so executor not able to file refund claim; equitable estoppel not available to extend timeframe for extending time to file refund claim; IRS motion granted).
(concerns application of IA capital gain exclusion to sale of farming business; gain attributable to sale of land qualifies for capital gain exclusion if both ten-year ownership and ten-year material participation test satisfied; gain triggered on tangible personal property and services qualifies for gain exclusion if 90 percent or more of tangible personal property or services sold and ten year requirements satisfied; goodwill qualifies for capital gain exclusion, but gain attributable to equipment and grain bins is ordinary income that does not qualify for capital gain exclusion).
(profit sharing agreement among plaintiffs (four large grocery store chains in California) violates antitrust laws even though result was to lower product prices for consumers via reduced labor costs; agreement was for profit sharing in the event labor strike occurred to one of the chains; dissent noted there was no anticompetitive effect of the agreement).
(amounts passing to surviving spouse via settlement agreement qualifies for marital deduction).
(collected runoff from logging operations (i.e., mud and sediment that washes off logging roads) into forests and rivers is a point source discharge of stormwater associated with industrial activity requiring an NPDES permit under the CWA; the runoff is collected in a system of ditches, culverts and channels which is subsequently discharged into streams and rivers).
(firefighter injured on duty received payments for injuries from collective bargaining agreement are includible in firefighter's income because they were not paid under a worker's compensation act as required for excludability by I.R.C. Sec. 104(a)(1)).
(state Department of Transportation not liable for plaintiff's injuries sustained in auto collision with horse on interstate; horse owner 30 percent at fault essentially under theory of res ipsa loquitur; plaintiff 20 percent liable due to high blood-alcohol level; plaintiff entitled to damages for loss of earning capacity and future mental pain and suffering).
(collision with fellow skier on ski-slope is inherent risk of downhill skiing which bars plaintiff's recovery for damages under the state Skier's Responsibility Act).
(taxpayer who was employed as office manager for real estate broker owned and managed rental properties with spouse claimed that rental property activity was non-passive under I.R.C. Sec. 469(c)(7); court disagreed, noting that activities as employee not taken into account - taxpayer must own at least 5% of the business that comprises work of at least 750 hours in a "real property trade or business" - so taxpayer had to meet 750-hour test via only the rental properties; test not satisfied and no grouping election made).
(consulting activity not trade or business and not merged with other businesses; expenses not deductible business expenses; losses from partnership's plane leasing activity not passive in one year, but instead were passive for two years; accuracy-related penalty applied).
(refund suit filed by estate dismissed due to lack of jurisdiction; estate had litigated issue in Tax Court which involved same tax liability and estate is precluded by res judicata from re-litigating issue in District Court).
(plaintiff's acquisition by defendant via basis-shifting tax shelter offered by Ernst & Young which sheltered $100 million taxable gain resulted in disallowed losses and 40 percent gross valuation misstatement penalty; reliance on CPA firm's advice not reasonable - it was the same firm that sold them the COBRA tax shelter for $2.5 million).