Case Summaries 12/2013
(a seller and a buyer signed a USDA option-to-purchase contract; contract granted buyer an irrevocable three-month option to purchase the seller’s 150 acres, and the buyer recorded the option; two days before expiration of option period, buyer (having received notice from the USDA that his loan would be approved “next week”) sent notice to seller that he had received loan approval and was exercising his option to purchase; buyer’s loan approved following week, “subject to the availability of funds,” which were not “immediately available”; seller sought to quiet title to his property, and buyer filed counterclaim seeking specific performance; in affirming chancellor court’s grant of summary judgment to seller, appellate court ruled that the buyer’s acceptance of offer was conditional, depending on future events that may or may not have happened; thus, buyer never validly exercised his option to purchase).
(petitioner claimed first-year 50 percent bonus depreciation in 2003 for private jet purchased for $22 million; petitioner was insurance salesman to ultra-rich who developed split-dollar technique that generated IRS notice 2002-59 which killed petitioner’s technique; jet to be used in petitioner’s business; jet paid-for in 2003 along with delivery of jet, and petitioner used jet for air transport in business in 2003 but didn’t substantiate business reasons for trips (flight logs and fuel receipts didn’t match-up); petitioner wanted special modifications to plane to make it fit for his business; accordingly, petitioner signed post-delivery agreement for modifications including $200,000 conference table and widescreen monitors and extra subhydraulics with total bill exceeding $500,000; modifications not completed by end of 2003; IRS claims petitioner committed tax fraud and issue settles; on bonus depreciation issue, court held that plane not placed in service in 2003 because plane not ready for taxpayer’s specifically intended use on regular, ongoing basis (unless frustrated by circumstances beyond taxpayer’s control); petitioner testified that without conference table and widescreen monitors plane not suitable for petitioner’s business needs; 20 percent substantial understatement penalty applied).
(plaintiffs purchased a landlocked parcel, assuming they could use a private road owned by defendants for access, even though one of the defendant’s representatives had warned them before the purchase that they would need to secure an easement for ingress and egress; plaintiffs filed their action alleging that they were entitled to an equitable easement by necessity; trial court found that plaintiffs had “rolled the dice” by purchasing property without securing access to that property and denied the easement based on hardship to defendants, who wanted to develop the property; on appeal, the court affirmed the denial of the easement; plaintiffs were not innocent; they knew they did not have legal access to the property, bought it anyway, and attempted to “extort their neighbors; trial court did not abuse discretion in denying them an equitable easement).
(petitioner received $883,250 as up-front bonus payment to allow oil and gas company to lock-up property for eventual lease; petitioner treated amount as capital gain and argued that sale rather than lease involved; IRS claimed amount was ordinary income and assessed additional tax of $147,397 and imposed accuracy-related penalty of $29,479; court agreed with IRS and also disallowed a percentage depletion deduction because no production had occurred - no well drilled on property at time payment received; permanent easement not involved).