Annotations 04/2010

(married couple not eligible for first-time homebuyer tax credit because wife owned principal residence in prior three years, and can't take long-term homeowner credit because husband didn't reside in wife's home for long-enough period of time). 

(defendant approved two amendments to Water Quality Control Plan for Sacramento River and San Joaquin River Basins to address problems of high salt and boron levels; plaintiffs claim that amendments violate state and federal water law and California Environmental Quality Act; petition denied except point as to whether substitute for Salt/Boron TMDL was effective as a TMDL).

(plaintiff, Michigan winery, challenged Arizona statutes regulating direct shipment of wine from wineries as violating the dormant Commerce Clause by discriminating against out-of-state wineries; court disagreed, finding that existing exemptions to three-tier distribution system under certain circumstances which result in treating similarly situated in-state and out-of-state wineries the same and do not impose new impermissible burdens on out-of-state wineries and do not have the practical effect of favoring in state economic interests over out-of-state interests). 

(defendant inspected farmer’s grain silos which collapsed post-inspection, and court determined that state law imposed duty on defendant to exercise reasonable care when conducting inspections; farmer filed insurance claim with plaintiff and plaintiff sued defendant for breach of contract and breach of warranties; defendant not entitled to summary judgment on negligence claim because jury could have concluded that misrepresentations were made by defendant in its inspection report leading to “but-for” causation).

(trial court finding that statement made by employee of ski-run was inadmissible hearsay reversed - statement qualified as excited utterance; thus, genuine issue of material fact existed concerning whether defendant's failure to remove tree stump from ski-run proximately caused plaintiff's injury). 

(plaintiff corporation provides land surveying services, but does not provide any services that are required to be performed by licensed engineers; IRS took position that such services are "engineering services" under Treas. Reg. Sec. 1.448-1T(e)(4)(i) and, thus, the corporation is a qualified personal service corporation subject to a 35 percent tax rate; court agrees that land surveying is in the field of engineering and court not bound to follow state (Tennessee) law under I.R.C. Sec. 448(d)(2) which distinguishes land surveying from engineering by requiring separate licenses for each service; temporary regulation upheld as valid).

(50 percent beneficial owner of land trust assumed benefits and burdens of ownerships and was, therefore, entitled to mortgage interest deduction; state (Michigan) law controls nature of taxpayer's rights in trust - while trust agreement states that taxpayer had no right, title or interest in trust property, other documents referred to taxpayer as "buyer" and other attributes of a sale were present such as downpayment, closing costs and payment of principal and interest, and beneficial owner responsible for maintenance of trust property, had to pay taxes on it, and had right to property's proceeds from rents, mortgages or sales and could obtain title by paying balance of purchase price and had to obtain insurance on the property; while other factors weighed against beneficial owner having burdens and benefits of ownership, such factor were outweighed by those supporting beneficial owner bearing burdens and benefits of ownership;  IRS waived the issue of whether land trusts are shams).

(amounts taxpayer withdrew from taxpayer's IRA constituted a distribution rather than a loan and were includible in taxpayer's gross income and subject to 10 percent penalty tax; distributions received were not in form of annuity; taxpayer had no income tax basis in IRA).

("business pursuits" clause in insured's homeowner insurance policy applies and insured did not have coverage for fatal injuries sustained by 17-year old girl when attacked by insured's Siberian tiger during high school senior picture shoot (for which no fee was charged by insured) on insured's farm that was used as a animal sanctuary; accident arose out of operation of business pursuit of insured; no business insurance policy in effect at time attack occurred; insured held himself out to be a professional animal trainer and activity not merely a hobby and was operated with profit motive). 

(buyer of 96 acre tract (out of 100 acres) held right of first refusal on remaining four acres; seller sent buyer notice of intent to sell portion of four acre tract, but right of first refusal not exercised and action for declaratory relief filed and trial court granted buyer's motion for summary judgment; appellate court determined that trial court erred in determining that buyer had right to purchase entire four acre tract, and failure to exercise the option caused right of first refusal to expire). 

(married couple that failed to report bank deposits in income determined to have taxable income on such amounts; couple failed to show that unreported deposit amounts were nontaxable loans - no corroborating evidence that amounts received from friends were loans and no evidence that couple entered into loan agreements or intended to repay amounts; accuracy-related penalty upheld).

(petitioner, a pastor, received housing allowance that was not includable in gross income under I.R.C. Sec. 107; but petitioner lacked sufficient records to substantiate claimed business deductions on Schedule C).

(home purchased before Nov. 7, 2009, does not qualify for long-term homeowner tax credit). 

(wife entitled to first-time homebuyer tax credit for purchase of home with spouse from wife's father-in law because purchase occurred before Nov. 7, 2009). 

(married couple that purchased land to build new residence on is eligible for either first-time homebuyer credit or long-term homeowner credit for constructed homes, purchase date is date home occupied). 

(case involves plaintiff's pre-enforcement challenge to anti-animal-fighting provisions of Animal Welfare Act (AWA) as unconstitutional - provisions constitute bill of attainder, violate principles of federalism, and violate plaintiffs' First Amendment right of association and right to travel and Fifth Amendment right to due process for deprivations of property and liberty; court affirms trial court's dismissal of plaintiffs' claims - plaintiffs did not allege any present or future economic loss due to foregone revenues from Louisiana where cockfighting was legal at time case brought; risk of wrongful prosecution mere speculative; AWA does not impose penalties without a judicial trial and is not a bill of attainder; any injury is to impacted states and their citizens in general, thus plaintiffs did not personally suffer a federalism violation). 

(plaintiff, buyer and seller of livestock that is registered under PSA as market agency and dealer, appeals decision of USDA judicial officer that determined that plaintiff had engaged in unfair and deceptive trade practices that violate the Packers and Stockyards Act (PSA) - plaintiff didn't disclose that he had repurchased cattle from his own consignment and later sold cattle for higher price; GIPSA believed that plaintiff's violations were more serious than did judicial officer and that plaintiff should be suspended rather than fined; on review, judicial officer agreed with GIPSA and plaintiff appealed; court upheld determination that plaintiff acted as market agency which owed a fiduciary duty to buyers; plaintiff should be suspended, but not for five years; five-year suspension vacated and case remanded to judicial officer). 

(farm debtor borrowed money from co-op to finance crop input costs with co-op taking security interest in crops to be grown; debt excepted from discharge under 11 U.S.C. Sec. 523(a)(2)(B) because debtor submitted materially false documents to co-op for purpose of causing co-op to grant him financing; debtor also failed to tell co-op that he was feeding co-op's collateral to debtor's cattle; co-op justifiably relied on debtor's misrepresentations and suffered loss as a result). 

(case involves dispute over ownership of farmland owned by decedent that died intestate in 1962 without a spouse or children).

(IRS again takes the position, without analysis of the statute, that I.R.C. Sec. 36 bars home purchases from taxpayer's parents as being eligible for the first-time homebuyer tax credit).

(plaintiffs, homeowners near airport sued defendant for inverse condemnation or intentional nuisance caused by increased flights over plaintiffs' homes after construction of new runway; no inverse condemnation because plaintiffs failed to show that increase in flights rendered their homes unsuitable for residential use - same standard applies under TX law to both takings claims via inverse condemnation and intentional trespass (plaintiffs must show that flights directly, immediately and substantially interferes with plaintiffs' use and enjoyment of land for intended use and that flights rendered their homes valueless; seminal case on issue involved low-level flights over chicken farm that had to shut down - United States v. Causby, 328 U.S. 256 (1946)). 

(I.R.C. Sec. 2703(a)(2) applies to gifted shares of FLP interests whose only asset was Dell stock to donors' children; IRS used highly liquid nature of asset to limit amount of applicable discount petitioner sought in accordance with transfer restrictions in FLP agreement such that FLP's transfer restrictions were ignored for valuation purposes; court upheld Tax Court determination that partnership conducted no business and that, therefore, there was no "bona fide business arrangement" under I.R.C. Sec. 2703(b) - primary purpose of FLP was to protect petitioner's children from dissipating the assets and teach them how to handle the funds; court also upheld Tax Court's determination that lack-of-marketability discount limited to IRS claimed level because all partners could agree to terminate FLP and FLP asset was highly liquid).

(I.R.C. Sec. 2703 applies to gifted shares of FLP to donors' children such that FLP's transfer restrictions were ignored for valuation purposes; court also upheld Tax Court's determination that lack-of-marketability discount and minority interest discount were as determined by IRS rather than in the amount the petitioners' claimed). 

(court upheld trial court's custody award of former couple's child to father; father more financially stable and mother not fit to be parent if she moved out of parent's home; mother's past behavior (which court characterized as the mother acting as a "slut") raised legitimate concerns about her ability to consider child's best interests if she were not living with her parents; mother failed to raise issue of judicial bias at trial or ask judge to recuse so issue not preserved for appeal). 

(plaintiff's claim for various business expense deductions associated with construction of new home to be used as a bed and breakfast denied; no business involved; dependency deductions and credits also denied; penalties for failure to timely file and pay penalties upheld). 

(taxpayer eligible for 2008 version of first-time homebuyer credit (with recapture provision, rather than 2009 version, based on when home was purchased). 

(IRS again takes the position, with no statutory analysis that purchases from relatives (including parents) are disallowed for purposes of the first-time homebuyer credit). 

(taxpayer, engaged in real estate business and qualified under I.R.C. Sec. 469(c)(7)(B) granted extension of time to make election to group all interests in rental real estate as a single rental real estate activity). 

(case involves plaintiff's claim that defendant infringed plaintiff's exclusive rights in PVPA certificate to certain varieties of centipede turfgrass; court determined that venue improper and transfers case to court where venue is proper). 

(case involves permit that authorized construction of concentrated animal feeding operation near a town). 

(decedent lacked testamentary capacity when codicil to will signed; decedent didn't sign on codicil's signature line and trial court properly viewed that act as an indication of decedent's state of mind; codicil not read to decedent and evidence lacking that decedent had capacity to comprehend nature, extent and state of affairs of her property). 

(IRS again takes the position, with no statutory analysis, that purchases from relatives don't qualify for the first-time homebuyer tax credit). 

(debtor filed Chapter 12 petition and reorganization plan, but did not move to have plan confirmed; debtor did file documents trying to remove trustee and sent counterfeit money order to trustee so that trustee could pay claims; case dismissed and converted to Chapter 7 due to attempt to defraud creditors).

(S corporation owners (sheet metal manufacturing business in Iowa) entitled to charitable deduction for transfer of land via bargain sales to non-profit trust in accordance with option agreement; step transaction doctrine not applicable).

(portion of credit card purchases that taxpayers can get back via cash rebates or donate to charity are not includible in gross income; amount donated to charity is charitable contribution on date of receipt by charity). 

(debtor's acquired their residence (homestead) within BAPCPA's 1,215-day look-back period which limits the homestead exemption to $136,875 per debtor (11 U.S.C. Sec. 522(p)); court need not determine case based on either the "title" theory or "equity" theory of Sec. 522(p) - under either rationale, exemption would be limited to $273,750).

(bankruptcy trustee brought adversary action to sell 80 acres of farmland in which debtor was a joint tenant with his brother and their father; father's funds were used to buy the land and sons' names put on deed as surviving joint tenants merely for estate planning purposes; trial court held that debtor's bankruptcy estate has no interest in the land for purposes of 11 U.S.C. Sec. 363(h) and that 11 U.S.C. Sec. 541(d) limits estate's interest to debtor's bare legal title; strong-arm powers of 11 U.S.C. Sec. 544(a)(3) are limited to recovery of transfers made by a debtor and do not include recovery of an equitable interest in real property held by debtor's father as joint tenant; even assuming 11 U.S.C. Sec. 544(a) would allow the avoidance of equitable interests, trustee has notice of father's equitable interest and is not a bona fide purchaser for value who could purchase debtor's interest in the land free of the father's interest - thus, trustee could not sell property under 11 U.S.C. Sec. 363(h); case reversed on appeal - Sec. 544(a)(3) does not limit trustee's powers to avoiding transfers that debtor makes, and trustee has all rights and powers of a bona fide purchaser, and trustee had no constructive or implied notice that debtor held his undivided one-third interest in property for benefit of another person).

(CA assigned by CAA the role in setting limits on emissions from in-use non-road engines and in 2004, CA enacted a rule regulating emissions from transportation refrigeration units in trucks and EPA authorized the CA rule; plaintiff challenges the rule, but court denies petition for review; rule does not amount to national regulation and EPA properly considered costs of the rule). 

(plaintiff not liable for UBIT on royalty income from accidental death and dismemberment insurance; plaintiff liable for UBIT on credit insurance for years that plaintiff failed to maintain income records, and liable for UBIT on share of profits from "Credit Union Indirect Lending Association" - income not related to plaintiff's exempt purpose). 

(security agreement containing jury wavier clause upheld as valid; clause treated as arbitration or forum selection clause which does not require additional evidence showing that party knowingly and voluntarily agreed to it; creditor did not misrepresent security agreement and debtor failed to read security agreement containing waver clause which was conspicuous).

(taxpayer failed to hold replacement property received in an I.R.C. Sec. 1031 exchange for investment purposes or for use in the taxpayer's trade or business; taxpayer moved into replacement property within two months of the exchange and used it as a residence).

(purchase of home from taxpayer's parents does not qualify for first-time homebuyer credit; no statutory analysis provided). 

(taxpayer may claim credit for cost of installing geothermal heat pump at newly constructed home; but cannot claim credit for energy efficient windows because they must be installed on an existing home in accordance with I.R.C. Sec. 25C).