Annotations 12/2012

(boat slips at marina leased by REIT are real estate assets in accordance with I.R.C. Sec. 856(c)(4); rental income from boat slips qualified as rents from real estate under I.R.C. Sec. 856(c)(2) and 856(c)(3); such assets count toward requirement that 75 percent of value of REIT's total assets represented by real estate, cash and government securities).

(appellate court held that deviations by U.S. Army Corps of Engineers from operating plan for dam that caused increased flooding downstream to wildlife management area that plaintiff owned were only temporary and not “inevitably recurring” and did not constitute taking of flowage easement; Fed. Cir. opinion reversed Court of Federal Claims opinion holding that action constituted taking of temporary flowage easement over plaintiff’s property – damages of $5,778,758 awarded; on further review, U.S. Supreme Court unanimously reversed, holding that "recurrent floodings, even if of finite duration, are not categorically exempt from Takings Clause liability").

(plaintiff brought suit alleging landowner’s levees constituted a nuisance and violated drainage laws and prescriptive flood easement; trial court held for landowner and plaintiff appealed; on appeal, court reversed; appellate court held landowner’s action in building levees without a permit and without regard to the adverse impact on neighbors was unreasonable and created a nuisance; court also held plaintiff proved a prescriptive easement for flooding; court also held plaintiff presented adequate proof of damages through modeling and expert testimony and that injunctive relief was proper; court remanded case to trial court for a determination of damages).

(petitioner, an international oil pipeline consultant, charged with criminal tax fraud and pled guilty; petitioner also challenged limitations to charitable deduction for artwork donated to charity; court determined that deductions were properly limited by IRS in accordance with I.R.C. Sec. 170(e)(1)(A) to petitioner's basis in the artwork because petitioner did not hold the artwork for more than a year, and signed purchase agreement which petitioner entered into more than a year before donation was merely option to buy and not a contract for purchase because no title passed and artwork not delivered at time agreement entered into and petitioner not obligated to ultimately make purchase under agreement).

(petitioner could not show existence of claimed NOL simply by filing return with statement setting forth amount of NOL deduction claimed and schedule setting forth NOL computation; court noted that NOL must be used in the two preceding years prior to carryforward year unless an election is made to waive carryback, and that petitioner didn't do either one; taxpayer failed to carry burden of proof of establishing existence of NOL). 

(case involves plaintiff's motion to appoint counsel for himself and two estates and a trust; while plaintiff can proceed pro se on his own behalf, he cannot do so when an estate or trust has beneficiaries other than the plaintiff because doing so would constitute the unauthorized practice of law; court cannot appoint counsel in civil cases; plaintiff given until Jan. 29, 2013 to retain counsel).

(plaintiff visited city park in which city kept buffalo herd; signage placed warning visitors to stay back from animals; plaintiff dropped his glasses while he was throwing away a pop can in a trash barrel that was next to the buffaloes’ fence; buffalo head-butted plaintiff through the fence; plaintiff sued the city for his injuries; city filed summary judgment motion claiming municipal recreational use immunity ; motion denied and city appealed; on appeal, court held because location of trash barrel was out of position and next to fence question of fact existed as to whether position of trash barrel by fence failed to notify plaintiff of dangerous condition of buffalo; summary judgment properly denied).

(petitioner's property destroyed in fire and petitioner received damage award as part of settlement of lawsuit; petitioner claimed that rash received from ash as result of fire and associated breathing problems and stress occurred; no doctor visited for treatment of alleged conditions; court determined that settlement intended to compensate taxpayer for property damage and income loss, and was not excludible under I.R.C. Sec. 104).

(hobby loss case; petitioner was experienced auto racer who was employed as telecommunications specialist; petitioner started motorsports company and lost enormous sums over 11-year period, finally showing profit in final year; petitioner kept meticulous records to satisfy recordkeeping requirements rather than assist in making profit; no testimony that CPA consulted to render financial advice; four of nine factors favored IRS, two favored taxpayer and three were neutral; court emphasized significant losses over long period of time and petitioner's failure to reduce expenses or increase income; losses from autoracing activity disallowed). 

(petitioner and wife transferred approximately $250,000 to their corporation over three-year period, and used personal credit cards for both personal and business purchases; corporation paid credit card expense of almost $900,000; no records separating out business from personal expenses; court disallowed corporate deduction for personal expenses and such amounts included in couple's gross income; transfers to corporation constituted capital contributions rather than loans because no debtor-creditor relationship intended, and payment of personal expenses by corporation characterized as dividends; accuracy-related penalty imposed).