Annotations 10/2012

(ruling on defendant’s motion to dismiss various claims in contract dispute regarding mineral-rights lease on plaintiff’s land; plaintiff sought reformation of the contract but court held no evidence contract failed to state intention of parties, so reformation not viable and claim dismissed; plaintiff sought nullification of the contract as contrary to public policy because it was solicited by an unlicensed real estate broker, but court held contract unaffected by this as proper remedy would be to preclude broker from recovering fee and claim dismissed; plaintiff argued contract was unconscionable because trustees who signed lease were elderly, uneducated, and in poor health and contract unreasonably favors defendants; court held allegations sufficient to survive motion to dismiss; court also denied claim to deem a judicial ascertainment clause void as against public policy as established by state law; court also held because plaintiff did not assent to assignment of lease that defendant remains bound by the contract). 

(brothers had amicable farming partnership for decades; partnership agreement entered into in 1973 required bi-annual assessment of partnership valuation and life insurance policies on each partner to buy out the deceased brother’s family; formalities of 1973 agreement or partnership not followed by either brother; additional life insurance policies purchased during partnership’s lifetime; partnership had significant debts for many years and partnership cashed out value of life insurance proceeds unrelated to 1973 agreement before brother’s death; after brother died, estate brought suit against surviving partner for conversion of value of life insurance proceeds; after bench trial probate court held partnership agreement not followed by either brother and cashed out life insurance policy not related to agreement, so no conversion of value and estate not entitled to any recovery from surviving partner; court also denied attorney fees to surviving partner; estate appealed; appellate court affirmed findings on partnership agreement, life insurance value, and denial of attorney fees). 

(appeal of trial court’s grant of summary judgment to bank where trial court determined that bank held superior security interest over after-acquired livestock for which debtor did not pay defendant; appellate court affirmed summary judgment on basis that security interest attached to livestock even though drafts for livestock submitted by debtor were not honored by bank because debtor had voidable title which allowed security interest to attach; court also held bank owed no duty of good faith to defendants as third party, so bank was good faith purchaser despite its knowledge of defendant’s claims; concurrence filed which suggested statutory language to protect parties such as defendant in the future; dissents filed arguing questions of fact regarding bank’s role should have prevented summary judgment and defendant should have been permitted to argue good faith against bank).

(U.S. Supreme Court grants certiorari in case to resolve split between U.S. Circuit Courts of Appeal on issue of whether U.K. windfall profits tax paid by plaintiff’s U.K. subsidiary is creditable under I.R.C. §901; Third Circuit held that it was not and Fifth Circuit held that it was).

(appeal from a Chapter 12 bankruptcy order allowing lifting of automatic stay on two parcels of land because debtors had no equitable interest in property; debtors entered into contract for deed with creditors whereby creditors paid off debtors' $170,000 bank loan in exchange for a warranty deed to property; debtors were to make yearly payments to creditor to buy back property; after a few years, debtors were delinquent in payments and creditor sent notice of default; under contract if default was not cured within 30 days, contract terminated and all payments  treated as rent; debtors made rental payments for a time, but eventually stopped paying rent; debtors filed bankruptcy and included property as part of the estate; appellate court affirmed because contract for deed was terminated 2 years prior to commencement of bankruptcy when default was not cured, so debtors had no legal interest in property; court also held forfeiture should not be set aside for principles of equity because creditors attempted to help debtors avoid forfeiture with favorable repayment terms and debtors still defaulted; order affirmed).

(landowners filed takings case against U.S. Army Corps Of Engineers based on improvements Corps made to Prado Dam that could increase flood levels on landowners’ land if water is released; plaintiffs claimed that improvements effectively blocked their land from being zoned for future residential or commercial development; when local flood control districts began buying parcels in 1990s, landowners offered up to $9 million for their land, but landowners presented counteroffer of $21 million which was rejected; in lawsuit, plaintiffs sought $60 million in compensation plus interest and attorney fees and costs; court rejected taking claim on basis that plaintiffs had not demonstrated that permanent flooding or repeat flooding would inevitably recur; changes in property value resulting from flood control projects cannot be considered “takings” of property under the constitution absent actual flooding; on reconsideration, court held that plaintiffs failed to meet requirements for reconsiderations and motions for leave to amend complaint, and plaintiffs failed to convince court that no physical taking of flowage easement occurred; reconsideration appropriate to extent plaintiffs assert taking claim for portion of property alleged to be occupied by surveyor’s monuments; plaintiffs allowed to amend complaint to plead claim for physical taking of portion of property allegedly  occupied by surveyor’s monuments).  

(plaintiff is experienced cattleman who was displaying bulls during beef exposition at fairgrounds; plaintiff was trampled by two bulls while helping unload two bulls owned and raised by third party from trailer; plaintiff suffered injury to right femoral vein and tore left rotator cuff which prevented him from continuing work as cattle embryologist; plaintiff sued to recover economic loss from inability to continue embryo business; court reversed lower court judgment granting plaintiff summary judgment; court determined that plaintiff presented sufficient material issues of fact to preclude summary judgment on lost profit and wages claim).

(debtor filed Chapter 13; case converted to Chapter 7; legal issue in case involves question of what Bankruptcy Code requires Chapter 13 trustee to do with undistributed funds received pursuant to confirmed Chapter 13 plan when case is converted to Chapter 7; in affirming bankruptcy court decision, court notes that debtor’s plan became infeasible and debtor exercised right to convert case to Chapter 7 and sought return of post-petition earnings in trustee’s possession; no evidence of bad faith present and post-petition earnings belong to debtor in accordance with 11 U.S.C. Sec. 348(f) and are not to be distributed to creditors).

(consolidated appeal of misdemeanor convictions of two Old Order Swartzentruber Amish for violation of statute requiring a bright colored, reflective, slow, moving emblem in a triangular shape on their horse and buggy to warn motorists; defendants argued statute violated their religious freedoms guaranteed under the state Constitution; court clarified confusion and held that state Constitution provides same level of protection for religious freedom as U. S. Constitution; court held that statute applied broadly to all persons' actions on public highways and did not single out religious practices of defendants; court found a rational basis for statute due to safety concerns; because rational basis existed, it upheld statute; concurrence filed disagreeing that state constitution does not provide greater protections for religious freedoms, but stated that the statute held up to strict scrutiny).

(fracking company's summary judgment motion granted dismissing landowners' trespassing claim against company's pits containing drilling wastes buried on the landowners' property; company had oil and gas lease obtained from third party that was acquired through a deed severing the mineral rights from the land in 1950s; court held state permit allowed company to use pits in its operation and owners of subsurface rights have right to use land as necessary to conduct their operations, so there was no evidence of a trespass).

(plaintiffs appeal summary judgment ruling in favor of defendants; plaintiff was bitten by defendants' predator control dogs when she was participating in a bicycle event through U.S. forest; defendants had grazing permit in same forest area; court agreed that state premises liability statute applied preempting plaintiffs' common law claims because defendants had possession of property through lease; court, however, held that strict liability dog bite statute was not abrogated by premises liability statute as held by lower court, so claim could proceed and should not have been dismissed; court held question of fact existed as to whether defendants had sufficient control over the property where bite occurred for statutory exemption excluding liability for damages caused by predator control dogs working on property controlled by defendants; court also held no settlement agreement existed when defendants effectively withdrew all offers of settlement an hour before plaintiffs attempted to accept; case remanded).

(petitioners were members of LLC that made bargain sales of open-space conservation easements to qualify charity (portion of purchase price paid by charity is gain to seller and below-market portion is contribution); IRS denied charitable contribution on basis that easements not perpetual because government agencies that funded purchase entitled to recapture upon condemnation of land and extinguishment of easement, and because appraisal not qualified and no contemporaneous written acknowledgement of gift; court disagreed with IRS – upon extinguishment taxpayers would not reap windfall and done can use its proportionate share of proceeds to advance cause of historic preservation on different property; while qualified appraisal must include statement that it was prepared for income tax purposes, appraisal report included required information either in appraisal or in summaries; contemporaneous written acknowledgement can be comprised of a series of documents).

(claimed business deductions not substantiated and denied; court upheld denial of deductions, including deduction for expenses related to office in home; petitioner provided no explanation of why documentation not provided). 

(property owner appealed tax penalty levied against her for an impermissible change in conservation status of property under covenant agreement; property owner sold parcel of land after application approved by tax board for conservation use; board notified new owner of breach of covenant; when breach not cured, board sent notice of penalty to owner; board upheld penalty and owner appealed to court; court held law required owner to receive notice of breach and have opportunity to cure before penalty could be assessed; because owner never received first notice, penalty could not be assessed).

(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).

(petitioner served on local bank board; board supervised management of bank, but did not participate in daily bank operations; bank provided liability coverage, life and disability insurance and retirement benefits, but not health insurance; petitioner vested in bank’s retirement plan for board members; petitioner put in less than 5 hours a week on board member business, did not hold himself out as contractor and did not claim any tax deductions for business expenses because bank paid all expenses; IRS took position that petitioner was independent contractor in accordance with employment tax regulations and earnings subject to self-employment tax; court agreed with IRS position based on multi-factor analysis).

(plaintiff gifted several million to family members that triggered gift tax liability of $1.8 million; plaintiff failed to timely file Form 709 reporting the gifts and paying the tax; plaintiff argued that her health problems (including pneumonia, upper respiratory infections, knee pain and replacement surgery, and cataract surgery, among other things, prevented her from timely filing Form 709, however, during the interim time period from when gifts were made and filing deadline for Form 709 plaintiff transacted other business including conveying real property, consulting with tax attorneys, reviewing income tax returns and paying taxes; court determined that plaintiff lacked reasonable cause for failure to File Form 709; imposition of penalty upheld).

(legal challenge brought by advocacy organizations to United States Fish and Wildlife Service’s decision to allow genetically modified crops to be grown on National Wildlife Refuge land that included a failure to fully follow NEPA, APA, and FWS procedure before permitting planting; defendants agreed not to permit such planting in 2013 until required environmental studies were completed and moved for dismissal of this suit based on mootness of issue; court held issue was not moot because plaintiffs could still suffer harms this year, and court could still grant some form of relief; because the case was not moot, the court set a hearing to determine remedies).

(legal wife appealed probate court decision requiring her to tender proceeds of life insurance policy back to estate; wife and decedent had consent judgment of separate maintenance, which specifically stated wife had no further interest as beneficiary of life insurance; insurer denied claim by estate for proceeds stating under ERISA it could only pay designated beneficiary under the policy which was the wife; probate court held wife had waived her rights to the proceeds; on appeal court affirmed probate court holding that under contract law, once proceeds properly paid pursuant to ERISA, a contract claim could be made against wife for the proceeds she waived in the maintenance agreement; remanded to probate court to examine issue raised by wife that she and decedent entered into new agreement).  

(defendant filed motion to suppress evidence obtained by invalid search warrant; defendant owned malamute dog breeding kennel; police received complaints of possible cruelty and neglect; police first observed conditions of dog kennels from road and saw potential problems; police officer visited the defendant's property and defendant gave police officer tour of facility; officer observed deplorable conditions in kennel including dead dog; officer obtained warrant to seize 160 dogs for cruety violations; while seizing dogs, a large number of marijuana plants were discovered growing in house and on property; additional warrants issued to seize plants; court held initial warrant was valid because it was based on a citizen complaint and officer's legal observations; additional warrants were based on observations made while seizing dogs under valid warrant, suppression motion denied).

(legal malpractice claim against firm for diminished trademark by fruit farming corporation; firm filed summary judgment motion arguing claim was barred by one year statute of limitations; alleged malpractice was inclusion of plant varietal name in patent that affected trademark; court held that plaintiff was aware of issue by 2003; state statute tolls limitation period, however, until plaintiff sustained actual injury; court denied summary judgment because at a minimum a question of fact existed as to when the actual injury occurred and court agreed it was when a trademark action was instituted against the corporation and recoverable damages are limited to actual legal expenses in defense of the trademark; question of fact also existed as to whether firm continued to represent client on issue thereby tolling statute of limitation as well).

(case involves value of historic structure permanent facade easement donated to charity and corresponding charitable deduction; before and after appraisal utilized to value easement at $7.445 million; IRS allowed $1.15 million charitable deduction and assessed 40% penalty for gross misstatement; at Tax Court petitioner’s appraiser used replacement cost and income approach to value easement and determined easement value to be $10 million, and IRS determined easement to have no value; Tax Court utilized comparable sales method to value easement at $1.8 million; on further review by Fifth Circuit noted that Tax Court should have included impact of easement on associated building’s fair market value and whether penalty appropriate based on whether satisfied reasonable cause burden of proof; on remand, Tax Court determined that the easement value (and corresponding deduction overstated by more than 400% and that petitioner failed to establish basis for valuation or properly utilize comparable sale approach; gross valuation misstatement occurred; no reasonable cause exception applicable and accuracy-related penalty imposed).

(adult juice bar appealed decision of Tax Appeals Tribunal; bar contends admission and dance performance charges are state tax exempt because they are dramatic or musical arts performances; state imposes tax on any admission charges for entertainment establishments not meeting this exemption; plaintiff failed to prove its performances were choreographed performances entitled to the exemption; plaintiff’s expert unable to provide personal knowledge evidence of choreography of dances in private rooms; no error in tax appeals tribunal’s finding that public dances in club also failed to meet this test as expert’s opinion was based on conclusion of public dances were same as private dances of which expert stated she had no personal knowledge; court also held that decision was not irrational as pairs ice dancing was not by statute exempt, so “performances by women gyrating on a pole to music, however artistic or athletic their practiced moves are” did not qualify either; decision of tax tribunal upheld; dissent filed arguing court makes impermissible distinction between high-brow and low-brow dance performances and choreography in statute was meant to apply to all dance performances).

(petitioner denied Schedule C deductions for charitable contributions due to lack of evidence that such contributions were ordinary and necessary business expenses; petitioner also denied deductions for utility expenses associated with claimed business use of apartment due to lack of evidence as to business use; related mortgage interest deduction denied attributable to loan on home where petitioner worked and lived due to lack of evidence that mortgage interest at issue paid or even existed).

(debtors, sweet potato farmers borrowed funds from bank to plant sweet potato crops for 2007-2009 and executed promissory note granting bank security interest in crops and equipment; 2009 crop was complete failure resulting in debtors having inability to repay bank loan; bank discontinued lending agreement but did not foreclose on debtors’ assets; bank extended maturity date of loan twice; debtors planted and harvested 2010 crop with funds received from disaster payment, another corporation debtors owned, liquidation of IRAs and son’s college fund, and crop loan from another lender secured by lien on 2010 crop; debtors satisfied other lender’s lien, paid expenses and retained 2010 crop net proceeds of $410,347; debtors then filed Chapter 12 petition; bank claimed priority against buyer of 2010 crops, but buyer claimed that bank’s lacked security interest in 2010 crop due to language in financing statement; both parties moved for summary judgment; summary judgment denied for both parties – bank made whole via court order the debtors improperly retained net proceeds of 2010 crop and had to pay bank lien with proceeds; whether bank can prove that potatoes owned or grown by debtors that other party purchased for must be resolved by trial on matter, as well as issue of whether potatoes purchased violated bank’s security interest).

(lower court’s held that 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 vest until and unless there is production from the land, but a grant of non-participating mineral interest is devoid of all rights except the right to receive royalty and vests immediately; thus, reservation of "royalty interest" in deed violated rule against perpetuities; on further review, state Supreme Court affirmed lower court holding that deed language created a royalty interest (defendant failed to include in petition for review their claim that lower courts erred in finding that deed language created royalty, as opposed to mineral, interest – thus, issue not preserved for review); royalty interest held to be a reversionary interest not subject to rule against perpetuities; issue of whether a royalty interest created in transferee is a future interest that vests at production not squarely before court and not ruled upon; court, in dicta, said that USRAP did not apply because conveyance at issue before 7/1/92 effective date, but such comment incorrect because Kan. Stat. Ann. Sec. 59-3405(b) has retroactive effect and applies to pre-July 1, 1992 conveyances).

(court considers defendant’s motion to dismiss for abstention under doctrine established in Colorado River Water Conservation Dist. v. U.S., 424 U.S. 800 (1976); pending state court action regarding the administration of a family farm trust and allegations of a breach of fiduciary duty and legal effect of daughter’s changes to distributions in trust document while the benefactor was incapacitated; allegations also regarding propriety of distribution of federal estate taxes among beneficiaries; court held factors were in favor of abstention, but stayed proceedings rather than dismissed suit).

(district court entered summary judgment for insurance company holding plaintiff could not recover underinsurance benefits from an automobile insurance policy when a car struck the decedent’s tractor because there was no reasonable expectation of coverage; plaintiff appealed arguing policy language should control rather than reasonable expectations doctrine and the “owned, but not insured” exclusion did not bar recovery; on appeal, the court held that the district court erred in holding a lack of reasonable expectations precluded coverage because the policy language was not ambiguous; but summary judgment was applicable because the exclusion did apply and did bar recovery under the policy; decedent owned the tractor he was driving when he was injured; summary judgment affirmed). 

(appeal from termination of tenancy in family real estate; defendant daughter claimed she was promised one-half ownership interest in property before investing substantial resources in repairing and maintaining property; trial court found no evidence that plaintiff with sole ownership interest made any promise or agreement and defendant was evicted; on appeal, court concluded that it was likely plaintiff encouraged defendant’s belief in her ownership interest, but because no evidence of an agreement was presented, the result was unfair to defendant, but inescapable; trial court decision affirmed).

(case consolidated two estates with the same issue; husbands died leaving QTIP trusts to their wives to be taxed in the wives’ estates for federal tax purposes through tax deferral and marital deductions; no elections were made to trusts for state marital deduction or tax deferral; no such election or deduction existed under state law at the time of the husbands' deaths; federal law also changed during period between husbands’ deaths and wives’ deaths; wives’ estates received deficiency notices from the state regarding the assets remaining in the QTIP trust and wives appealed; court held estates not liable for state taxes on QTIP trust created pre-2005; QTIP is transferred by electing spouse and not surviving spouse, so state overstepped its bounds in interpreting statute by trying to tax wives’ estates by classifying QTIP trust as a “real” transfer (as required under statute) rather than a legally “fictional” transfer; in 2005 state (WA) adopted state estate tax applicable to all tangible property in WA in addition to intangible property irrespective of location; tax also applicable to property contained in QTIP trusts; in 2005 legislation, state did not distinguish between trusts established before or after effective date of legislation; consequently, state had no authority to tax property held in QTIP trust created before effective date of law). 

(plaintiff brought action under 42 U.S.C. § 1983 against county for alleged violations of her constitutional rights when the county denied her request to change the zoning of her parcels from agricultural to rural residential, which permits development outside the reach of public facilities; in an earlier state court action brought by the plaintiff due to the denial, a settlement was reached prior to trial in which the county agreed that the parcels should be rezoned because the previous denial had been that the parcels were too close to hog farms and at the time of the settlement, the hog farms were going to be closed; a hearing was held on the rezoning, but the request did not pass because less than a three-fourths majority voted in its favor; a year later the board granted the request, but the housing market (in 2008) had collapsed and the property was no longer worth more in the new classification; plaintiff brought suit in federal court; she alleged invidious discrimination and denial of equal protection because two other properties had been permitted to rezone, retaliation for exercising her first amendment right to bring a lawsuit; the district court granted summary judgment for the county and the plaintiff appealed; the appellate court affirmed summary judgment because there was no evidence of discrimination as the other parcels approved for zoning changes were located farther away from the hog confinement; the first amendment claim also failed because a suit regarding the value of personal property is not a public concern for which first amendment protections would apply; court held plaintiffs damage claim also failed because the housing collapse was not foreseeable by the county and is not liable for unforeseeable risks).

(farm rental lease dispute between landowner and farm business/tenants; lease required $2000 per month rent on land and farm house, but tenants paid only $1200 per month, which was accepted by landlord for one and a half years; landlord then filed three day notice to pay rent or vacate claiming delinquent rent of $800 per month since the inception of the lease; notice was sent to tenants doing business as farm business; tenants submitted $1200 rent in response, which was not accepted by landowners, but tenants remained on property; unlawful detainer filed by landowners; after bench trial, court held tenants current on rent until three day notice to quit presented and restored property to landowners with judgment for delinquent rent; court awarded tenants attorney fees; on appeal tenants argued trial court lacked jurisdiction because notice was defective; appellate court disagreed because notice was not premature or addressed to wrong party; court also held amount due on notice was subject of dispute, so amount claimed did not affect court’s jurisdiction; court did reverse attorney fees award to tenants because they were not parties to the contract (which was with farm business); attorney fees for appeal awarded to landowners as prevailing party on appeal).

(petitioner, web designer, not able to deduct wages paid with respect to repairs and lawn maintenance due to lack of substantiation that wages had actually been paid; auto expenses disallowed above IRS-prescribed rate due to lack of substantiation; other business deductions denied for same reason).

(plaintiffs purchased a house from Chapter 7 debtors; sellers disclosure provided as well as house inspection; plaintiffs later had drainage problems and plaintiffs claim debtors knew of the problem but failed to disclose; plaintiffs claim fraud in the house sale, for which damages would not be dischargeable in bankruptcy; court held no evidence presented of any knowledge of or intent to commit fraud in completing the seller disclosure form; plaintiffs also sought rescission of the sales contract; court held plaintiffs failed to prove damages and rescission would deliver a windfall to plaintiffs; based on lack of proof of fraud or damages, court dismissed plaintiffs other claims as well).

(bank brought summary judgment motion in Chapter 11 bankruptcy claiming entitlement to funds paid to another creditor; the security agreement securing a loan from the bank encumbered the debtor’s farm products including livestock; the bank filed a financing statement disclosing its interests; the bank alleges it is entitled to the proceeds of 192 steers in the possession of the court under state UCC; trustee and other creditors disagree; court held Food Security Act (FSA) preempts UCC codes on farm products and requires notice of security interest to buyers;  bank argued FSA did not apply because buyer was not buyer in ordinary course because it purchased steers with a dishonored check; court held whether there was a buyer in ordinary course was question of fact and law, so summary judgment denied).

(petitioner bought yacht for his charter fishing company operating in the Gulf Opportunity Zone area in Alabama; petitioner took delivery of yacht in Florida (outside of the GO Zone) and, due to various problems, it took almost a year to get the yacht to petitioner’s business site in AL; yacht chartered for 43 days in non-GO Zone waters while enroute to AL and remained available for charter for 74 days during tax year once in GO Zone; petitioner claimed 50 percent bonus depreciation  (for property purchased, placed in service and used in a trade or business substantially all of which is conducted in Go Zone) on basis that use outside of GO Zone was at time when yacht not in business use; IRS disagreed citing Notice 2006-77 which specified that “substantially all” meant 80 percent or more of use had to be in Go Zone; while court upheld IRS position on basis that 43 days of charter outside of GO Zone of 117 total constituted substantial non-GO Zone use, court stated that IRS Notices do not have force of law and are not entitled to Chevron deference). 

(petitioner started career selling insurance for local bank in Harvey, ND, but bought out the bank’s C corporation insurance operation over a period of time; bank ultimately buys-out petitioner and enters into six-year employment agreement with petitioner; IRS claims that transaction is disguised capital gain taxable at corporate rates and generates taxable dividends to petitioner; bank’s insurance agency dropped its name in favor insurance agency in petitioner’s name because of greater name recognition of petitioner; petitioner served as manager for six-year term of employment agreement; bank reported petitioner’s compensation as FICA wages; petitioner rewrote existing policies, accepted new applications, supervised and trained employees, attended bank training sessions, negotiated commissions and did bookkeeping for agency; petitioner’s workload increased substantially; at end of term, bank asked petitioner to continue to manage on year-to-year basis which petitioner agreed to do; petitioner trained replacement and retired; court rejected IRS position noting that there is no salable goodwill where the business of a corporation depends on the personal relationships of a key individual (Martin Ice Cream Co. v. Comr., 110 T.C. 189 (1998)); based on facts of case, court noted that insurance business was personal and petitioner had unique ability to keep large insurance companies interested in a small insurance market; petitioner did not have agreement with his agency at time of its sale to bar him from taking his clients and skills elsewhere; IRS did not denote what other intangible assets were purchased in the name of petitioner’s agency; minor unsubstantiated deductions with respect to not from petitioner’s wholly-owned corporation).

(motion to lift automatic stay for an offset of funds filed against Chapter 12 debtor by Farm Service Agency (FSA) for pre-petition claim arising from farm loans; debtor had enrolled in Direct and Countercyclical Program in 2008, under which farmland was entitled to funds through 2012; to participate, farmers must file an application with FSA each year and control the land for the crop year; debtor owns 10% of land he controls and rents the other 90%; all payments of rents and lease signing was done well after filing Chapter 12; as far as for land owned, the fact that an application was required to be made each year did not characterize the obligation to pay by FSA created in 2008 as postpetition; as far as the leased land, the obligation was created when the leases were signed, which was postpetition, therefore the debt arose postpetition; court held FSA entitled to offset claim against debtor with 10% of funds agency owes for the land debtor owned, but not entitled to offset its claims with payments on leased land).

(father-son farming operation determined to be partnership for tax purposes and not a joint venture between two individual proprietorships; no formal written partnership agreement; while parties shared farm income equally, most expenses allocated to father resulting in net losses on father's personal return even though father had high non-farm income from CPA practice; no partnership return filed; farm bank account created; insurance policy purchased for farming operation; farming operation registered with state as a partnership; accuracy-related penalty upheld against father; partnership finding resulted in expenses being reported equally to each party and in two of three years at issue, result was income to both father and son rather than income to son and loss to father; case affirmed on appeal, and appellate court determined that notice of deficiency satisfied I.R.C. Sec. 7522 because it clearly stated that basis for deficiency was IRS position that business had operated as partnership).

(appeal of partial disqualification of property from farm use special property tax assessment; one half of property was cleared and all but portion housing honeybees was disqualified because allowed to lie idle; other half, which was forested qualified as farm use due to productive trees; plaintiff contended cleared area provided flowers, clover, and other desirable plants and was honeybee forage area as testimony showed bees foraged for miles; plaintiff’s daughter also kept chickens, goats, and llamas on property but provided no evidence of making no profit from the animals; court held daughter’s animals do not constitute farm use because raised for personal consumption and evidence insufficient to conclude bees needs prevented active farming on area and alfalfa or other crops could be grown on land, so farm use assessment denied).

(S corporation shareholders executed buy-sell agreement that restricted transfer of stock shares; buy-sell agreement subsequently amended; Treas. Reg. Sec. 1,1361-1(l)(2)(iii)(A) specifies that buy-sell agreements are to be disregarded in determining whether corporation's outstanding shares of stock confer identical distribution and liquidation rights unless the principal purpose of the agreement is to circumvent the one class of stock requirement and the agreement is entered into at significantly less or more than FMV of stock; no second class of stock created under facts presented). 

(IRS points out that homosexual “marriage” is not a legitimate relationship for federal tax purposes, pointing out that homosexual partners cannot file a married filing separately or joint return; likewise, IRS points out that a taxpayer cannot use the head-of-household filing status if the taxpayer’s only dependent is their homosexual partner; also, only one partner in a homosexual relationship can claim a qualifying child as a dependent with the deduction belonging to the partner with whom the child resides for the longer period of time during the tax year; because federal law does not recognize homosexual “marriage”, one homosexual partner can itemize deductions and the other can claim a standard deduction if it is desired; other provisions of federal tax law applicable to spouses inapplicable to homosexuals). 

(IRS provides a list of conditions that will not bar petitioner who is developing wind-powered generating facility from treating wind power generators as being "placed in service" for purposes of I.R.C. Secs. 167 and 168; such conditions include unavailability of transmitter line if transmitter not fully constructed before stated date, operations of subsidiary company's project at maximum level of stated percentage of full-rated capacity until completion of transmitter line). 

(defendant stipulated restitution amount for criminal fraud in loan application process; after supervised release ended defendant sought modification of restitution amount; court denied review because amount stipulated and judgment was unappealed 10-year-old judgment).

(petitioner worked for investment business that entered into business relationship with another business to share customers and provide financing in return for web development work to investment business; petitioner ultimately spent $24,000 on used car that other business needed and co-signed credit card debt exceeding $35,000 for other business; by end of 2007, petitioner still owed $21,000 on car note and entered into agreement with other business that he would be paid $2,000 and that petitioner would forgive the $19,000 balance and be released as a co-signer; petitioner claimed $19,000 deduction on 2007 return; IRS denied deduction on basis that debt not worthless in 2007; court upheld IRS position because note not worthless in 2007 because it was forgiven not due to inability to pay but because made in exchange for petitioner's voluntary release as co-signer).

(LLC had rights in transfer agreement involving building complex and assigned those rights to qualified intermediary; assignment constitutes transfer of relinquished property under I.R.C. Sec. 1031; immaterial that building's fair market value less than principal of outstanding debt (nonrecourse).

(following trial on confirmation of Chapter 12 debtor’s second amended plan, court adopted creditor’s valuation prepared by certified appraiser and held creditor well over-secured, so attorney fees allowed; court also held creditor’s loans were short term loans secured by personal property, so debtor’s proposed 20-year repayment terms not appropriate; debtor’s financial projections also held to be unrealistic due to lack of consideration of transportation costs, veterinarian and training costs, and other expected costs for hay sales and horse operation; court sustained objections to plan and ordered debtors to submit amended plan).

(plaintiff was working for defendant when he became ill; after driving defendant’s tractor back to farm, he went home and was taken to the hospital where it was determined he had a heart attack and his heart was damaged; plaintiff sued his employer and claimed entitlement to bring civil action for failing to secure workers compensation benefits and negligence; defendant moved for summary judgment and plaintiff sought to amend petition to allege negligence in failing to secure workers compensation as required by statute; trial court granted summary judgment and denied leave to amend petition; on appeal, court held workers compensation claim could not be decided in district court as exclusive jurisdiction resided with workers compensation; sole remedy for failing to have workers compensation is employee’s ability to bring negligence claim; court also held no negligence existed because plaintiff’s heart attack was not foreseeable when he merely mentioned to defendants he did not feel well, so no duty existed to render aid; court also upheld denial of motion to amend because it was untimely and futile).

(summary judgment granted to plaintiff in patent infringement case brought against defendant farmer upon discovery of plaintiff's patented technology in progeny seeds; defendant had executed plaintiff's technology agreement restricting use of seed, no exemption for research or saving seed covered under general utility patent).

(mere non-use of easement insufficient to terminate easement; owner erected fence in middle of driveway easement, constructed barn at end of easement, never spread gravel to indicate driveway; neighbor planted trees and mowed grass up to fence of easement for period of more than 15 years; court held fence and barn construction established owners abandonment of easement and neighbor’s acquired their portion of easement by adverse possession through continued use of their side of easement; affirmed on appeal).