Annotations 03/2012

(debtors, married couple, opened two I.R.C. §529 Education Savings Accounts for benefit of husband’s two children from prior marriage and filed Chapter 7 petition less than five months later; debtor moved for order directing turnover of funds in accounts; accounts held to be property of bankruptcy estate because wife owns accounts and contributions made within year preceding petition date; no state or federal exemption applies; while Bankruptcy Code provides special treatment for domestic support obligations, such treatment does not include earmarking pre-petition assets for post-petition obligations; accounts held to be non-exempt property of bankruptcy estate; see also In re Bourguignon, 416 B.R. 745 (Bankr. D. Idaho 2009)).

(state (MA) law prohibiting permanent residents from obtaining firearms license violates Second Amendment). 

(plaintiffs had no standing to challenge county decision to vacate portion of roadway providing access to cemetery in which daughter buried; county had not maintained road for decades prior to vacating road; plaintiffs not abutting landowners to vacated roadway; plaintiffs suffered no special injury under law; and alternative routes to access cemetery available to plaintiffs).

(plaintiffs had no standing to challenge county decision to vacate portion of roadway providing access to cemetery in which daughter buried; county had not maintained road for decades prior to vacating road; plaintiffs not abutting landowners to vacated roadway; plaintiffs suffered no special injury under law; and alternative routes to access cemetery available to plaintiffs).

(state (CO) law subjecting out-of-state retailers to sales and use notification and reporting requirements (Colo. Rev. Stat. §39-21-112(3.5)) violated Commerce Clause; permanent injunction issued; court noted that Quill Corp. v. North Dakota, 504 U.S. 298 (1992) prohibits states from imposing the same obligations on out-of-state retailers with no physical presence in the taxing jurisdiction); defendant failed to meet “very high burden of proof under the strict scrutiny standard” to overcome facial invalidity of the Colorado law”). 

(court states that it will reconsider it prior opinion concerning the scope of the Open Beaches Act (OBA); in prior opinion, court limited reach of OBA by finding that doctrine of avulsion operated to limit or eliminate public beach assessments after storm events – state (TX) rolling easement law does not cross property lines with result that public access to dry-sand beach under OBA lasts until original parcel over which easement established is lost to erosion; doctrine of custom inapplicable to establish public easement over beachfront property irrespective of beach movement, and doctrine of avulsion applicable to fix boundaries for public dry-sand beach easement). 

(plaintiff appealed denial of  request by municipality for building permit for fence; plaintiff argued property line of front yard began in middle of street and ordinance ambiguous; court affirmed denial of permit, finding ordinance clearly and unambiguously did not contemplate inclusion of street in front yard's measurement).

(quiet title action to settle dispute regarding land conveyed to two different parties; first grantee did not record her deed after property conveyance until 1986; second grantees from same grantor recorded their deed in 1984; trial court jury found second grantee had actual notice of conveyance to first grantee; subsequent conveyances by second grantees to related parties were also found to have had notice of first grantee's interest; first grantee deemed owner of property; second grantee appealed only the legal conclusion from the jury's factual findings; appellate court clarified Maine's statute as "race-notice", meaning subsequent grantees who record their deed first can beat earlier grantees so long as the subsequent grantees had no actual notice of the earlier grantee's interest; based on jury findings of fact establishing second grantees all had notice of first grantee's interest prior to first grantee's recordation of property deed, court affirmed and vested title in first grantee).

(decedent, president of lumber company who had invested heavily in bank and stock appreciated highly in value, transferred assets to FLP; transfer not bona fide sale, but done primarily for tax reasons and no legitimate non-tax reason existed for transfers, thus, included in gross estate under I.R.C. Sec. 2036(a); decedent retained possession and enjoyment of assets transferred to partnership via implied agreement; commingling of personal and partnership assets present; payment of premiums on life insurance policies for benefit of children and grandchildren via Crummey-style trusts were gifts of present interests eligible for annual exclusion even though payments were paid directly to the insurance company instead of the grantor transferring the premium payments to the trust and the trust remitting the proceeds to the insurance company with the trustee providing notice to the beneficiaries of their withdrawal rights simultaneous with the contributions of the premium amounts to the trust; to have present interest gift treatment, court noted that key question is whether beneficiary had "legal right to demand" withdrawal; under trust terms, beneficiaries had absolute right and power to demand withdrawals after each direct or indirect transfer to the trust; thus, indirect funding irrelevant to demand right; lack of notice did not affect "legal right to demand" withdrawals, and was not a problem in Crummey case; IRS has not conceded issue, and it remains important to properly contribute premium amounts to trust and notice of withdrawal right be given to beneficiaries; on reconsideration, estate claimed that under decedent's will, assets pulled back into estate via I.R.C. §2036(a) passed to surviving spouse and because surviving spouse had right to pecuniary marital bequest that allowed surviving spouse to receive assets equal to amount necessary to reduce estate tax to zero, marital deduction resulted in no estate tax deficiency; court held that marital deduction not available for FLP interest or FLP assets gifted during decedent's lifetime; Treas. Reg. §20-2056(c)-2(a) specifies that property interest passes to surviving spouse only if it passes to spouse as beneficial owner, but decedent’s assets first transferred to FLP and then decedent gifted FLP interests to persons other than surviving spouse; consequently, property passing to person other than surviving spouse cannot also be considered as passing to surviving spouse for purposes of marital deduction; value of transferred assets in decedent’s estate for tax purposes, but are owned by FLP or non-spousal partners and would not be includible in surviving spouse’s estate).

(case involves estate of J. Howard Marshall, II who was married for the last 14 months of his life to Anna Nicole Smith (Vicki Lynn Marshall); J. Howard had been married to Eleanor Stevens from 1931-1961 and, as part of divorce proceedings, certain shares of stock were transferred to three CRATs and a GRIT with Stevens named income beneficiary of the GRIT; J. Howard later sold the stock back to the corporation at a value less than market value; sale constituted gift to other shareholder and GRIT; GRIT had terminated after 10 years with property passing to  E. Pierce Marshall; J. Howard died shortly after sale of stock at less than market value; because GRIT had terminated, trust not in existence to pay resulting gift tax assessed against shareholders; issue involved liability for gift tax; court determined that income beneficiary rather than remainder responsible for payment of tax because income beneficiary treated as donor and benefited from increase in income distributions from trust; at time of gift donor (J. Howard's estate) was not going to pay gift tax, so gift tax liability of trust corpus). 

(petitioners, married couple, claimed deductions for vehicle, meals, entertainment and home office expenses alleged to be related to husband’s construction business; no evidence offered to substantiate claimed amounts; petitioners failed to establish that they didn’t understand communications from IRS in English).

(decedent was IRA owner with trustee of revocable trust named as remainder beneficiary; under terms of trust, IRA passed to marital portion over which surviving spouse had right to income and principal distribution; IRA treated as having passed directly to surviving spouse and, as such, IRA funds could be rolled into IRA in surviving spouse’s name without inclusion in surviving spouse’s income). 

(plaintiffs owned farm and sought to start composting business on their property; citizens objected and formed organization to object; plaintiffs sued government actors and private citizens and organized non-profit; suit made claims in violation of 42 U.S.C. § 1983, 42 U.S.C. § 1985(3), which prohibits conspiracies to violate constitutional rights, and 42 U.S.C. § 1986, which provides a cause of action against individuals who knew about and had the power to stop a § 1985 conspiracy, but failed to do so; claims for defamation also made based on statements in objecting to composting business; government actors previously dismissed; private citizens moved to dismiss remaining claims; court granted dismissal of § 1983 claim and defamation claims based on Noerr–Pennington immunity, which allows private citizens to petition government officials to take actions;  § 1985 and § 1986 claims dismissed because plaintiffs failed to plead  racial or class-based animus underlying conspirators' actions as required for recovery).

(married couple gifted membership units in LLC to children and grandchildren; transfers made in accordance with dollar value of gifts and were determined by a fraction (numerator was state dollar amount and denominator was value of entire company as determined by IRS or court); IRS claimed gifts were of fixed fractional interests in LLC and, as a result, LLC unit value understated; court determined that defined value clause reallocated LLC membership units among parties in conformance with formula in which unit value as of transfer date was "unknown constant"; Proctor (142 F.2d 824 (4th Cir. 1944) not controlling; McCord (5th Cir.), Christiansen (8th Cir.) andPetter (9th Cir.) controlling, each of which involved use of a defined value clause providing that any amount later determined to exceed the stated gift value passed to charity; case appealable to 10th Cir. and notice of appeal filed in the Tax Court on August 29, 2012).

(parents established irrevocable trust for children; under trust terms, trustee to divide trust into equal shares for each child and trustee had discretion to distribute income to one child (son) and his descendants; son also given power of appointment exercisable during son's lifetime to appoint remainder of trust to any "issue" of parents including himself; to extent power not exercised, remainder remained in trust; son's power did not constitute general power of appointment). 

(lessor brought declaratory judgment to declare oil and gas lease terminated because prior lessee failed to maintain production “in paying quantities” when loss of $40 occurred one year in 1950s; suit filed after new lessee made plans to drill additional wells on property; appellate court relying on Young v. Forest Oil Co., 45 A. 121 (Pa. 1899), held that when production on well has been marginal or sporadic, such that for some period profits did not exceed operating costs, the phrase “in paying quantities” must be construed with reference to operator's good faith judgment; lower court judgment affirmed on consideration of operator's good faith judgment and conclusion oil and gas lease at issue produced in paying quantities; dissent disagreed with court’s interpretation of Young and called for two-part test for determining paying quantities: profits must exceed operating expenses and if profits exceed operating expenses, then lessee's good faith judgment is considered).

(Chapter 11 case in which debtor had interest in I.R.C. Sec. 401k retirement plan and claimed plan as exempt; case converted to Chapter 7; plan funds rolled over into IRA and then debtor withdrew funds after debtor turned 59 and 1/2; trustee claimed that IRA not scheduled or disclosed to court and is non-exempt; trustee requested turnover of withdrawn amounts; debtor claimed that 401(k) funds were ERISA qualified and claimed as exempt in Debtor's original schedules and that funds rolled over into IRA and continue to be exempt; record showed that at petition date funds frozen in I.R.C. Sec. 401(k) plan and was listed on original exemption schedules; lack of evidence that funds came from other than the plan; no penalty on withdrawals).

(as a result of failure of MF Global, taxpayers that hedged through MF Global may have received forms 1099 late; such late 1099s posed particular problem for farmers filing by March 1 without need to pay estimated tax; news release notes that IRS forgiving late penalties for affected farmers; IRS specifies that procedure to receiving waiver of estimated tax penalty is to complete Form 2210-F and attach short statement to Form stating that taxpayer received late Form 1099 from MF Global and write at top of Form “MF Global; electronic submission not possible; if return already filed and penalty assessed, IRS should be contacted and relief potential identified). 

(Chapter 7 case involving debtors with primarily credit card debt and mortgage; debtors had income above median income level for debtors’ household size; trustee moved to dismiss case on basis that debtors’ adjusted monthly income was high enough that made it presumptively abusive for debtors to continue under Chapter 7 rather than repaying debts in context of Chapter 13; debtors claimed that “means test” (11 U.S.C. §707(b)) which limited them to deduction not to exceed $1,775 annually as school expense per child violated First Amendment right to send their children to religious school and barred them from receiving a discharge; means test facially neutral and does not bar debtors from practicing their religion; government has compelling interest in ensuring fair and efficient application of Bankruptcy Code; debtors’ attempt to use Bankruptcy Code to subsidize private school expenses runs counter to government’s compelling interest; debtors’ personal financial situation was cause for debtors not being able to send children to religious school). 

(associate attorneys in law firm were employees rather than independent contractors; degree and extent of control key issue; no mention of whether earning passed through to attorneys on K-1 such that Medicare tax avoided).

(petitioner was real estate professional who owned 14 single-family homes in Columbus, Ohio, but lived in Dayton, Ohio;  petitioner traveled between homes and showed them to prospective tenants, handling complaints, working with contractors and handling paperwork with respect to homes; petitioner claimed time driving between Dayton and Columbus toward 750-hour test; IRS claimed that driving time not part of real estate activity, but is commuting; losses limited to $3,000 annually; petitioner made no mention of whether office in the home existed that was used exclusively for the rental activities; petitioner make I.R.C. §7430(c)(4)(E) qualified offer and doesn’t receive response from IRS; petitioner raises point concerning existence of home office and that it was mentioned from the beginning of the litigation; at time of petition, petitioner had not mentioned office in the home existed; court determined that “substantial justification” of IRS position is measure at petitioner date, and home office not mentioned by petitioner at that time and IRS under no obligation to inquire about existence of home office; IRS position upheld as reasonable and petitioner’s attorney fees denied). 

(declaratory judgment action brought by trustee for guidance on disbursement of equipment sale and crop insurance proceeds in Chapter 7 bankruptcy and avoidance of bank’s security interest due to errors in agreement; Agricultural Security Agreement for loan by bank failed to correctly identify date value was given for first loan; no dispute value provided so all requirements of enforceability satisfied because mistake in description of secured debt does not render otherwise valid security agreement unenforceable; no allegations of being misled by incorrect representation in suit; bank’s later loan not secured because bank failed to include future advances or dragnet clause in security agreement; court agreed with Fifth Circuit decision (In re Cook, 169 F.3d 271 (5th Cir. 1999)) that Federal Crop Insurance Act pre-empts UCC Article 9, which means exclusive method for creditor to obtain lien in undisbursed proceeds is through FCIA authorized assignment process).

(decedent took out four insurance policies naming wife as beneficiary along with couple’s minor children; marriage dissolved in 2004 and wife received child support and agreement that decedent would maintain insurance policy to cover child support obligation; wife also received spousal maintenance payments and decedent required to maintain $500,000 insurance policy to protect former spouse's interest in spousal maintenance payments; at hearing court ordered decedent to maintain policy with $2.495 million death benefit for former spouse; upon death, former wife received $2.495 million policy proceeds; estate's tax liability (state and federal) was $970,000 and estate did not have sufficient liquid funds to pay tax; Form 706 included $2.495 insurance policy proceeds and then claimed offsetting deduction as debt of estate; court held that policy proceeds includible in estate pursuant to I.R.C. Sec. 2042, but because proceeds payable to wife by court ordered settlement agreement it was paid to spouse for full and adequate consideration under I.R.C. Sec. 2516 and Sec. 2053(c)(1)(A); interest paid on former spouse's loan to estate also deductible).

(CWA does not preclude pre-enforcement judicial review of EPA administrative compliance orders; such preclusion would violate due process; plaintiff had filled-in approximately one-half acre of property with dirt and rock in preparation to build a house, but EPA issued a compliance order alleging that parcel was wetland subject to CWA permit requirements; plaintiff sought hearing with EPA to challenge finding, but hearing not granted and defendant continued to assert jurisdiction; plaintiff then sued in federal district court seeking injunctive and declaratory relief, but trial court granted defendant's motion to dismiss for lack of subject matter jurisdiction because, according to court, CWA precludes judicial review of compliance orders before EPA starts enforcement action; case affirmed on appeal; U.S. Supreme Court reversed, noting that compliance order constitutes "final agency action" under the Administrative Procedure Act, and owners did not have adequate remedy at law).

(employee of extermination company that offered dog-sniffing bed-bug detection services fired employee because he was moonlighting; company filed suit to recover bed-bug sniffing dog in possession of employee and enforce non-compete agreement; company filed Motion for Preliminary Injunction; in ruling on Motion, court found question of fact regarding ownership of dog, so motion denied regarding recovery of dog; court granted injunction regarding enforcement of non-compete agreement with exception of New York City due to size of market (most “bed-bug infested” city in 2011) and single inspection in city during term of employment).

(petitioners’ S corporation restaurant business sustained losses for multiple years and didn’t deduct loss in year in which basis existed to allow deduction, but rather reported income in like amount and claimed income amount added to basis; court determined that reporting S corporation income that wasn’t actually earned does not increase basis under I.R.C. §1367; no capital contributions made in year in which stock basis increase claimed; no upward adjustment to basis for amounts incorrectly reported as pass-through income which doesn’t correspond to shareholder’s actual pro-rata share of such income; basis reduced even if shareholder does not actually claim pass-through losses on return; petitioners could not deduct NOL in year with lack of evidence showing correct computation of income/NOLs in prior years - issue first raised after trial).

(petitioner ineligible for S corporation status because its shareholder was a Roth IRA, an ineligible shareholder; petitioner taxable as C corporation for tax year at issue; ownership of custodial IRA and Roth IRA could not be attributed to shareholder for purposes of S corporation eligibility; S corporation status terminated at time custodial IRA acquired corporate stock).

(lawsuit re-filed against oil companies for release of by-products that allegedly led to "global warming," which plaintiffs claimed produced conditions that formed Hurricane Katrina; previous suit dismissed by district court, Court of Appeals panel overturned district court dismissal, but review by court en banc could not occur due to lack of quorum; appellate decision lawfully vacated before loss of quorum; motion to dismiss present suit granted by district court based on res judicata and collateral estoppel of district court opinion in first lawsuit; as a precaution court also dismissed for lack of standing, presentation of non-justiciable political question claims; pre-emption of state law claims by federal law; statute of limitations, and failure to state a claim for relief; plaintiffs' claims completely dismissed).

(appeal from criminal conviction as repeat offender of driving without license and driving without motor vehicle insurance policy; court found no merit in defendant’s stated defense that he was not subject to the laws of the state because he is a resident of the "Kingdom of Hawaii"; court also found no merit in defendant’s claim he was using his 1990 Mazda Miata convertible on the open highway as a "road machine" or "implement of husbandry" because he was using it to obtain water and feed for the animals on his farm and, thus, was exempt from driver's licensing requirements under state law; all other defenses found to be without merit and convictions and sentencing upheld).

(following loss of 140 cattle in a replevin action in which the court held that under Nebraska law, no valid title to cattle passed to plaintiff through series of sales in Missouri and Nebraska started by seller who was entrusted with care and breeding of cattle, but not for sale of cattle, plaintiff brought suit against seller for indemnification; all sellers cross-appealed in linear order of sale except no claim brought against original seller because he was bankrupt; court determined action should be decided pursuant to Missouri law; Missouri allows merchants to sell entrusted goods (Nebraska requires specific intention for sale); stipulations made by parties that if original sale generated good title, then all subsequent sales were valid; court held original sale was to a buyer in the ordinary course without knowledge of any issues with title, therefore all subsequent sales were valid; court acknowledged discrepancy between replevin action and outcome of this claim, but plaintiff failed to plead res judicata and two cases were determined by different a state’s law). 

(plane crashed during emergency landing when trying to avoid barrier erected within runway protection zone; plaintiff brought suit for damages alleging state tort principles; defendant filed motion in limine to preclude evidence of any safety standards other than FAA regulations and in particular the FAA Advisory Circular claiming its safety standards preempted state law; district court agreed and plaintiff admitted FAA regulations complied with and all claims based on state tort law; appellate court reversed and held that Advisory Circular does not contain mandatory standards and are not regulations with the force of law, so they cannot preempt state law; state law remedies still applicable; and Advisory Circular admissible for appropriate standard of care; case remanded to district court to vacate order granting motion in limine).

(on remand from 9th Circuit Court of Appeals (626 F.3d 520 (9th Cir. 2010)), district court held that meals and medical expenses provided to employees of religious corporation are deductible business expenses in accordance with I.R.C. Sec. 162; religious community functions largely without wages, in wage-less community (regardless of religious nature), compensation takes different form, such as housing, food, and medical care, because employees would not be able to work long and hard for no wages absent these benefits).

(petitioner, NASA employee, in spare time developed communications system but was unable to secure patent; petitioner incurred many expenses and claimed records destroyed in hurricane; losses non-deductible due to lack of profit intent and failure to satisfy I.R.C. Sec. 183).

(even after admission to Alzheimer’s unit of nursing home, decedent possessed valid non-tax reasons for post-admission transfer of family business assets (rock quarry) to family limited partnership (FLP) such that value of transfers not included in decedent’s gross estate via I.R.C. §2036; decedent did not have ability to manage transferred assets and reduced personal liability associated with assets after transfer; decedent received partnership interests of equal value to contributed assets and no retention of interest in transferred partnership interests; decedent retained over $1,100,000 in liquid assets in own name; FLP further decedent’s intent to equally distribute assets to children post-death and provide management; no evidence of implied agreement allowing decedent to continue to enjoy income after transfers; no binding agreement present to provide decedent with support and maintenance).

(manure spill from pig farm not covered under insurance policy because of pollution exclusion clause; farm brought claim against insurance agent for negligence in failing to sell pollution coverage; district court granted agent’s summary judgment motion holding evidence established farm would not have been eligible for pollution coverage; appellate court upheld summary judgment because no facts presented by farm to establish special duty owed by agent to ensure adequate coverage for insured; all other claims dismissed for lack of evidence). 

(plaintiff’s property stored in defendant’s barn; separate dispute occurred regarding damage to real property, defendant locked barn and would not let plaintiff retrieve his property in May 2004; plaintiff discovered property missing 15 months later; brought civil suit in August 2010 for civil conversion; conversion occurs when possessor exercises any dominion contrary to owner’s rights; summary judgment granted because claim brought more than six years after May 2004 when conversion occurred; case affirmed on appeal and dismissed).

(conservation easement case; easements conveyed to qualified conservation organization via deeds restricting donor’s use of property, but permitting limited farming, recreational use and timber harvesting if done approved donor’s timber management plan; deeds also reserved 12 lots for development and prohibited mineral exploration and various commercial or industrial facilities along with barring public access; court held that easements protected significant habitat and gave donee right to determine whether permitted uses would lead to degradation of conservation values via annual monitoring; court determined that deeds preserved conservation purpose of protecting significant habitat; requirements of I.R.C. §170(h)(4)(A); but, value of charitable contribution overstated; accuracy-related penalty not imposed).

(defendants operated day care service out of single family home, which was subject to restrictive covenant forbidding operation of any business from home; homeowners’ association gave notice of violation and brought suit to enjoin activities when defendants refused to cease operation of daycare; homeowners’ association filed motion for summary judgment seeking to establish operation of daycare was violation; trial court granted motion; Supreme Court held restrictive covenant was not ambiguous and specifically prohibited operation of a business of any kind, so daycare was violation of covenant; court also held that Quality Child Care Act does not create public policy against prohibition of daycare through covenant; trial court decision affirmed).

(co-representatives of deceased parents’ estates filed personal representative’s deed to son who farmed with father prior to death and contracted with mother prior to her death to purchase family farm; mother had inherited entire farm when father died intestate and all 10 children renounced interests in farm through waivers of inheritance, so mother could inherit and was free to dispose of as she wished; all children knew farm would be sold to son; neither contract for sale nor any other documents reserved mineral rights for remaining children; son paid off contract for deed and all proceeds paid to heirs; 20 years later co-representatives prepared and filed second personal representative’s deed conveying minerals underlying family farm to heirs of the parents; action to quiet title brought by son; counterclaim made for reformation of the mineral deed and contract for deed; summary judgment requested by son; trial court dismissed counterclaim, quieted title to son, and dismissed son’s claim for attorney fees and costs for slandering title to minerals; on appeal, court affirmed dismissal of reformation for lack of evidence and quieted title; court reversed dismissal of claim for slandering title because of lengthy delay in recording statements of claims coinciding with production of minerals within past five years, which permitted inference of intentional filing to slander title; appellate court remanded for resolution of claim).

(appeal of summary judgment opinion regarding interpretation of insurance policy exceptions to coverage; after fire on pasture ground caused personal injuries, parties sought opinion regarding application of homeowner’s insurance to claim; insurance company claimed two policy exceptions excluded coverage for fire on leased pasture land; appellate court held “business exclusion” required continuity or regularity of the activity and whether a profit motive existed; district court determined no business exclusion present, but appellate court remanded for further development of facts and application to announced test for business use due to lease on property and homeowner’s work on the land; appellate court held “owned premises” but not insured exclusion, however, was not applicable because homeowner must be titled owner of property if policy states “owned” (rather than “owned” or controlled) and here property titled to LLC not homeowner).

(petitioner received $210,000 in arbitration award tied to family and medical leave breaches by employer and excluded the amount from income; amount paid was not for physical injury so petitioner not entitled to exclude arbitration award from income under I.R.C. §104; accuracy-related penalty not imposed).

(I.R.C. §6324(a)(2) imposes personal liability on transferees of non-probate property to the extent of value of transferred property rather than imposing a lien on the transferred property; to enforce personal liability, IRS can bring action under I.R.C. §7402 or impose liens on transferee’s property). 

(plaintiff bought $1.9 million parcel and paid $25,000 as earnest money deposit; plaintiff attracted to property due to its description and views of waterfalls; purchase contract included “frog pest alert”; buyer subsequently forms development company to develop property and discovers noise made by frogs and claimed that area was “populated by drug dealers and hookers”; plaintiff sued defendant for misrepresentation; trial court awarded summary judgment to defendant; on appeal, court affirmed; contract contained “frog pest alert” which disclosed noise of frogs could exceed 70 decibels all night long and “as is” disclosures; other “off-site” social conditions not “rooted in the land” and, as such, defendant had no duty to inspect or disclose facts concerning transient social conditions in the neighborhood; acceptance agreement allowed defendant to retain plaintiff’s initial deposit if plaintiff breached contract). 

(landowner challenged disqualification of property from farm use special assessment; a three acre portion of entire seven acre parcel used for dumping of organic material for composting which produced weeds and plants beneficial for quality soil; property not eligible for farm use assessment because lessee using property only for dumping and composting and operates seed production on other location; also, previous state case held growing weeds not accepted farming practice, so not “farm use” eligible for assessment).

(petitioner’s employer restructured and petitioner received stock option restricted by SEC regulations and other sale restrictions; petitioner exercised stock option and received W-2; petitioner attempted to sell stock, but company never went public and eventually failed; petitioner lost everything except I.R.C. §83(a) deficiency and claimed theft loss based on company’s demise; I.R.C. §83 specifies that no income recognition when property that is received for services has no market value; petitioner had ownership and control over stock and restricted market for stock existed; petitioner claimed no income from sales that were facilitated, but did not establish primary offering price and did not introduce copy of Form S-11even though petitioner’s decision to exercise options based on fact form filed; court sustained deficiency but allowed $750,000 short-term capital loss (deductible over next 250 years).

(under 11 U.S.C. Sec. 548(a)(2)(A), bankruptcy trustee could avoid portion of charitable contributions debtors made to church over two-year period before bankruptcy filing that exceeded 15 percent of debtors' gross annual income; trustee's argument that statute requires debtors' contributions (which exceeded 15 percent threshold in both preceding years) be avoided in their entirety is rejected).

(tenant received timely, written notice of termination of year-to-year lease for 240 acres of 480 acre lease; tenant agreed lease terminated for half the property, but remained on 240 acres; landlord sent notice terminating remaining half of leased property one month before renewal date, but argued oral notice given and tenant had constructive notice terminating entire property; court held statute requires written notice of termination within three months, so notice given insufficient to terminate lease on 240 acres).

(before death, taxpayer failed to timely pay assessed taxes; taxpayer and wife owned property as tenants by the entirety; taxpayer and wife conveyed property to wife for $1; IRS filed tax lien against property shortly thereafter; taxpayer died, but formal estate never submitted to probate; one year later, wife passed away; co-executors of wife’s estate brought formal probate proceedings; IRS sent notice of tax lien to co-executors; administrative appeal initiated by estate contesting assessment, IRS prevailed; co-executors conveyed property to son (also co-executor) for $1; son sold property to third party netting proceeds of $313,206.94, which son lost in stock market; IRS brought suit to enforce its lien; competing summary judgments filed; court held first that probate exception argued by co-executors to federal jurisdiction did not apply to federal question raised by IRS and IRS’s collection efforts were timely because instituted within three years of tax filings; court held tax lien continued to encumber one-half of property because tenancy by entirety intentionally terminated by joint conveyance of property to wife; court rejected co-executors argument that wife was bona fide purchaser because payment of $1 not adequate consideration for sale; court found co-executors personally liable as fiduciaries for tax lien because conveyance of property to son rendered estate insolvent after co-executors had knowledge of lien).

(petitioners, married couple, used personal residence for developmentally disabled adults; husband served as general contractor for project that converted residence according to county standards, and petitioners started business and got paid by county and claimed exclusion from income under I.R.C. Sec. 131; petitioners owned other homes and had family get-togethers in one of them and the wife recovered from foot surgery in the home, and other family members along with petitioners lived in the home; mere ownership of home in which services rendered insufficient to exclude payments; to meet requirement of I.R.C. Sec. 131(b)(1)petitioners must prove that they lived in the home distinct from merely working in the home, citing Dobra v. Comr., 111 T.C. 339 (1998); negligence penalty not imposed).

(state court judgment entered for estate against debtor and writ of execution issued which ordered sheriff to sell debtor’s vehicle to satisfy judgment; estate paid creditor amount of loan secured by vehicle and sheriff schedule sale which never occurred because debtor filed Chapter 7; debtor claimed portion of their interest in vehicle exempt under Iowa law and filed motion to avoid estate’s judgment lien which is avoidable under 11 U.S.C. §522(f)(1); bankruptcy court denied debtor’s motion; on appeal B.A.P. affirmed on basis that lien not judgment lien but consensual lien under Iowa law; when loan paid off, estate stepped into shoes of bank under Iowa Code §626.37 and held non-avoidable consensual lien; thus, amount estate advance to pay off loans secured by bank’s lien against debtor’s vehicle not secured by judicial lien).