Case Summaries 05/2010
(corporation not entitled to I.R.C. Sec. 167 depreciation deductions or I.R.C. Sec. 1031 treatment for equipment that the corporation held for sale to customers and designated as rental equipment at the same time; under the facts presented, IRS determined that corporation held the equipment primarily for sale to customers).
(plaintiff's subdivision proposal rejected because it would impede adjacent ranch's ability to move cattle and equipment across road and would bring increased traffic to the area - health and safety concerns; county's decision upheld on appeal; on further review, county's decision not arbitrary and capricious, and county entitled to damages for unpaid application fees, but county not entitled to recover costs other than $10 statutory witness fee).
(trial court erred in finding that prescriptive easement for ingress and egress had been abandoned; use was only periodic and unexplained; dissent (correctly) noted that majority wrong because evidence established affirmative conduct on plaintiff's part established intent to abandon easement [note: abandonment of an easement requires some affirmative act]).
(trial court correctly concluded that parties had acquiesced to different boundary than described in their deeds, but erred in determining that corner marking the section line between their properties had been obliterated).
(plow lines in field that had been treated by the parties and their predecessors as the property boundary for more than 20 years established the property boundary irrespective of survey).
(trial court erred in holding that natural gas was a "pollutant" under defendant's policy and that, therefore, plaintiff's injuries "arose out of" the release or dispersal of natural gas rather than because of negligence).
(trial court correctly concluded that landowner breached farm lease agreement with tenant; landlord failed to communicate intentions with tenant before tenant incurred land preparatory expenses for spring planting and before tenant planted crop; tenant reasonably relied on parties' custom in preparing ground and planting crop in absence of written agreement).
(more than $2,000,000 in damages sought for "production losses" resulting from crop damage caused by defendant's fertilizer application to plaintiff's tomato plants; Magnuson-Moss Warranty Act held applicable to action because fertilizer is "consumer product" that is commonly used for "personal, family, or household purposes"; breach of contract claim not dismissed; plaintiff sufficiently pled claim for treble damages under TN Consumer Protection Act; plaintiff's five tort claims dismissed under TN economic loss doctrine).
(debtor ineligible for Chapter 13 because of excess noncontingent, liquidated, unsecured debts; amount owed to creditor for seed potatoes was calculable and was noncontingent and liquidated).
(plaintiff not entitled to property tax exemption for residence located on farm; plaintiff's non-farm income exceeded $40,000 and ratio of non-farm income to farm income too high).
(tax fraud case in which plaintiff, accountant and lawyer, enjoined from marketing tax "schemes"; one "scheme" involved execution of "flock contracts" for clients which plaintiff claimed allowed clients to become "farmers" eligible to claim deductions for the cost of purchasing laying hens).
(plaintiff, Tennessee poultry farmer that entered into poultry production contract with defendant, claimed that defendant engaged in retaliatory conduct against plaintiff for plaintiff's participation in regional grower's association in violation of the Agricultural Fair Practices Act and that defendant violated the Packers and Stockyards Act by engaging in "unfair, discriminatory or deceptive practices"; plaintiff's claim dismissed - plaintiff failed to allege his involvement with an "association of producers" as required by AFPA, and failed to prove that defendant's conduct injured competition as required under 7 U.S.C. Secs. 192(a) and (b) and failed to even plead that defendant's conduct had an adverse effect on competition).
(plaintiff, newly-formed S corporation which held a partnership interest that it sold in its first year for $5.2 million claimed tax basis in interest (pursuant to appraisal) at $2.98 million, but IRS claimed sale price was best evidence of value which triggered built-in gain tax of $925,260 and understatement penalty of $185,052; court viewed sale price as relevant as well as appraisal value and weighted appraiser's report at two-thirds and sale price at one-third for a final value of $3,727,142; penalty not sustained).
(case involves value of petitioners' (married couple) respective 50% tenancy-in-common interests in residential real estate in Hawaii; court rejected appraisals of both IRS and petitioners and used its own methodology - (1) determine if partition not necessary to sell property by determining pro rata share of appraised value of full parcel, projected one-year into future (estimated time to complete sale); reduce resulting value by appropriate discount for time needed to sell property; reduce result by pro rata share of selling costs; reduce value further by estimated operating costs over the time needed to sell property; (2) determine value as if partition necessary to sell property by determining pro rata share of appraised value of full parcel, projected two years into future (estimated time to complete both partition and sale); reduce resulting value by discount for time needed to partition and sale; reduce value further by pro rata share of selling costs; reduce value further by estimated operating costs over time period needed to partition and sell property; resulting value is value between step one and step two based on expert opinion on likely need of partition; under facts of case, there was a 10 percent likelihood of need for partition).
(married couple does not qualify for long-term homeowner tax credit because one of the spouses didn't own and use the same principal residence for five consecutive years in eight-year applicable time period).
(trust's charitable donation deduction limited to trust's adjusted basis of property that trust purchased from accumulated gross income; IRS rejected trust's argument that properties were purchased with previous years' gross income).
(NPDES permit not needed for transfer from one regulable water source of already polluted waters to another regulable water source without an intervening industrial, municipal or commercial use; 2008 EPA regulation upheld as reasonable interpretation of statute which requires "addition" of pollutant before permit required).
(plaintiff, which removes natural materials from mining strip piles and processes them into different grades of crushed sandstone and then sells the processed materials for use in gravel, cement and asphalt, liable for severance tax on sandstone removed from mining operation and processed into new materials because plaintiff was producer responsible for collecting tax from purchaser).
(for purposes of long term homeowner tax credit, IRS lack authority to waive the five consecutive year ownership and use requirement for military personnel).
(11 U.S.C. Sec. 1222(a)(2)(A) applies to taxes generated by post-petition sale of farm assets; debtor's calf inventory constituted a "farm asset" used in the debtor's farming operation for purposes of 11 U.S.C. Sec. 1222(a)(2)(A); debtor's "marginal method" of computing the amount of tax to be treated as a non-priority claim under 11 U.S.C. Sec. 122(a)(2)(A) is correct).
(debtor, in attempt to perform debtor's confirmed Chapter 12 plan, asks court to determine priority of liens in livestock sale proceeds; creditors are bank and feed supply business; feed supply business claimed priority under ag supply dealer's lien statute (Iowa Code Ch. 570A); court holds that bank's interest is prior and superior to interest of feed supply business).
(plaintiff claims that defendant violated Clean Water Act for discharging pollutants in excess of permitted levels and didn't follow permits' report and monitor requirements; court holds that only some of plaintiff's claims are actionable, and determines that nine-month injunction is appropriate).
(plaintiffs owned mineral rights created via 1903 severance deed and sued for declaratory judgment that they had right to remove coal from property by surface mining; court concluded that term deed's use of phrase "all coal" was not intended to include coal removable only by destroying the surface and that parties to deed had expectation that damage to surface by mining would be limited to five acres (of 62-acre tract); other deed language consistent with underground mining and surface mining unknown in county at issue in 1903; appellate court affirmed).
(plaintiff sued defendant for damages to plaintiff's property allegedly caused by defendant's failure to clean drainage ditch system of defendant's property; dike on defendant's property held to be improvement to real property that was in a defective and unsafe condition and such that two year statute of limitations applies; statute also applies to actions seeking both injunctive relief and monetary damages; plaintiff failed to plead negligence action; plaintiff's action time barred).
(debtor cannot retain debtor's portion of federal tax refund attributable to child tax credit; amount belongs to bankruptcy estate; immaterial whether credit is refundable or non-refundable and is not held by parents in trust for their children).
(innocent spouse relief granted to taxpayer even though request untimely; taxpayer otherwise qualified for relief and court had previously invalidated time limitations contained in the Treas. Reg. in Lantz v. Comr., 132 T.C. 131 (2009)).
(IRS regulation which specifies that overstatement of basis results in an omission of gross income and, as such, extends the statute of limitations for assessing tax or beginning court proceeding for collection of tax without assessment from 3 to 6 years did not apply to the case because it is effective for tax years for which the applicable period for assessing tax did not expire before September 24, 2009; court noted that as a trial court it was bound by U.S. Supreme Court's opinion in Colony, Inc. v. Comr., 357 U.S. 28 (1958)) which held that overstatement of basis is not an omission from gross income, but that IRS was not so bound by a Supreme Court opinion based on Swallows Holding Ltd. v. Comr., 515 F.3d 162 (3d Cir. 2008)).
(repeals the 9 percent state tax on rooms and meals at campsites).
(case involves plaintiff's motion for attorney fees associated with claims that plaintiff prevailed on concerning defendant's violations of the Migrant and Seasonal Worker Protection Act).
(court affirms trial court order which authorized the sale of real estate an confirmed the sale and partially distributing the estate).
(contributions to and payments from a plan operated by city providing for health and medical benefits after employment ceases are excludable from the participants' gross income; contributions to and payments for the benefits aren't subject to FICA or FUTA tax).
(U.S. Forest Service plan to spray herbicide from helicopters over Kootenai National Forest violates agency's own guidelines specifying that the frequency and duration of such flights would likely have adverse impact on grizzly bears - USFS acted arbitrarily and capriciously in determining that aerial spraying is not likely to adversely affect grizzly bears; USFS may continue with ground application of herbicides).
(case concerns defendant's regulation of height of fences and hedges that abut public roadways; no issue of material fact that regulation unconstitutional; no triable issues of fact under Penn Central analysis).
(plaintiff, environmental activist group devoted to ending all ranching activity on public lands, sued defendant claiming that defendant violated various environmental laws by failing to consider sheep grazing's environmental impact - specifically claiming NEPA violation for failing to account for new information on noxious weeds and "global warming"; several ranching parties motioned to intervene to protect agriculture's interests because they claim the defendant might not adequately represent ag's interest; intervention allowed for remedy purposes).
(plaintiff investigated on charges of animal cruelty; warrant issued and horses seized, but plaintiff alleged 4th Amendment violations along with violations of the 8th and 5th Amendments; Rooker-Feldman doctrine applied and defendant's motion to dismiss granted).
(case involves various claims arising from creation and subsequent modification of revocable trusts containing farmland; claim against drafting attorney also involved).
(Tax Court properly disallowed business-related deductions under I.R.C. Sec. 162 and I.R.C. Sec. 44 (disabled access credit) for investment in payphones and ATMs that were equipped with modifications that rendered them ADA compliant; under taxpayer's purchase and service agreements, taxpayer never acquired ownership for tax purposes; taxpayer not eligible for disabled-access credit because taxpayer not required to comply with ADA; taxpayer not engaged in trade or business involving the payphones or ATMs for purposes of I.R.C. Sec. 162 deductions).
(Administration's recess appointment of Alan Bersin as Commissioner of Customs and Border Protection, the agency in charge of enforcing laws concerning whether employees are legally able to work in the United States, resulted in finding by Senate Finance Committee that Mr. Bersin had failed to properly complete and maintain Employment Eligibility Verification Forms (I-9s) for 9 out of 10 household employees employed over the past 20 years).