Annotations 02/2010

(taxpayer not entitled to depreciation deduction on personal residence, had unsubstantiated property tax deductions, and couldn't claim losses on rental properties due to the passive activity rules of I.R.C. Sec. 469).

(plaintiff's improvements and structures (as part of its fishing camp and full service marina) placed on land leased from the U.S. Army Corps of Engineers subject to property tax because improvements were not part of federal leasehold interest, but were additions thereto). 

(court unanimously grants defendant's petition for rehearing of "climate change" class-action lawsuit; trial court had dismissed plaintiff's claim that they were injured when oil and gas companies created a public nuisance by intensifying Hurricane Katrina via greenhouse gas emissions; on appeal, three-judge panel of 5th Circuit reversed the dismissal and now the full court has unanimously reversed the panel in the wake of "climategate," the Copenhagen "climate change" conference in January 2010 and other evidence of fraud concerning the data behind the global "climate change" theory). 

(court grants creditor's motine in limine prohibiting testimony at trial or presenting evidence concerning whether creditor's action in terminating coal supply agreement with debtor was "commercially reasonable"; debtor was insolvent and unable to pay debts as they became due, as such proposed testimony concerning good faith termination or commercial reasonableness not relevant). 

(attorney violated both automatic stay and confirmed reorganization plan by recording memorandum of judgment in an attempt to collect fees from debtor).

(taxpayers, married couple, liable for tax on settlement proceeds received by wife; proceeds not excludible under I.R.C. Sec. 104(a)(2) because they were not related to physical injury sustained by taxpayer).

(Potter Children's Home & Family Ministries (PCHFM) is an integral part of Churches of Christ within meaning of Treas. Reg. Sec. 1.1402(c)-5(b)(2) such that rental allowances paid to managers, executives, supervisors or administrators who are ordained, licensed or commissioned ministers employed by PCHFM can be excluded from gross income under I.R.C. Sec. 107). 

(controlled burn on defendant's property became uncontrolled and damaged plaintiff's property; plaintiff sued, but corporation owned land on which controlled burn started and no agency existed between defendant and corporation and plaintiff had known of the corporation's existence and potential liability for several years - statute of limitations had run). 

(third party had properly acquired title to disputed strip of land by adverse possession).

(plaintiff not entitled to prescriptive easement for lane; plaintiff failed to prove adverse nature of use so no presumption of adversity arose due to rural nature of land at issue; even if prescriptive easement created, it would have been extinguished due to many years of non-use and intent to abandon manifested by non-use).

(defendant liable for breach of cash forward grain contracts; defendant did not properly invoke arbitration clause included in contracts).

(net operating losses from 2001 and 2002 returns which weren't filed until 2007 and were claimed against income on 2003 return which was filed in 2006 disallowed; while NOL carryback can be waived and elected to be carried forward, it must be done on timely filed return). 

(farmer's purchase of ring corn bin and truck adder exempt from sales tax because such items used directly in production of agricultural commodities).

(purchase of home from parents does not qualify for first-time homebuyer credit; IRS did not provide any analysis of Sec. 36(c)(3) which, by its terms, does not apply to purchases for fair market value from related parties).

(payments made by farmers’ cooperative to members for purchase of grain are PURPIMs in accordance with I.R.C. §1382(b)(3); cooperative’s DPAD to be computed without regard to any deduction for grain payments). 

(amounts received from wrongful death action that resulted from action of state legislature are excludible from taxpayer’s gross income under I.R.C. §104(a)(2); but, amounts attributable to medical expense that were deducted in prior year includible in income). 

(case involves appeal from permanent injunction enforcing zoning regulations against defendant, a livestock feeding operation; court holds that, based on language of zoning regulation, scope of nonconforming use is controlled by actual number of cattle in feedlot rather than physical capacity of feedlot). 

(restrictive covenants in deed requiring that lot be used for residential purposes ambiguous; thus, defendant need not construct single-family residence before constructing horse barn on property; defendant's intent to construct residence when financial situation allowed justifies non-conforming use during interim period).

(decedent's will not product of undue influence and decedent had capacity to execute will; evidence presented at trial insufficient to establish confidential relationship).

(deducted losses not limited by passive loss rules; taxpayer satisfied material participation requirement; taxpayer held an interest as a managing member of an LLC under California law and did not hold a "limited partnership" interest; opinion follows that of Gregg, Garnett and Thompson). 

(defendant's issuance of conditional use permit for operation of cattle feedlot not arbitrary, capricious or unreasonable). 

(valuation of life insurance policy determined to be cash value regardless of surrender value).  

(sales and use tax not imposed on sales and purchases of wood or corn used as fuel source if more than 50 percent of amount purchased is used directly in manufacturing or processing, refining, generation of electricity, irrigation, farming or by any hospital).

(owner of single-member LLC that did not make elected to be treated taxwise as a corporation is liable for LLC's employment taxes; for wages paid after 2008, such LLCs are no longer disregarded as separate from their owners for employment tax purposes).

(farmer eligible for farm machinery and equipment exemption from sales tax on purchase of pull scrapers; scrapers used to perform annual farm maintenance which was an exclusive farm use). 

(payment received by decedent's estate for wrongful death of decedent is excludible from gross estate's gross income under I.R.C. Sec. 104(a)(2), except for amounts attributable to medical expenses that decedent deducted on a prior year's federal tax return).

(statute of frauds applicable to bar claim for plaintiff's alleged breach of agreement to purchase ranch). 

(decedent not delusional when he amended his will by striking out names of in-laws from certain bequests and writing "void," "bastard" and "get nothing" on the will; court determined that decedent knew the parties listed in the will and was clearly determined to disinherit them; plaintiffs failed to establish that decedent lacked testamentary capacity). 

(plaintiff's claim for damages to watermelon crop arising from defendant's alleged negligence in spraying of adjacent cotton crop with herbicide denied; no negligence per-se, trial court's jury instruction on Act of God proper, and expert testimony admissible). 

(legal fees that petitioner paid are deductible on Schedule A as an unreimbursed employee business expense (as opposed to being deductible as an ordinary and necessary business expense) because the fees were the result of petitioner's relationship with financial services firm).

(I.R.C. Sec. 30D credit for plug-in electric vehicles expired at the end of 2009, and IRS does not have the authority to extend it to vehicles acquired after 2009).

(plaintiff seeks review of defendant's finding that gases blamed for "global warming" threaten public health; petition challenges defendant's endangerment finding issued in late 2009 which attempts to regulate carbon dioxide and other heat-trapping gasses as "pollutants" under the Clean Air Act; plaintiff claims that defendant improperly relied on conclusions of groups including the United Nations International Panel on Climate Change which have now been disclosed to be erroneous and that defendant failed to demonstrate that ensuing rules would improve existing conditions).  

(case involves plaintiff's response to court's order directing plaintiff (pro se litigant) to show cause why the action should not be dismissed for failure to comply with procedural rules; plaintiff served FSA, but failed to serve U.S. Attorney within required 120-day period; plaintiff failed to show cause and action dismissed).

(case involves ownership claims by the parties to 160-acre island in Platte River; defendant acquired title to island via adverse possession against prior owners, and plaintiff did not acquire ownership via riparian rights to balance of upstream portion of island - island not formed by accretion or reliction but was added to island as a consequence of prior owner's addition of dike; trial court's boundary description modified based on additional information).  

(unclear language in deed resulted in creation of tenancy-by-the-entirety between decedent and his wife; upon wife's first death, her interest, as a tenancy-by-the-entirety property, was not devisable and passed entirely to decedent as survivor and property included in decedent's estate at death).

(plaintiff, owner of Des Moines delivery business, personally liable for approximately $700,000 of unpaid payroll taxes; while lack of payment started with bookkeeper, plaintiff personally liable for taxes and willful failure to remit taxes).

(taxpayer who qualified to claim, and did claim, the first-time homebuyer tax credit for a purchase after April 9, 2008 and before January 1, 2009, is subject to the 15-year recapture provision; IRS does not have administrative authority to waive repayment requirement).

(taxpayer who purchased home before effective date of long-term homebuyer credit is not eligible for the credit; IRS does not have the authority to extend the availability of the credit to purchases before the effective date of the credit - Nov. 7, 2009).

(USDA admitted that it knowingly and willingly lied about plaintiff's credit history to credit agencies in violation of Fair Credit Act; court upheld trial court's award to plaintiff of $10,000 in compensatory damages plus $20,055 in attorneys' fees). 

(defendant's motion to dismiss denied and case remanded to trial court on issue of defendant's breach of listing agreement for sale of ranchland).

(plaintiff failed to establish common law dedication of defendant's land adjacent to plaintiff's ditch which would allow plaintiff to remove plaintiff's fence along ditch and place spoil from dredged ditch on bank - plaintiff showed no intent to set land apart for public use; no easement by necessity or prescriptive easement supported by the facts). 

(restrictions in real estate deed invalid and unenforceable; no general plan of development when property subdivided; other lots within same subdivision violated the deed restrictions leading to "many inconsistencies" in the restrictions; only written restrictions in one of the three deeds).

(insurance policy did not cover water damage resulting from unusually fast snowmelt that overwhelmed man-mad ditches and flooded plaintiff's business property; loss was from "surface water" which was an excluded peril under the policy terms). 

(plaintiff owns a dairy farm and defendant is an adjacent landowner that operates fertilizer, chemical and feed distribution plant; on various motions for summary judgment, plaintiff's motion for summary judgment on claim that defendant discharged pollutants into navigable waters of U.S. without a CWA permit dismissed; plaintiff also failed to raise triable issue of fact concerning whether defendant violated RCRA's "open dump" provisions; defendant not entitled to costs and attorneys' fees; plaintiff's state law claims dismissed).

(case involves charge of animal cruelty (horses) against plaintiff and plaintiff's motion for summary judgment; court denies motion on basis that no reasonable jury could conclude that temporary corrals and enclosures were within curtilage of the property based on lack of proximity to home, merely a perimeter fence used (as opposed to privacy fence) and horses clearly visible from pens; seizure of horses did not violate plaintiff's Fourth Amendment rights; no malicious prosecution, no excessive force used, no equal protection violation).

(petitioner's candle-selling activity not conducted in business-like manner and was not engaged in for profit; expenses only deductible to extent of income from activity). 

(case involves class action involving defendant's alleged misreporting of pricing data which plaintiff class claims resulted in depressed prices paid to the class for raw milk from Jan. 1, 2002 through Apr. 30, 2007; plaintiffs' state law claims barred by field rate doctrine). 

(court affirms Ralston Purina Co. v. Comr., 131 T.C. 29 (2008) in holding that petitioner could not deduct payments for cash distribution redemptive dividends - such dividends are not within the exceptions of I.R.C. Sec. 162(k)).

(designation of the Haiti earthquake as a qualified disaster for federal tax purposes).

(IRS provides safe harbor method for reporting gain or loss for taxpayers that initiate an I.R.C. Sec. 1031 exchange but fail to complete the exchange because a qualified intermediary fails to acquire replacement property and transfer it the taxpayer).