Annotations 06/2011

(in divorce proceeding, husband appealed trial court’s order concerning distribution of farm property; husband argued trial court erred in concluding wife’s claim to property was not barred by statute of limitations and that 1990 quitclaim deed purporting to convey farm to husband and three children was invalid; appellate court affirmed; held wife’s claim challenging validity of deed transfer tolled until time of trial when wife learned of conveyance; court affirmed trial court ruling that 1990 quitclaim deed was invalid for lack of delivery; no evidence of present intent to transfer). 

(decedent’s wife filed petition for declaratory judgment to determine whether bequests to deceased children passed as residue of estate or to lineal descendants; trial court held Texas’ anti-lapse statute applied so bequest made to pre-deceased children of decedent passed to grandchildren; appellate court found intention of decedent that anti-lapse statute should not apply due to language indicating lapsed gifts should be treated as residuary and other provisions expressly providing for specific gifts to be given to lineal descendants; trial court reversed).

(landowner's water loss claim associated with two springs on their property as an alleged result of plaintiff's conduct untimely; statutory procedure for landowners to follow when alleging impact on water supply by mine operator must be strictly followed).  

(plaintiff proved that debtor intentionally or recklessly made false statements under oath concerning financial information; discharge denied; debtor included no income from hog business even though he had grossed $2 million in sales; debtor also failed to disclose $25,000 in income and transfers of two ATVs, bobcat, tractor and co-ownership of wife’s vehicle). 

(enacts an extension of the 4.3 cent/gallon excise tax on commercial airline fuel and 7.5 percent tax on ticket purchases through July 22, 2011).

(landowner's water loss claim associated with two springs on their property as an alleged result of plaintiff's conduct untimely; statutory procedure for landowners to follow when alleging impact on water supply by mine operator must be strictly followed).

(involves rights of three brothers (residuary beneficiaries under testamentary trust); one brother leased trust property until trust terminated; trustee terminated lease; district court ruled lease was properly terminated, brother was not entitled to compensation for improvements made to leased property, and loans secured by brother against trust property were his obligation alone; appellate court held that terminated lease at end of crop year in which trust terminates was reasonable; court remanded case to determine whether brother installed tile during farm lease and if entitled to compensation; finally, court held that testator intended to treat sons equally and district court did not err in holding balance owing on farm loan was obligation of son).

(in a 2-1 decision authored by Carter appointee, court upholds against a facial challenge the constitutionality of the minimum coverage provision (i.e., the individual mandate) of the Patient Protection and Affordable Care Act; majority reasoned that provision within the authority of the Congress to enact under the Commerce Clause; court rejects government's position that provision is a tax that can be upheld under the taxing power of the Congress; court notes that nature of challenge by plaintiffs as a pre-enforcement facial challenge favors the government and is not the preferred route for litigation; court notes that opinion does not preclude future as-applied challenges to the mandate provision and that Act may, indeed, be eliminated by the Congress; dissent notes that mandate does not regulate commercial activity, but regulates the status of being uninsured; thus, since no market activity involved, the Congress has no ability under the Commerce Clause to regulate such inaction; dissent also points out that finding the mandate provision Constitutional removes all limits on the authority of the Congress under the Commerce Clause). 

(petitioner properly denied a charitable deduction for donation of conservation easement to county; failed to satisfy substantiation requirement s of I.R.C. Sec. 170(f)(8)).

(IRS asserted $7,000,000 deficiency in federal estate tax from decedent's estate due to valuation issues concerning 3,970 units of LLC interests included in estate; estate's expert valued interests at $28.2 million and IRS at $40.863 million with both appraisers using discounted cash flow approach; court's rejected estate appraiser's removal of non-recurring income items due to lack of explanation as to non-recurrence; court rejected IRS appraiser's use of guideline company analysis; estate's expert failed to explain reasons for taking discount for BIG tax in calculating future cash flows; court performed its own discounted cash flow analysis and arrived at value of $32,602,000).

(court upholds defendant's decision to grant neighbors of plaintiff variances allowing them to replace old homes on two parcels of land; plaintiff's claim that new homes would increase traffic on adjacent road and increase likelihood that gates would be left open and his cattle escape insufficient to show prejudice to plaintiff's rights).

(valuation of decedent's 15 percent interest in LLC at issue; estate valued interest at $34,936,000 and, on audit, IRS valued interest at $49,500,000; court determined that proper value wasless than what estate valued interest at - $32,601,640; estate entitled to refund of $861,422). 

(family dispute concerning sale and distribution of proceeds from two family farms; use of FSA data to determine tillable acreage proper; trial court's disposition of tractor, attachments and skid loader that were not sold at auction not erroneous; trial court's computation of cash rent not erroneous). 

(one-year chicken production contract entered into with Tyson Breeders, Inc.; contract orally terminated for grower's poor performance; grower sued for breach of contract; trial court awarded grower damages based on one-year contract income due to oral termination rather than written as required by contract; judgment reversed and remanded to compute damages for lost profits during period of time that jury determines to be reasonable notice period; evidence of grower's conduct causing prior termination of earlier contract relevant). 

(case involves buyers and processors of farm-raised crawfish suing a pesticide manufacturer under state (LA) product liability law to recover economic loss from decline in farm-raised crawfish allegedly caused by rice seed that was treated with defendant's pesticide; trial court granted summary judgment for defendant and appellate court affirmed; plaintiff did not sustain damages to their person or property and economic loss rule bars recovery in such situations in tort; association between damaged crawfish and economic loss was tenuous because plaintiffs had no actual, enforceable contract right to buy crawfish; LA law does not recognize cause of action for negligent interference with contract rights). 

(case invovles dispute between beneficiaries of trust and trustees; trust assets of $6.5 million included in life beneficiary's gross estate; holders of remainder interests sought distribution of $2 million and trustees only wanted to distribute $1 million due to concern that estate could be liable for additional $2 million in federal estate tax; following litigation on matter, trial court ordered $1.5 million be distributed and that trustees had breached fiduciary duty under state (IN) law because they knew that trust corpus was ripe for distribution; portion ripe for distribution still needed to be distributed even though beneficiaries were in dispute over amount to be distributed; appellate court affirmed on fiduciary duty/distribution issue, but reversed on damages issues holding that beneficiaries entitled to interest only on cash portion of court-ordered distribution for period beginning with demand to time of actual payment (less interest or income accrued during timespan); case remanded for determination of compensatory damages plus $150,000 in attorney fees to beneficiaries). 

(issue was whether government’s experts’ opinions regarding whether river branch was “water of the United States” should be excluded; defendants were charged with violating Clean Water Act, making false statements, and obstruction of justice in discharge of hog waste case;  issue was whether expert testimony would assist the jury in its determination; court held that expert was not permitted to “opine” as to whether river branch was “water of the United States” or whether it possesses “significant nexus” with nearby waters; both terms are legal conclusions and would “impermissibly invade” province of jury by telling jury what result to reach). 

(petitioner's payment on former spouse's mortgage not deductible alimony; amount not paid under a divorce or separation instrument and was subject to conditions related to petitioner's sons). 

(married couple entitled to deduct legal expenses as ordinary and necessary business expense, but could not deduct expenses attributable to rental property and could not deduct as a bad debt amount of loans they claimed were worthless because there was no bona fide indebtedness; rental property expenses not claimed on correct place on return and didn't raise issue with IRS at administrative level). 

(value of decedent's 41.128% limited partner interest in Oregon limited partnership engaged in landholding and timber activities valued at $27.45 million rather than $13 million that estate valued interest at or the $33.5 million that IRS valued interest at; no accuracy-related penalty imposed). 

(business expenses of CPA not substantiated and, therefore, business-related deductions disallowed). 

(plaintiff, environmental group, sues defendant to gain access to defendant's records related to advocacy and compensation of employee James Hansen which is beyond scope of employee's employment with defendant; defendant failed to comply with plaintiff's prior Freedom of Information Act request; employee advocates single point of view concerning "global warming" and advocates for blockage of permitting for new coal-fired power plants in the United States such as the advocacy he made concerning the proposed Marshalltown, Iowa coal-fired power plant). 

(defendant held both an express easement coinciding with a gravel road that ran across the plaintiff’s property and an easement by prescription that allowed the defendant’s use of portions of the road not subject to the express easement; scope of express easement not exceeded because language creating easement in deed was an ingress/egress easement with no limitations and present use consistent with longstanding use of the easement).

(defendant left his livestock on plaintiff’s ranch after relationship soured and plaintiff sued to perfect lien on livestock for expenses incurred in caring for the livestock; no lien arose because no actual or implied agreement existed to pay boarding charges and plaintiff did not bring claim within applicable one-year statute of limitations; livestock merely abandoned on plaintiff’s ranch). 

(taxpayer entitled to charitable deduction for grant of facade easement to charitable organization). 

(Treas. Regs. granting 6-year statute of limitations due to IRS position that overstated basis constitutes an omission from gross income upheld).

(by a 49-51 vote, U.S. Senate fails to get beyond a cloture vote on the Economic Development Revitalization Act of 2011; Act contains repeal of volumetric ethanol excise tax credit; four senators who voted to end the volumetric ethanol excise tax credit, voted against cloture  - Johnson (D-ND), McCaskill (D-MO), Nelson (D-NE) and Klobuchar (D-MN)). 

(Chapter 12 bankruptcy case; taxes incurred post-petition on sale of farm assets not entitled to non-priority treatment under 11 U.S.C. Sec. 1222(a)(2)(A)); court reverses bankruptcy court and follows rationale of 9th Circuit). 

(defendant permanently enjoined from operating duly licensed junk yard on property because junk yard constituted a nuisance; junkyard not a pre-existing non-conforming use). 

(son, as legatee under mother’s will not entitled to order authorizing sale of real property in mother’s estate; will set forth time for option to be exercised; son failed to show that performance of option impossible). 

(federal courts do not have jurisdiction to hear federal common law nuisance claims relating to greenhouse gas emissions; authority to regulate such gases delegated to EPA and courts' job to review EPA regulations, not decide what the regulations are to be in the first place; Clean Air Act and EPA actions displaced any federal common law right to seek relief sought; CAA directs EPA to list categories of air pollution and establish emission standards; Court unanimously reverses Second Circuit opinion authored by Justice Sotomayor who took no part in the Court's opinion on review). 

(character of gain on sale of tract of real estate is short-term capital gain in nature; taxpayer bought properties and would build single-family residence on bare lot and then sell the improved property via use of brokers; lots in issue not held primarily for sale to customers in ordinary course of business). 

(plaintiff, wholesale generator of electricity, challenged award of summary judgment to defendant; trial court determined that defendant owned three riverbeds and was, thus, entitled to damages for plaintiff's use of riverbeds from 2000-2007 at hydroelectric power sites; on appeal, court affirmed on basis that rivers at issue were navigable when defendant became state in 1889 under navigability for title test).

(defendant not entitled to construct snowmobile trails across private property without acquiring rights-of-way or exercising power of eminent domain; defendant did not hold reversionary interest in property upon railroad abandonment of rail line; railroad company at issue not chartered within 15 years of 1852 Act and had also used power of condemnation to obtain rights-of-way necessary to operate line; upon abandonment of line in 1980, federal law allowed plaintiff to acquire right-of-way one year and one day later; defendant did not buy right-of-way from railroad at that time; snowmobile trail can be built on line across private property, but defendant must pay for such right or condemn the property). 

(value of annuities and value of life insurance policies included in decedent's taxable estate; decedent retained incidents of ownership; estate properly included policies in estate at death (except for overvaluing one) but then later excluded them from estate; however, evidence showed that decedent retained right to change beneficiaries on policies until time of death which causes inclusion in gross estate under I.R.C. Sec. 2042; value of annuities included in estate by virtue of I.R.C. Sec. 2039(a)). 

(U.S. Senate voted 73-27 on June 16 to repeal volumetric ethanol excise tax credit of $.45/gallon; vote was on amendment to S. 782, the  Economic Development Revitalization Act of 2011). 

(taxpayer did not qualify for first-time homebuyer credit on purchase of home from mother's estate; acquisition of home was not a qualified "purchase" insomuch as the purchase was from the executor who was a disqualified related party to the taxpayer (a sibling); while a sibling is not a related party under the statute, the executor of an estate and a beneficiary of that same estate are related persons under I.R.C. Sec. 267(b)(13)). 

(IRA contribution deduction of $5,000 disallowed for 2007 due to lack of wage or self-employment income; fact that IRS had audited 2006 return and didn't challenge IRA deduction in that year under same set of facts not binding on IRS for any subsequent tax year).

(court holds that state (FL) Right-to-Farm Act applied only to ordinances enacted after the Act was adopted; plaintiff owned and operated nursery on several tracts located in agricultural-residential zoning district; plaintiff owned most parcels for many years, but purchased one of the subject tracts in 2005 on which plaintiff cited for operating a wholesale or retail nursery without proper zoning approval in violation of Unified Land Development Code (ULDC); plaintiff filed for special permit which defendant issued subject to conditions which plaintiff then claimed violated state Right-to-Farm Act; trial court granted defendant's motion for summary judgment on basis that Right-to-Farm Act banned any new ordinances restricting farm activity and had no impact on pre-existing conditions; appellate court affirmed that Right-to-Farm Act did not apply to ULDC - ULCD enacted in 1989 and Right-to-Farm Act in 1990; but, ordinance pertaining to special permits enacted in 2002 and was subject to Right-to-Farm Act; case remanded for review of application of Right-to-Farm Act to ordinances that negatively interfered with plaintiff's farming operations). 

(petitioner who was hired by county to manage county park lived out of petitioner’s mobile home on park property, even though not required to live in park as condition of employment;  deductions associated with mobile home not deductible under I.R.C. Sec. 119 because contract for petitioner’s services did not require petitioner to live on premises; fuel expense petitioner incurred to operate park vehicles deductible because strict substantiation requirements inapplicable to “qualified non-personal use vehicles). 

(court reversed trial court determination that settler of revocable trust lacked contractual capacity which invalidated settler's amendments to trust; amendments were simple and related to property distribution post-death and, as such, were "indistinguishable from a will or codicil"; settler had testamentary capacity). 

(bankrupt debtor not allowed to claim additional $200 vehicle operating expense (or pro rata portion thereof) for unencumbered vehicle over six years old simultaneously with deduction for IRS standard owning and operating expense; debt retired before completion of Chapter 13 plan payments; case involves question left unresolved by Ransom v. FIA Card Services, 131 S. Ct. 716 (2011) in which Court held that debtor not entitled to take vehicle ownership expense deduction if debtor did not have secured debt payment on a vehicle, but where Court did not address situation where debtor has secured debt payment that is less than IRS National and Local Standards). 

(summary judgment not granted to taxpayer, a partnership, on issue of whether a final partnership administrative adjustment was timely or not; overstatement of basis case; six-year statute of limitations may have been applied).

(court holds that I.R.C. Sec. 6015(f) is ambiguous with respect to statute of limitations and upholds Treas. Reg. Sec. 1.6015-5(b)(1) as reasonable in establishing 2-year statute of limitations for innocent spouse claims; case remanded to Tax Court). 

Petition for writ of certiorari to the United States Court of Appeals for the Ninth Circuit granted.

(case involves action against former owner of cemetery on farm; petitioner had buried remains of parents in cemetery before selling farm in 1983 and claimed title to plot; 1853 deed excepted out burial plot and was not simply a burial easement). 

(court determined that state (Vermont) law required that POA created before effective date of statute barring agent from making gifts of principal's property to himself under POA had to conform to entire statute or execution was invalid; power to make gifts after effective date of statute did not give agent explicit power to make gifts and was unenforceable). 

(boundary dispute case involving attempted reformation of contract of sale of land and quiet title to disputed area; trial court determined mutual mistake occurred requiring reformation; issue of mutual mistake before court on appeal, but not supported by record; reversed).

(debtors, potato farmers, borrowed money from bank with bank securing lien in debtors crops and equipment; debtors unable to repay 2009 crop loan due to crop disaster, and bank did not foreclose lien; debtors planted 2010 crop after getting input financing from other lenders and executed agreement that bank's forbearance did not constitute a new loan; proceeds from 2010 crop used to pay input loan suppliers with debtors then filing Chapter 12; debtors sought finding that bank did not have lien on remaining crop proceeds from 2010 crop, wanting to use those proceeds to plant 2011 crop; court found that bank's financing statements remained valid and effective under state statute that contemplated a crop "to be grown" in the future; thus, bank had lien in remaining proceeds from debtors' 2010 sweet potato crop; unless bank consented, debtor's proposal to "roll-over" 2010 proceeds to 2011 crop was not adequate protection for bank's interest in proceeds of 2010 crop).

(plaintiff did not have legal right to access his property via a roadbed in question; roadbed not a public road; no prescriptive easement present).