Annotations 03/2009

(single-member LLC owner personally liable for LLC's unpaid employment taxes; "check-the-box" regulations upheld).


(passive loss rules not impermissible retroactive and did not constitute a Fifth Amendment taking; certioriari denied).


(couple's net income received for helping care for their granddaughter not subject to self-employment tax; taxpayers not engaged in trade or business of providing daycare for children).


(taxpayer failed to provide clear and convincing evidence that payments made to executive were reasonable compensation).


(trespass to try title action; summary judgment for defendant affirmed; plaintiff could not establish superior title or elements of adverse possession or prior possession).


(oil and gas lease not forfeited either for failure to bury lines or pay royalties; lease contained no end date to landowner's option of requesting that lines be buried, and farm-tap sales to be included in calculation of royalties; case remanded for determination of which party is to bear cost for burying pipelines).


(no claim for negligence against surveyor in boundary dispute case had accrued because adjoining landowner had not shown error in survey, and claim against surveyor was contingent on property owner's liability to adjoining landowner).


(taxpayer not entitled to charitable deduction for charitable contribution of trial discovery material; such property is a "letter, memorandum, or similar property" that is "prepared or produced" for a taxpayer, and is excluded from the Code's definition of "capital asset" under Sec. 1221(a)(3)(B); as such allowable tax deduction limited to taxpayer's basis, which was zero).


(will scrivenor's initials located on lower corner of every page insufficient to satisfy statute of wills; question also existed concerning testator's capacity to execute will).


(Indian tribe's casino property not subject to property tax because property was acquired under federal land settlement statute and, thus, held in trust by United States).


(court rejects IRS position that medical residents not eligible for FICA student exception; case remanded for determinations regarding students' qualification for student exception).


(charitable contribution deduction denied for donation of preservation easement on taxpayer's home (designed by Frank Lloyd Wright); taxpayer failed to properly substantiate; penalties upheld).


(estate entitled to 5 percent valuation fractional interest discount (amount conceded to by the government) when valuing 50 percent interest in nineteen-painting art collection).


(defendant cannot object to a partitioning of property on the ground that the future principal value of the property appears to be for wind farm development; right to harvest wind is an inchoate interest in the land which does not become vested until reduced to possession by employing it for a useful purpose, much like water).


(plaintiff, father of defendant, had valid laborer's lien on son's cotton crop; on remand, recorded lienholder could also move to reinstate its motion for full hearing).


(ex-wife petitioned for increase in child support and ex-husband (a farmer) claimed that court must use expense method depreciation as utilized on ex-husband's tax return to determine ex-husband's income rather than straight-line depreciation; case of first impression; because child support guidelines caution that a court may include depreciation as a business expense only if it is reasonably necessary to produce income, trial court did not abuse discretion by using straight-line depreciation to calculate child support income).


(summary judgment awarded to defendant hog operation affirmed on appeal; plaintiff sued to enjoin proposed hog feeding business on grounds that it would violate provisions contained in zoning handbook; plaintiff lacked authority to regulate defendant's hog operation under state law).


(restrictive language in deed imposing a conservation easement on part of defendant's property precludes the defendant's from using the tract for activities by the paying public). 


(proceeds of sale of farm equipment were deceased husband's separate property and, therefore within exception to state law that creates a presumption that all tangible personal property in the joint possession or control of a decedent and spouse at time of death is owned in joint tenancy with right of survivorship; wife maintained off-farm employment and had no involvement in husband's farming operation).


(replevin action involving attempted repossession of trespassing cattle; defendant refused to allow plaintiff to recover cattle unless plaintiff paid $200 per cow; trial court award of $1,000 in nominal damages and $3,000 of punitive damages to plaintiff reversed, but $1,000 in attorney fees for plaintiff upheld; defendant failed to raise at trial statutory right to impound the cattle; but cattle returned unharmed and undamaged, thus $1.00 in nominal damages allowed; plaintiff did not properly request punitive damages, but did raise the issue of attorney fees). 


(remaining basis in a damaged building and the cost of its demolition are only recoverable as an offset against proceeds from the sale of the land on which the building was located).


(negligence case involving claim for breach of escrow account in land sale transaction). 


(quiet title action; evidence of continuous farming of property, erection of fences and construction of buildings were indicia of possession under state statute which raised a material question of fact concerning possession for requisite period of time under a claim of right).


(bankruptcy court did not err in ordering debtor to turn over to bankruptcy trustee commissions earned in connection with farm real estate sale contracts that were entered into pre-petition; commissions earned post-petition and became property of bankruptcy estate).


(hatchery-raised steelhead and salmon should be lumped together with wild populations for endangered species listing purposes).


(NRCS determination of plaintiff's wetland violation upheld; no good-faith reliance and activity not eligible for minimal effect exemption; no due process violation).


(two-year statute of limitations contained in Iowa Code Sec. 614.1(10) applies to agricultural supply dealer's lien (Iowa Code Sec. 570A.7) rather than 5-year statute of limitation set forth in Iowa Code Sec. 614.1(4); defendant (lender) entitled to summary judgment).


(valuation misstatement penalties do not apply after plaintiff conceded to adjustments IRS made in a final partnership administrative adjustment).


(language in subdivision covenant requires unanimous approval among tracts for transfer of water rights to a neighboring city).


(defendant's conveyance of 250,000 acres of land to University of Alaska unconstitutional). 


(agreement between S corporation and its founder when founder's children obtained interests in the corporation did not create second class of stock and S election thereby not terminated; preferential payments to taxpayer-shareholder's parents did not constitute second class of stock; payments made to parents not made pursuant to a binding agreement that gave them different legal rights from other shareholders).


(language in subdivision covenant requires unanimous approval among tracts for transfer of water rights to a neighboring city).


(plaintiff's challenge to construction of coal company not valid because plant had already secured necessary permits). 


(plaintiff, egg producer, claimed that USDA regulations that restricted sale of its eggs and lowered their value, and caused the loss of its egg-laying hens that tested positive for salmonella bacteria constituted an unconstitutional taking requiring compensation under the Fifth Amendment; Federal Circuit denied plaintiff's claim - while regulations interfered with plaintiff's reasonable investment-backed expectations, economic impact of regulations was not severe; Penn Central analysis applied and factors weighed in government's favor; U.S. Supreme Court declined to grant certiorari). 


(11 U.S.C. Sec. 1222(a)(2)(A) applies to post-petition tax claims, and such claims can be treated as an administrative expense in the bankruptcy estate).


(innocent spouse relief granted; deceased spouse (Iowa lawyer) hid personal financial problems from spouse).


(plaintiffs lost money in livestock venture and failed to prove existence and amount of debt owed to plaintiffs by debtor; debtor’s poor management of venture and lack of communication insufficient basis for debt to be excepted from discharge).


($13 million paid to founder of Menards was deductible under I.R.C. Sec. 162(a)(l) as reasonable compensation; reverses Tax Court which had set itself up as the "superpersonnel department for closely held corporations").


(defendant, veterinarian, not negligent for injuries suffered by plaintiff's horse; plaintiff signed legal "hold harmless" agreement which waived defendant's liability). 


(taxpayer did not actively participate in horse racing business, thus passive loss rules bar use of losses from offsetting other income).


(seller of hay baler "as is" and trial court's dismissal of negligence claim upheld - plaintiff failed to present expert testimony as to standard of care applicable to seller (standard of care of seller of used hay baler outside ordinary experience and common knowledge of jury); trial court's dismissal of plaintiff's strict liability claim reversed - no exception exists for sellers of used products).


(taxpayer denied business deductions and disabled access credit for investment in pay phones; purchase and service arrangements did not give couple sufficient ownership in the phones and phones not subject to Americans with Disabilities Act).


(land use case involving statutory construction of whether essential or accessory improvements and structures can be placed on land designated as "exclusive farm use").


(grant of land use application for construction of wind farm upheld; defendant could consider application because terms of option agreement conferred on permit applicant the necessary property interest required by state law; defendant did not err in granting applicant waiver from screening requirement of local ordinance because such denial would require construction of 200-foot high fence around wind turbines which would have frustrated their effect, obstructed wind flow and provided little or no additional benefit to the community).


(boundary between adjacent properties determined to be current thread of stream; appellee failed to prove that an avulsive event occurred that fixed location of boundary even though stream moved).


(plaintiff environmental groups lack standing to challenge "salvage timber" sales by USFS; 1992 law required USFS to subject forest land projects to notice and comment, but USFS decided to not submit projects with minimal environmental impact to notice and comment procedures; plaintiffs sued and Ninth Circuit allowed case to proceed on basis that plaintiffs had right to provide input on environmental impact of logging and timber sales on 238 acres of burned forest land; Supreme Court reversed, noting the plaintiffs could not show the logging or sales would interfere with their right to enjoy the forest; court also noted that plaintiff failed to show specific intent to comment if opportunity to do so was restored, and failed to show a specific plan of any of their 700,000 members to visit a specific site; without concrete injury, no right to sue present and no right to sue simply because some procedural right taken away).


(settlement agreement between buyer of defective grain-moving system manufactured by defendant and dealer that sold defective product to buyer only releases manufacturer from joint and several liability if the original parties to the settlement agreement manifested such an intent, or if the injured party receives full compensation for the damages sought against the other tortfeasors; factual dispute remains regarded whether buyer was fully compensated as a result of settlement with dealer, thus trial court's grant of summary judgment for manufacturer reversed). 


(water rights can be obtained by adverse possession through seven years of continuous, uninterrupted, hostile and notorious adverse use if the seven year period is completed prior to 1939 change in applicable law).


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