January 2017

January 2017


Iowa Supreme Court Sides with Drainage Districts

On January 27, 2017, the Iowa Supreme Court issued a ruling favoring the drainage districts in three northwest Iowa counties in the high profile Des Moines Water Works nitrate litigation. This ruling effectively means that the federal court will enter summary judgment in favor of the districts with respect to DMWW’s claims for money damages and injunctive relief and will likely grant similar relief with respect to DMWW’s claims alleging violations of DMWW’s constitutional rights.

Today’s Iowa Supreme Court ruling has no immediate impact on the core federal claim in the lawsuit, the allegations that the districts have violated the Clean Water Act (and the companion Iowa statute) by discharging nitrates via a point source into “Waters of the United States” without a National Pollutant Discharge Elimination System (NPDES) permit. Those claims will soon be addressed by the federal court when it evaluates the drainage districts’ second motion for summary judgment.

As we’ve explained in past articles, this litigation arose March 16, 2015, when the Des Moines Board of Water Works Trustees (DMWW) filed a federal Clean Water Act (CWA) lawsuit against 10 drainage districts (and their trustees) in Buena Vista, Sac, and Calhoun Counties in Iowa. The lawsuit, which was filed in the United States District Court for the Northern District of Iowa, asserts causes of action falling into two categories.

Continue reading here.


Washington is Abuzz with ACA Activity

Open enrollment for purchasing 2017 health plans on the Marketplace ends today. In the meantime, Congress and President Trump have been paving the way to unwind and recalibrate the Affordable Care Act, a massive chunk of (largely) tax legislation.

Trump concluded his first day on the job by signing an Executive Order stating that, pending repeal of the ACA:

It is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market

The Order goes on to urge the responsible agencies to: exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.

What is the impact of this Order? Does it mean that individuals who did not have insurance in 2016 or large employers who did not offer insurance in 2016 will not have to pay their respective “shared responsibility payments” (i.e. penalty taxes)?

Continue reading here.


Make Sure You Understand the Tax Implications of that Equipment Trade

In light of the tough farm economy, dealers are offering producers even more options when it comes to purchasing upgraded equipment. Because different tax implications flow from different contractual arrangements, it is crucial that a producer understand the true nature of a lease or purchase contract before he signs it. This will avoid big surprises come tax time.  

It is important to understand that the IRS does not always consider a “lease” a “lease.” What matters is not the name given to a transaction by the dealer, but the economic realities of that transaction. If a “lease” doesn’t act like a “lease,” the IRS won’t treat it as one for tax purposes.

True equipment leases are often called “operating leases.” An operating lease is one where the farmer pays for the use of the equipment for a term, nothing more, and nothing less. An operating lease is not a rent-to-own agreement. If the producer does wish to purchase the equipment at the end of the term of the operating lease, the purchase price will be roughly equivalent to the fair market value of the equipment at the time of the purchase. If equipment is leased pursuant to a true operating lease, the farmer can deduct the rental payments from income as ordinary and necessary business expenses.

Continue reading here.

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CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.

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