Annotations 01/2012

(under state (TX) law, professional real estate inspector qualifies for professional services exemption to liability under the TX Deceptive Trade Practices Act; exception inapplicable because inspection report addressing status of roof of inspected home not representations of fact; case remanded on issue of whether trial court determination supported on theory of negligent misrepresentation). 

(decedent lived in Illinois at time of death, but also owned farmland and personal property in Indiana; with help of friend decedent drafted document termed his “Will” and made four copies; decedent signed all four copies and included his Army Serial Number, but did not notarize any of them; decedent had some of the copies witnessed and mailed the signed copies to named beneficiaries; unwitnessed copy put behind safe in farmhouse in Indiana; decedent died two months after executing document; decedent deemed to have died intestate under Illinois law due to failure to meet requirements for self-proving will and Illinois real and personal property distributed under Illinois intestate succession law; Indiana court not precluded by doctrines of res judicata or full faith and credit from deciding same issue and probating decedent’s will; sufficient proof submitted to permit decedent’s will to be admitted to probate in Indiana; Indiana follows general rule that determination of validity or invalidity of will by court of testator’s domicile not conclusive on same question as it relates to real estate located in another state; disposition of realty, whether by deed, will or otherwise governed by law of situs; Illinois court’s denial of decedent’s will to probate of no effect on admission of will to probate in Indiana as relates to disposition of Indiana real estate). 

(plaintiff claims it was a secured party and substantially complied with § 1631(e) of Food Security Act (FSA) (a.k.a. “The Farm Products Rule”) by providing notice of its security interest in farm products; the notice sent to the defendant left blank the space for a description of the property or county where the farm products that were claimed as collateral may be located; question for the Court was whether an Illinois state case holding that substantial compliance with notice under the UCC was sufficient or whether Illinois should follow the holding of Farm Credit Midsouth, PCA v. Farm Fresh Catfish Co., 371 F3d 450 (8th Cir. 2004), which held that FSA requires strict compliance; the court held that the FSA requires strict compliance with notice given under direct notice exception to the Act; the plaintiff failed to clearly state the location of the farm products in its direct notice to the defendant, so plaintiff did not hold a secured interest in the property; dissent stated that court’s opinion adopting a strict compliance standard under Farm Credit Midsouth leads to an absurd and illogical interpretation of Farm Products Rule because a party can make an error in identifying the secured party, but all parties will be deemed to have constructive notice of the claim, while a creditor can be unsecure where direct notice is given but the notice contains any minor error  (even if the party has enough sufficient knowledge of the claim.))

(student loan debt not dischargeable because debtor failed to satisfy undue hardship test; unemployment not likely to continue for various reasons; medical condition did not impair ability to work; debtor did not have total incapacity to pay debts in the future).

(petitioner not entitled to business expense deductions for expenses associated with flight lessons; accuracy-related penalty applied; petitioner provided no evidence that it was normal, usual or customary for commercial realtors to take flight lessons).

(petitioner acquired tract in late 2003 in fee simple and conveyed conservation easement to qualified entity the next day; conservation easement deeds contained clause that easement could be terminated by mutual agreement of parties; gift to entity did not create charitable trust and remote possibility that easement would be terminated immaterial; transfer to entity is a restricted gift for preservation and protection of conservation of donated property; cy pres doctrine does not bar conservation easement in event it is not possible to carry out purpose of easement; conservation easement could be terminated by mutual agreement and easement fails to comply with perpetuity requirement of Treas. Reg. Sec. 1.170A-14(g)).

(petitioner engaged in mortgage banking business, but not entitled to deductions for mileage, car lease and fuel due to lack of substantiation; same result for petitioner's advertising business - not a going concern during tax year at issue (no TIN issued and no gross receipts or sales); petitioner's claim that he lost records in fire not convincing). 

(plaintiff, a non-resident of Pennsylvania was subject to PA state income tax on income plaintiff received from foreclosure of commercial property; plaintiff was partner of partnership and partnership property disposed of as result of foreclosure of commercial property in the partnership; plaintiff responsible for tax on plaintiff's share of partnership's tax liability on gain which was triggered upon foreclosure of property in the partnership; plaintiff could not offset gain from sale or disposition of partnership property with partnership NOL; plaintiff's loss on liquidation not PA-sourced income and, as such, could not offset plaintiff's PA income tax liability). 

(involuntary Chapter 7 petition filed against debtor and debtor claimed that petition failed to contain at least three entities holding separate claims as required by 11 U.S.C. Sec. 303(b)(1); petitioning creditors were married couple and couple's daughter - debtor's ex-wife; liability arose out of $12,000 loan from ex-wife's parents to debtor and ex-wife evidenced by promissory note payable to "husband and wife"; creditors held single claim; only two petitioning creditors existed and involuntary petition fails).

Annotation(Hawaii - for estates of decedents dying on or after Jan. 25, 2012, state law exemption mirrors federal exemption; Indiana - state inheritance tax repealed for deaths after 2021, and exemption set at $2 million for estates of decedents dying on or after Jan. 1, 2012 (up from $402,000 for deaths in 2011); Illinois - sets state law exemption at $3.5 million, but does not allow for portability of unused exemption at death of first spouse, and eliminates gift tax; Maine - exemption for 2012 set at $1 million, and will be $2 million for decedents dying on or after Jan. 1, 2013; Ohio - state estate tax repealed effective for decedents dying on or after Jan. 1, 2013 (exemption set at $338,333 for deaths in 2012); Oregon - state inheritance tax changed to an estate tax with an exemption of $1 million effective for deaths on or after Jan. 1, 2012; Tennessee - legislation phases out the estate tax over four years and repeals the gift tax retroactive for gifts made on or after Jan. 1, 2012).