Annotations 04/2010

(reinstates state estate tax effective for deaths after April 30, 2010; includes provision which picks up I.R.C. Sec. 2102 which grants a credit for state estate tax paid by a non-citizen estate with situs in Hawaii).

(plaintiff failed to state plausible claim for relief under either Section 301 or 402 of the Clean Water Act or under state (Virginia) law for discharge of sediment, nitrogen, phosphorus and other pollutants onto her property as a result of defendant's construction of stormwater retention basin; defendant's request for attorney fees not granted). 

(plaintiff sued for permanent nuisance for noise and odor emanating from plaintiff's operation of natural gas compressor station; trial court judgment of over $1 million against plaintiff for loss in value of adjacent property affirmed). 

(while evidence established that defendant knew it's bull had propensity to escape its enclosure and wander onto plaintiff's property, plaintiff failed to establish defendant could reasonably know that bull would put others at risk of harm; thus defendant not liable for injuries plaintiff sustained when bull knocked plaintiff to ground while plaintiff was attempting to remove bull from plaintiff's property). 

(for cases filed after 10/17/05, 11 U.S.C. Sec. 362(b)(26) permits IRS to setoff a pre-petition income tax overpayment against a pre-petition income tax liability without seeking relief from the automatic stay; bankruptcy court opinion (389 B.R. 105) reversed).

(government properly canceled plaintiff's grazing permit on federal land). 

(court did not have personal jurisdiction over trust whose settler was resident of foreign jurisdiction at time of trust's creation and at time of death). 

(thoroughbred horse racing and breeding activity not engaged in for profit under multi-factor test). 

(partner's advance on partnership profits subject to IRS administrative levies; advances or partner "draws" were "wages" in accordance with I.R.C. Sec. 6331(e); accuracy-related fine imposed). 

(taxpayer not eligible for long term homeowner tax credit; home purchased before effective date of provision - Nov. 7, 2009). 

(trial court judgment upheld which granted summary judgment to owner of parcel which declared that owner holds express easement appurtenant to use railroad crossing over railroad tracks

(trial court properly found that Walck entitled to damages for lost crop production caused by Kerbs, and properly measured those damages based on FSA county-wide average even though Walck's historical hay and pasture crop production was 68.5 percent of county-wide average; Kerbs violated state water law by installing outlet pipe in ditch so as to change means of conveyance of water without permission from the state and because Walck injured by such change in diversion point).

(no surviving spouse relief for surviving spouse; joint tax liabilities were paid by deceased spouse's estate and plaintiff lacks standing because surviving spouse not payor).

(corporation not eligible to report income from highway construction project under percentage of completion method of I.R.C. Sec. 460; agreements not long-term construction contracts).

(cattle not owned by grazing permit holder cannot graze on federal allotments; plaintiff bore burden of proof to establish that he wasn't grazing cattle he didn't own on federal land covered by his grazing permit; defendant's cancellation of two of plaintiff's four grazing permits upheld - plaintiff given due process and defendant acted appropriately; plaintiff could not prove that it had purchased over 1,500 head of cattle). 

(misplaced fence resulting in 19 acre tract of land in favor of defendant had been in place for nearly 70 years and had been treated as the boundary between the adjacent tracts; fence established boundary by agreement (acquiescence). 

(case involved compensation required for taking of property via permanent, non-exclusive pipeline easement; pre-taking highest and best use of property is agricultural - evidence lacking that property could be developed within reasonable time given applicable zoning laws and infrastructure hurdles). 

(defendant not a farm or agricultural employee at time of injury and is eligible for worker's compensation benefits; defendant worked as horse trainer at plaintiff's equestrian facility and primarily trained trail horses that would be used recreationally at plaintiff's facility). 

(married couple denied tax deduction for charitable contribution of facade easement to conservation organization; easement did not satisfy requirements of I.R.C. Sec. 170(h)(1) - contributed property still subject to mortgage and, thus, did not satisfy the perpetuity requirements under Treas. Reg. Sec. 1.170A-14(g)).

(married couple not entitled to deduct wife's gambling losses; wife was professional gambler, but Groetzinger did not support her tax position).

(for purposes of the long-term homeowner credit, married couple is considered to own their residence even if title is only in one of their names). 

(plaintiff, buyer and re-seller of perishable produce, received loan from defendant pledging cash and accounts receivable as security for the loan; plaintiff failed to pay loan in full and loan not renewed; defendant exercised creditor's right to set-off over $63,000 from plaintiff's bank account with defendant and notified plaintiff's customers that payments to plaintiff should be sent directly to defendant; plaintiff claimed that defendant caused plaintiff to breach its obligations under the PACA - plaintiff owed almost $300,000 to produce suppliers it claims are "valid PACA trust beneficiaries"; plaintiff is a commission merchant, dealer, or broker subject to PACA; court holds that PACA does not create an implied private cause of action for buyers that are not PACA trust beneficiaries and that PACA trust provisions only protect unpaid sellers not produce buyers; summary judgment granted for defendant). 

(defendant, farmer, executed four hedge-to-arrive (HTA) contracts with plaintiff for sale of grain, with each contract specifying price, type, and quantity of grain to be delivered, but none specifying a delivery date; rolling fees not mentioned in contracts, but defendant extended delivery periods multiple times and was charged each time; farmer ultimately did not deliver and contracts cancelled; farmer executed promissory notes agreeing to compensate plaintiff and then sued claiming that contracts were illegal off-exchange "futures contracts" and jury agreed; appellate court reversed - contracts were valid and enforceable "forward contracts"). 

(evidence supported jury verdict that land held in peaceable and adverse possession for statutory timeframe via deed and was openly used). 

(IN Dept. of Rev. properly classified trust beneficiary as Class C transferee under Ind. Code Sec. 6-4.1-1-3 for inheritance tax purposes; beneficiary (who was the biological grandchild of the decedent and also a trust beneficiary) was given up for adoption before becoming emancipated during lifetime of biological grandfather). 

(trial court summary judgment award to defendant upheld - plaintiff not entitled to specific performance and damages under farm lease agreement; plaintiff's alleged right of first refusal to buy the land if the owner put it up for sale not supported by the evidence and not definite enough to support claim for specific performance).

(farmers violated FAA regulations by flying crop-dusting planes too low over an intersection in a congested area; regulations not unconstitutionally vague for failing to define "congested area" - FAA inspector had warned that "two or three houses may be considered a congested area", thus farmers on notice that area where they were flying could be determined to be a congested area). 

(petitioners, married couple, not entitled to charitable deduction for private gifts made to needy persons through an alleged "church"; some deductions allowed for missionaries; petitioners' constitutional arguments rejected).

(petitioner not entitled to dependency exemptions for children; form ex-spouse signed to purportedly allow him to claim the children did not conform to the IRS form; taxpayer also not entitled to child tax credits).

(married couple not eligible for the first-time homebuyer tax credit or the long-term homeowner tax credit because one of the spouses owned a principal residence in prior three years and the other spouse did not own a residence within the applicable timeframes). 

(debtor, as vice president of company, was responsible for payment of company's withholding taxes; debtor willfully failed to pay over tax and IRS objection to bankruptcy plan sustained).

(nuisance suit brought against defendant involving allegations of sickness and deaths of plaintiffs' horses caused by groundwater contamination allegedly cause by stockpiled manure from one of defendant's turkey farms; trial court verdict for defendant upheld - defendant not liable for acts of independent contractors unless grower contracts required grower to create a nuisance (which it did not); no expert testimony offered on specific cause of injury or death to any specific horse; no damages awarded). 

(taxpayer's rental of owned cabin in California not rental activity under the passive loss rules, thus taxpayer cannot deduct expenses associated with cabin rental; cabin considered residence and taxpayer must include rental amount as income with no offsetting deduction under I.R.C. Sec. 280A).

(taxpayers, married couple, not entitled to casualty loss deduction for water damage to home; taxpayers did not prove amount of damage claimed; penalties applicable because failure taxpayer's negligently failed to maintain records or substantiate claims).

(qualified tuition reduction is excluded from income for education below the graduate level, but law school tuition reduction not excludible). 

(federal government lacks the power to outlaw expressions of animal cruelty via videotape and other commercial media; 18 U.S.C. Sec. 48 is invalidated in the court's 8-1 decision (dissent by Alito); while law passed in attempt to stop interstate trafficking of "crush videos" that show the actual killing of cats, dogs and other similar animals, law "creates a criminal prohibition of alarming breadth and court would not uphold an unconstitutional law "merely because government promises to use the law responsibly). 

(income from community spouse's annuity not available resource for purpose of determining institutionalized spouse's Medicaid eligibility; under federal law, community spouse's income is not deemed available to institutionalized spouse and state law requirement that state be named primary beneficiary means only that annuity could not pay another heir upon community spouse's death). 

(petitioner's capital losses not properly deductible on Schedule C; court rejected taxpayer's "Turbo Tax Tim Geithner" defense).

(foreign ag workers on H2A visas are exempt from social security and medicare tax and are not subject to withholding, but amounts paid to them must be reported on Form 1099-Misc if amount paid during the year is $600 or more). 

(I.R.C. Sec. 2035(b), which specifies that for gift tax paid on gifts made within three years of death the amount of gift tax is to be included in the decedent's gross estate for purposes of computing the estate tax, does not apply if the decedent is a non-resident alien for transfer tax purposes; I.R.C. Sec. 2014(b), which generally applies I.R.C. Secs. 2035-2038 to estate of nonresidents, is trumped by I.R.C. Sec. 2104(b) which only applies to "property of which the decedent has made a transfer"; "transfer" means "gratuitous transfer" and payment of gift tax is not a gratuitous transfer, thus Sec. 2035(b) inapplicable). 

(taxpayer fails to qualify for long-term homeowner tax credit because home purchased before credit's effective date of November 7, 2009). 

(1909 agreement and deed concerning railroad right of way conveyed fee simple interest (rather than merely an easement) to railroad which abandoned line in 1993 and defendant is now owner of strip of land conveyed by 1909 deed; agreement and deed to be read together and no words of limitation present in deed to modify words of grant and no termination date specified).

(defendant's man-made improvements and obstructions on their property in area subject to easement in favor of plaintiff prevent plaintiff from use and enjoyment of significant portion of easement, and plaintiff entitled to injunctive relief; defendant's improvements prevented plaintiff's use of approximately two-thirds of the width of the easement). 

(taxpayer, noncustodial parent, not entitled to dependency exemption; children were not "qualifying children," were not "qualifying relatives" and taxpayer failed to submit Form 8332 to ex-spouse).

(debtor, former spouse, was obligor on indebtedness with bank and had to recognize CODI upon bank's cancellation of the debt in spite of the fact that ex-spouse agreed, pursuant to divorce decree, to assume indebtedness; debtor spouse was original obligor on indebtedness and meaning of "incurred" in divorce decree unclear).

(real estate professional did not elect to make election to group multiple real estate rental activities as single activity under I.R.C. Sec. 469(c)(7)(A); taxpayer also not eligible for NOL carryover and some deductions for "repairs" related to taxpayer's property disallowed).

(plaintiff, S corporation shareholders, must amortize cost of covenant not to compete over 15 years because it is an I.R.C. Sec. 197 intangible; no accuracy-related penalty imposed).

(IRS again takes position that related party sales are disallowed for purposes of the first-time homebuyer credit; no statutory analysis provided). 

(case involves ownership over .849-acre tract; trial court judgment affirmed that defendant obtained title to tract via old fence line located 164 east of boundary as described in plaintiff's deed because fence line established a boundary by acquiescence between the parties; origin of mistaken boundary dated to error in 1845 plat due to an offset in lines and corners of survey to account for curvature of earth; preponderance of evidence present that parties and predecessors had occupied respective tracts based on mistaken belief that marker marked common corner). 

(petitioners, married couple not entitled to NOL because they couldn't show that they ran an inn during the tax years at issue; sufficient evidence lacking for court to verify substantiation of taxpayers' expenses).