Annotations 07/2010

(determination of whether defendant's farming operation constituted a nuisance should have been made via the administrative framework created by the state Right-To-Farm law rather than via the judicial process; whether farming operation involved a generally accepted farming practice was debatable and needed to be brought before the State Agricultural Development Committee or the state appellate courts rather than the trial court). 

(lump-sum Social Security payment was properly excluded from Chapter 7 bankruptcy estate by virtue of 42 U.S.C. §407). 

(court affirms judgment of U.S. Court of International Trade which sustained USDA decision denying plaintiffs’ application for trade adjustment assistance cash benefits because of excess net farm income over applicable gross farm income limitations; USDA need not recalculate farm income on accrual rather than cash basis which would have shifted $80,000 disaster relief payment received in 2004 to an earlier tax year; in any event, plaintiffs failed to provide documentation necessary to certify that their net income, calculated on accrual basis, was lower in 2004 than it was in 2003). 

(transactions reported on petitioners' tax returns which resulted in claims for I.R.C. Sec. 45K tax credit (credit for production of fuel from nonconventional sources) were fictitious; petitioners allegedly had no ownership interests in any landfill; promoters of scheme had no ownership interest in any landfill that produced alternative fuels; petitioners determined to be victims of fraudulent scheme). 

(U.S. House, on 7/29/10, failed to pass bill by required two-thirds majority; bill would have limited tax treaty benefits for multinational firms with parent company based in countries not having tax treaty with U.S., and would have provided financial assistance to 9/11 first responders; two-thirds majority required (rather than simple majority) because bill procedurally structured as suspension bill that could not be amended so as to avoid vote on immigration amendment). 

(plaintiff challenged the constitutionality of defendant's enforcement of S.B. 1070 which codifies federal law provisions concerning illegal immigration into state law to give state enforcement authority in lieu of plaintiff's longstanding failure to enforce federal provisions; plaintiff claims that power to regulate illegal immigration is an exclusively federal issue and that the provisions of S.B. 1070 are pre-empted by federal law; plaintiff, in the alternative, sought injunction against enforcement of S.B. 1070 pending trial on the merits; court holds that defendant's attempt to support federal effort to control illegal immigration (which is a joint federal/state effort) via S.B. 1070 should be enjoined pending full trial on merits even though plaintiff had abandoned rather than pre-empted field; no discussion of public interest).

(plaintiff, horse rider, sued equestrian center after she lost control of horse which tripped on training poles and threw plaintiff resulting in plaintiff’s injuries; plaintiff’s expert opinion was that placement of poles and movable step was negligent, trial court held that plaintiff’s injury result of inherent risk of equine activity and that plaintiff’s claim barred by Equine Act; appellate court reversed on basis that the negligent disregard of participant’s safety rule of exception to exemption from liability under Equine Act might apply  and that summary judgment not appropriate; Supreme Court reversed, reinstating judgment of trial court – poles and step not faulty). 

(to be held liable for damages caused by escaped livestock under state Stock Law (Rev. Stat. Mo. Sec. 270.010), individual must be owner of livestock; defendant not liable under Stock Law for injuries sustained in vehicle accident caused by livestock that escaped from defendant's pasture because defendant not owner of livestock; trial court judgment for plaintiff reversed and case remanded to determine whether defendant liable under principles of general negligence). 

(petitioner is an electric utility  that provides various lighting services for public and private entities and disputes centers on appropriate depreciation recovery period for petitioner's street light assets; court holds that such assets are neither assets used in the distribution of electricity nor land improvements and are property without a class life that default to classification as seven-year property with a recovery period of seven years).

(auto expenses denied for lack of substantiation - mileage logs not properly kept in accordance with substantiation requirements of I.R.C. Sec. 274(d); commuting miles claimed on holidays and personal miles mixed in with business miles and descriptions and business purposes too vague). 

(would exclude farmland from estate tax so long as it remains in farming use by creating new I.R.C. Sec. 2033A and apply to a decedent's estate that makes an election under I.R.C. Sec. 2032A(d)(2); unlimited recapture period). 

(FSA’s decision to deny enrollment of CRP land in REX program upheld). 

(case involves contractual dispute between electricity wholesaler and wind-powered electrical generation facilities; plaintiff seeks to recover liquidated damages after defendant failed to deliver (due to inherent inefficiencies of wind-generated electricity) minimum annual quantities of wind-generated electricity and renewable energy credits due under purchase and sale agreements; defendant countersued claiming that plaintiff failed to ensure sufficient transmission capacity; trial court rendered "take nothing" judgment for both parties on damage claims and a declaratory judgment in favor of defendant; both parties appeal, and on appeal court affirms take nothing judgment for defendant on their damage claim, and reverses to rule in favor of plaintiff on the construction of contract clause concerning plaintiff's duty to provide transmission capacity; case remanded). 

(court upholds decision of National Appeals Division denying re-enrollment of certain farmland in CRP program; FSA’s submission of notices to holder of POA sufficiently satisfied Due Process requirements and FSA complied with all requests of submission of necessary documents to which enrollee and enrollee’s estate failed to respond (no evidence present that enrollee made good faith effort to fully comply with program requirements or rendered substantial performance). 

(defendant father pastured son's cattle; son failed to pay pasture rent and defaulted on loan to plaintiff that had perfected security interest in cattle; court holds that defendant's statutory agister's lien beats out the plaintiff's perfected security interest; father/son transaction arose in the ordinary course of business and lien is not an agricultural lien that requires filing to perfect, but is a possessory lien not requiring filing; plaintiff failed to protect itself by placing contractual restrictions on movement of cattle). 

(case involves contractual dispute between electricity wholesaler and wind-powered electrical generation facilities; plaintiff seeks to recover liquidated damages after defendant failed to deliver (due to inherent inefficiencies of wind-generated electricity) minimum annual quantities of wind-generated electricity and renewable energy credits due under purchase and sale agreements; defendant countersued claiming that plaintiff failed to ensure sufficient transmission capacity; trial court rendered "take nothing" judgment for both parties on damage claims and a declaratory judgment in favor of defendant; both parties appeal, and on appeal court affirms take nothing judgment for defendant on their damage claim, and reverses to rule in favor of plaintiff on the construction of contract clause concerning plaintiff's duty to provide transmission capacity; case remanded).

(parties contracted for sale of cows; buyer removed 162 cows but didn’t notify other parties; seller then sold remaining cows and kept proceeds; trial court found that buyer breached contract, but seller couldn’t prove damages; affirmed on appeal – seller made no profit from sale of remaining cows and buyer’s breach resulted in windfall for seller). 

(petitioner did not engage in horse activities with profit motive - deductions from activity limited to gross income from activity; under nine-factor test, five favor IRS, two are neutral and two favor petitioner). 

(some graduate-level tuition waivers provided by educational institution to employees may qualify for exclusion from gross income under I.R.C. Sec. 117 if employees are graduate students working as research or teaching assistants; but waivers may be excludible up to $5,250 under I.R.C. Sec. 127, and amounts over that may be excludible if waivers are a working condition fringe under I.R.C. Sec. 132(j)(8)).  

(case involves appeal of injunction requiring installation of emissions controls at four of defendant's power plants where injunction was based on trial court's determination that emissions constituted public nuisance; trial court decision imposing injunction reversed - utilization of public nuisance would result in "balkanization" of clean air regulations and lead to confused patchwork of air standards to the detriment of industry and the environment; trial court decision improperly applied home state law extraterritorially in contradiction of International Paper Co v. Ouellette, 479 U.S. 481 (1987); activity that is permitted and extensively regulated by federal government cannot be a public nuisance; court notes that if public nuisance doctrine were to be utilized to overturn clean air legislation, it would be "increasingly difficult" for anyone to determine what standards govern and energy policy could not be established and would gut the Clean Air Act; court's opinion deals blow to groups and persons that seek to use public nuisance doctrine to shut down or substantially restrict particular activities based on alleged contribution to "global warming" - a.k.a. "climate change"). 

(plaintiff injured in bicycle/car accident on paved road in National Forest; on certified question from 9th Circuit, court holds that state recreational use statute does not extend to negligence of landowner or landowner's employee while acting in scope of employment and does not include vehicular negligence). 

(based on multi-factored test, contract between petitioner and car dealer was a lease and not a purchase; petitioner not entitled to claim expense method depreciation on truck; no elements of sale present). 

(reference to "royalty interest" in deed refers to share of production of oil and gas at severance and is personal property which relates to the proceeds from oil and gas if and when produced; "mineral interest" refers to oil and gas in place and constitutes present ownership of interest in real property and is commonly denoted by right of entry upon land to produce and conduct production activities; mineral interest vests immediately upon creation, but royalty interest does not; thus, reservation of "royalty interest" in deed violated rule against perpetuities). 

(will case involving allegations of undue influence; none found). 

(farmer's conviction on five counts of filing false tax returns upheld; farmer had previously been convicted and sentenced to prison in 1990s on similar charges; farmer's income resulted from rental income, grain sales, rental of house and taxpayer subsidies via farm programs; farmer claimed deductions for personal labor received in return for repayment of debt; farmer had gotten associated with Joseph Saladino, head of "Freedom and Privacy Committee," who had also been convicted previously of tax fraud). 

(defendant, a real estate developer, purchased known contaminated tract of undeveloped wetlands and court holds that defendant liable for cleanup costs of neighboring properties even though defendant sold tract before plaintiff sought reimbursement for clean-up cost of adjacent properties contaminated with PCBs; defendant had cleaned the wetland tract it purchased and then sold it before plaintiff reacted, but plaintiff had informed defendant that if defendant was going to clean-up own tract it had to clean-up adjacent tracts because wetland was source of contamination; plaintiff then hired company to clean-up adjacent tracts and billed defendant for the cost; court holds that "owner and operator" status under CERCLA determined at time clean-up costs are incurred (rather than when reimbursement lawsuit filed) for purposes of CERCLA liability). 

(life insurance premium reimbursements received as part of rebate scheme constitutes taxable income; promissory note provided to broker did not create genuine indebtedness so no offset of rebates). 

(IRS announcement of proposed regulations implementing a  $50 fee for individuals who apply for preparer tax identification number; additional fee to be charged by third-party vendor to operate new online application system for PTIN program). 

(would increase the limitations on the amount potentially excludible from a decedent's gross estate with respect to land subject to a qualified conservation easement to $5,000,000 and increasing the percentage of land value excludible to 50 percent and changing the percentage reduction from 2 to 2.5 percent).

(taxpayer cannot increase at-risk amount under I.R.C. Sec. 465 in his single-member LLC via loan that taxpayer took out to acquire a recreational vehicle; taxpayer failed to establish that LLC either owned or used the vehicle). 

(charitable deduction denied for donation of taxpayer's home that was donated to city fire department to burn and demolish with land then returned to taxpayer; qualified appraisal not submitted and no contemporaneous acknowledgement from city). 

(Veterinary Medicine Loan Repayment Program Enhancement Act)(would exclude from income the value of educational loans that are forgiven or repaid by certain government programs that are intended to expand access to veterinary services; referred to Senate Finance Committee). 

(case concerns ownership and use rights with respect to driveway that provides access to plaintiff's 60-acre tract but which defendant is the record owner of; plaintiff claims existence of easement by prescription which requires proof of same elements as adverse possession; plaintiff failed to satisfy burden of proof of elements by clear and convincing evidence and evidence did not support argument that driveway was a public roadway). 

(plaintiff claims that defendant discharged chicken manure into navigable waters of the U.S. without a CWA permit; certain plaintiffs dismissed from suit for failure to satisfy notice provisions of citizen suit requirements under CWA; notice of particular violations in complaint sufficient; Perdue Farms' claim that it cannot be held liable solely because it is an integrator and not required to be a co-permittee is overstated - liability of integrator determined on basis of integrator's control over contractors' chicken operations with result that Perdue Farms not dismissed from suit). 

(beneficiaries of estate could not claim estate's unused capital loss carryovers because they did not succeed to estate's property in accordance with I.R.C. Sec. 642(h)(1); settlement agreement involved). 

(recreational vehicle dealer's sales and use tax refund claim denied; untimely). 

(once timely filed Form 706 is filed, regulations allow alternate valuation election to be made via extension of time if regulation followed). 

(charitable deduction of $59,959 denied for donation of historic facade conservation easement on taxpayer's townhouse in historic district due to failure to substantially comply with I.R.C. Sec. 170; taxpayer failed to establish cost basis, date and manner of acquisition, did not document fair market value of property at time of donation charitable (due to inadequate appraisal that didn't properly utilize before-and after appraisal method), and easement not protected into perpetuity; charitable deduction denied for cash donation to organization arranging donation of easement which was required as condition of facade easement donation). 

(in response to Congressional Budget Office Report, the congressman stated that any decision to extend the volumetric ethanol excise tax credit should consider the credit's "very high cost to taxpayers"; the congressman noted that the credit "is by far the largest renewable energy tax expenditure and will cost $7.6 billion this year" before it expires on December 31, 2010; this amount is in addition to the $41.2 billion in current dollars that has been spent in tax-based subsidies on the credit for ethanol since 1980). 

(despite severe state budget deficit, bill extends special valuation techniques and exemptions for wind energy generating devices for property tax purposes through 2016). 

(Black Liquor qualifies as cellulosic biofuel under I.R.C. Sec. 40(b) which entitles the producer to claim the biofuel producer credit; note – Health Care Act statutorily specifies that Black Liquor does not qualify for the cellulosic biofuel producer tax credit). 

(plaintiff, inventor of farm implement that attaches to corn head and makes it easier to harvest downed corn; court upholds trial court's refusal to enjoin defendant's sale of modified equipment with device that copied plaintiff's implement; Uniform Deceptive Trade Practices Act does not authorize an injunction to prevent copying). 

(case involves condemnation of small acreage for state road project that split farm; case involves battle over proper way to value the property for "just compensation" purposes). 

(written declaration between adjoining landowners created easement rather than license and one party's landscaping unreasonably obstructed the use of the easement). 

(memo provides field direction on the section 118 Tier I issue related to leaking underground storage tank state remediation reimbursement programs). 

(payments that cooperative makes for grain sales are per unit retains paid in money; cooperative's computation of its Sec. 199 DPAD to be made without deducting such payments). 

(railway crossing may have created prescriptive easement and landowners entitled to have their claims measured in accordance with law before 2008 amendments to state law). 

(federal government lacks a rational basis for denying federal benefits to homosexual couples and, as such, Section 3 of the Defense of Marriage Act violates the due process clause of the Fifth Amendment; homosexual couples should be allowed to file joint income tax returns; court rules that Congress has no rational interest in promoting morality and conserving limited resources; court rules that, for purposes of federal tax benefits, federal government bound by state law - as such, opinion lays groundwork for basis of claim that recently enacted health care mandate is unconstitutional).