Annotations 04/2013

(appeal of child support modification; at trial, wife showed difference in farmer’s income if straight line depreciation used; farmer’s income would have been double; and court adopted these figures and a five-year average; on appeal, modification affirmed). 


(case involves deductibility of business bad debt; petitioner established existence of bona fide debt, but unable to establish worthlessness in 2006 absent testimony from disinterested party or other supportive evidence; court believed petitioner's testimony of poor state of real estate market caused petitioner's business to struggle, but court unable to measure decline based on evidence presented; debt not worthless for year in issue). 


(suit brought against highway commissioner after road work done altered surface flow of water; defendant moved to dismiss complaint based on government tort immunity; on appeal, court affirmed; plaintiff sought damages sounding in tort, which fell under the auspices of the immunity statute and defendant’s choice to make decisions regarding safety of drivers versus disruption of drainage on plaintiff’s land was not willful or wanton conduct).


(appeal of state agency’s denial of a corn producer’s indemnity claim; producer required to prove the grain dealer became insolvent after January 1, 2008, and as a result of this insolvency the dealer did not fully compensate the producer; producer failed to prove lack of full compensation caused by dealer’s insolvency, so denial affirmed).


(partition action among siblings as tenants in common after disputes arose; court held sister entitled to farm home and all buildings on her section of the tract as fixtures; brother appealed claiming he purchased buildings and was entitled to them and underlying land; appellate court found no error in trial court’s factual findings regarding conflicting testimony and affirmed; brother argued he should be indemnified for costs incurred in improving and maintaining buildings; on appeal, court held brother did not request reimbursement in his petition, so no error in failing to award; trial court’s enforcement of tenants in common agreement to division of property was also affirmed).


(plaintiff filed suit to claim ownership of tract of land via acquisitive prescription; defendant moved for involuntary dismissal for failure to prove claim; motion granted; plaintiff appealed; appellate court affirmed because evidence did not establish boundaries as claimed by plaintiff nor actual location of claimed boundary; further no survey or expert evidence presented to enable court to determine boundary even if plaintiff proved possession; dismissal affirmed). 


(inherited property used to purchase farmland that was sold after the marriage and proceeds used to purchase marital home with remainder used for household expenses; home was only asset of the parties and so court found inequitable to keep inherited property separate; court ordered equalization payment of half of value; on appeal, court held husband’s wise investment of inheritance allowed couple to live in home debt free; court found equitable distribution to be three-quarters to disabled husband and one-quarter to wife; dissent filed arguing house was purchased for wife and husband intended to sell it anyway and continue to live in farmhouse, so district court order should be affirmed).


(in 1972, petitioner transferred stock in family corporation to other family members pursuant to settlement of family dispute; no gift tax return filed, and IRS now asserting $1.1 million in unpaid gift tax on basis that transfer constituted gift; petitioner claims that transfers were nontaxable settlement payments; interest on purported gifts anticipated to exceed $1 million; because no gift tax return filed in 1972, statute of limitations for asserting tax never commenced and all tax years remain open).


(decedent died in late 2007 and estate tax return filed in early 2009 with "estimated" denoted at top of form; return reported gross estate of $13,810,000, tentative deductions of $550,000 and tentative tax listed as "unknown"; return indicated that litigation was pending between decedent's estate and decedent's surviving spouse that had been purportedly disinherited under decedent's will which impacted the amount, if any, of the marital deduction and, consequently, the estate tax due; IRS assessed over $5 million of estate tax against estate and estate objected noting the pending litigation barred computation of estate tax due; litigation settled in mid-2009 and estate filed two amended returns both reporting no tax due; IRS determined that over $2 million in estate tax due; estate sought IRS issuance of notice of deficiency so that alleged deficiency could be litigated; IRS issued notice of deficiency in late 2011 and estate filed Tax Court petition in early 2012 and IRS moved to dismiss for lack of jurisdiction on the basis that a prior assessment of estate tax eliminates any "deficiency" over which the court has jurisdiction; IRS also claimed its notice of deficiency issued as protective measure if prior assessment found invalid; estate moved for summary judgment on basis that statute of limitations barred issuance of revised notice of deficiency ; court rejected IRS' motion to dismiss, finding that prior assessment was invalid, but determined that notice of deficiency was valid because it had been timely issued and complied with I.R.C. Sec. 6212 and did not violate I.R.C. Sec. 7522; court has jurisdiction and case to proceed to trial).


(plaintiffs, environmental groups, sued Army Corps of Engineers (COE) alleging improper verification of construction of a wastewater pipeline that was authorized under two nationwide discharge permits issued by the Corps under the Clean Water Act for 23.5 mile wastewater pipeline that crossed over 30 wetland areas; utility companies intending to use pipeline intervened; court addressed cross motions for summary judgment; court held plaintiffs had standing to challenge because owned property could be more susceptible to damage from pipeline; claims are not moot simply because pipeline construction has begun; but, court held granting of permits by COE was not arbitrary and capricious and no additional reason given by plaintiffs to challenge permits - disruption of hunting and fishing and exposure of property to leaks insufficient to establish likelihood of injury; COE has no obligation to complete additional environmental impact statement for project; mere conversion of forested wetlands to wetlands with different functions involved; no permanent loss of wetlands present). 


(plaintiff sued defendant for breach of management contract; defendant moved for directed verdict on basis that party that signed agreement on defendant's behalf had no authority to bind defendant; trial court directed verdict for defendant; on appeal, court affirmed on basis that non-managing member of defendant had no authority to bind defendant to management contract pursuant to defendant's articles of organization which was a publicly filed document; plaintiff made no inquiry into who could bind defendant to contract and plaintiff bore burden of proof the establish agency relationship; no implied agency present; simply having authority to sign one document does not give authority to sign all documents on behalf of LLC). 


(case involves reasonableness of compensation paid to radio executive; over his career in radio and television, executive started to buy radio stations and would become owner/operator/general manager; management style was active involvement overseeing personnel, oversight of programming, negotiating with lenders, participating in sales meetings and communicating with lawyers, accountants and others on behalf of company; ultimately, executive gave himself substantial bonus and company claimed associated deduction; issue was reasonableness of compensation and court gets into detailed mathematical computational process of experts of the parties; court set reasonable compensation level at amount higher than what IRS sought due primarily to executive being compensated for underpayments that occurred in prior years; deduction approximately one-third of amount paid to executive; 20 percent accuracy-related penalty imposed).


(plaintiff provides medical treatment at various locations and hires physicians under five-year contracts in exchange for advances during the first two years of employment which must be repaid if employment ceases within five-year term; while advances accrue interest, physicians not required to pay interest; plaintiff did not withhold income or payroll tax on advances and advances not reported on Form W-2 but were reported on Form 1099-Misc. upon date amount no longer needed to be repaid; IRS assessed withholding and FICA tax plus interest for total amount over $600,000; court determined that advances were compensation for services; no intention that repayment be made, but that physicians would work five-year term; no fixed schedule for repayment at time agreements signed; advances were wages subject to withholding of employment and income tax). 


(adverse possession case on appeal; adjacent property owners disputed ownership of a sliver of land between their lots; plaintiff had planted trees and built retaining wall in area; 9 years later plaintiff sought permission from defendant to cross her lot to rebuild retaining wall; defendant later discovered plaintiff’s trees and wall were partially on her property, issue on appeal was whether permission given to cross lot to rebuild wall defeated hostile use of sliver of land; trial court had ruled permission not related to use of sliver and appellate court upheld finding sliver belonged to plaintiff by adverse possession).


(plaintiff and spouse divorced in 2005 and entered into QDRO designating plaintiff as alternate payee under ex-spouse's qualified retirement plan; QDRO provided that plaintiff to receive 53 percent of ex-spouse's accrued benefit as of 12/20/04, and if payments to plaintiff began while ex-spouse still employed payments to be computed as if ex-spouse had retired on date on which payments to plaintiff began, not accounting for value of play subsidy for early retirement benefits; if ex-spouse retired before age 65, plaintiff's benefit to be recalculated to include 53 percent of any employer subsidy for early retirement; plaintiff elected to begin receiving benefits when ex-spouse turned 55; three years later ex-spouse terminated due to company-wide workforce reduction which made ex-spouse eligible for early retirement benefit equal to 80.7 percent of normal benefit; because purpose of separation benefit to enhance early retirement benefits and because ex-spouse eligible for early retirement, such amount was subsidy for early retirement and was within meaning of "early subsidy for early retirement" as defined by QDRO; plaintiff entitled to 53 percent of early retirement benefit). 


(petitioner borrowed $78,849.07 from employer in return for promissory notes; petitioner to repay loans via his compensation incentives with employer also paying taxes on incentives; loan lacked repayment date and did not specify interest; petitioner made no payment on loan; and petitioner within two years, employer sold out to another business and new employer issued petitioner Form 1099-Misc. denoting amount of loan and reporting loan as non-employee compensation; IRS took position that petitioner received constructive bonus that was then used to repay loan; petitioner disagreed with IRS position and claimed loan was either canceled or that he was insolvent at time of cancellation; Tax Court determined that amount reported on Form 1099-Misc. was cancellation of debt income and 1099-Misc. issued in error; petitioner's liabilities exceeded assets by over $20,000 thereby reducing amount of CODI, which was $56,207.65). 


(decedent, before death, created LLC and transferred funds to LLC derived from sale of stock in decedent's closely-held business which was undergoing buy-out from Pepsi, Corp.; LLC worth $317.9 million (primarily cash) in net asset value; decedent's children redeemed their interests in LLC before decedent's death resulting in decedent's estate holding 70.42 percent voting interest and 70.9 percent equity in LLC; decedent's estate had liquid assets of over $19 million; anticipated estate and GSTT tax was $26 million, and estate borrowed $10.75 million from LLC in return for installment note with initial payment deferred until 2024 (18 years) with interest set at 9.5 percent (at time when long-term AFR was 4.61 percent); estate claimed discount for decedent's LLC interest of 31.7 percent which court rejected and allowed 7.5 percent discount that IRS conceded - estate's expert based analysis on companies that derived profits primarily from active business operations, unlike decedent's LLC; court noted that while estate tax deduction for estate administration expenses is allowed, prior decision in Estate of Gilman v. Comr., T.C. Memo. 2004-286 which allowed estate tax deduction for interest if loan necessary to raise money to pay estate tax without liquidating estate assets at forced-sale prices inapplicable; in present case, court noted that LLC was cash-rich and that estate had power to require LLC to make pro-rata distribution to members, thus eliminating need to sell assets; court also noted that loan would deplete company's cash similar to distribution; $71.4 million interest deduction disallowed; case also unlike Estate of Duncan v. Comr., T.C. Memo. 2011-255 and Estate of Kahanic, T.C. Memo. 2012-81 in which deduction was allowed in cases where estates were much less liquid). 


(ruling on summary judgment motion in patent and ownership dispute between produce grower and manufacturer over plastic containers; court denied defendant’s motion that plaintiff lacked standing to revise patent to include inventor who is alter ego of company, plaintiff had ownership interest in action; court rejected laches argument due to lack of evidence from defendant regarding plaintiff’s knowledge of patent; summary judgment granted on plaintiff’s claim of inventive contribution due to lack of evidence presented by plaintiff; summary judgment also granted on plaintiff’s false promises claims to not use invention in other ways due to lack of evidence; plaintiff’s claim of misuse of invention for second generation product without payment or permission may proceed; court also held plaintiff’s knowledge of sale of second generation product meant suit was timely filed; plaintiff precluded from bringing punitive damage claim but other damage claims allowed as evidence permits). 


(plaintiff brought suit after an automobile accident involving one of defendant’s dairy cows; dairy located close to Colorado border, but is located in Kansas; court determined Colorado lacked personal jurisdiction over defendant due to lack of contact with forum; court transferred case to Kansas rather than dismissing because statute of limitations would have run if plaintiff had to refile, his claims were colorable, and there was an absence of bad faith in choosing the forum; case transferred). 


(petitioners, married couple, filed joint return for 2003; petitioners held partial ownership in S corporation and claimed $279,289 loss as pro-rata share of S corporation's loss; IRS allowed loss to extent of petitioners' basis in S corporation - $153,282.93; issue was whether petitioners’ basis in S corporation reduced by suspended losses in the first year that the basis is adequate to absorb the losses; petitioners, in 1997, did not claim deduction for suspended loss even though, in 1997, they had sufficient basis to absorb the loss, and hence, petitioners claim, there was no basis reduction at that time; court disagreed with petitioners because I.R.C. Sec. 1367 requires basis reduction to occur in first tax year when there is sufficient basis to absorb a loss, and basis is still reduced even if shareholder fails to take deduction for loss; language in I.R.C. Sec. 1367(b)(1) providing that basis is increased by corporate income only to extent of inclusion in shareholder's income bolster's position of IRS because no comparable exception for corporate losses provided; substantial understatement penalty upheld).


(founder and controlling shareholder of plaintiff incurred legal fees for criminal defense against tax fraud and tax evasion charges and plaintiff paid such fees and deducted them as business expenses; plaintiff also omitted refunds from returns for certain years and reported them in later years and claimed an NOL for the income eliminated in earlier years; Tax Court determined that most of legal fees were nondeductible and that NOLs disallowed; on appeal, court determined that legal fees not ordinary and necessary business expense and are not theft losses; NOLs denied). 


(March 2013, jobs report; unemployment rate fell to 7.6 percent solely because of a contraction of the laborforce; economy added only 88,000 jobs during March and laborforce participation rate fell to 63.3 percent, the lowest rate since 1979 - thus, unemployment fell while employment did not increase; while civilian population has increased by 2.4 million over past 12 months, only 300,000 persons have entered the laborforce; government payrolls showed virtually no change despite implementation of "sequestration", but economy slowed down due to tax increases beginning in January of 2013; unemployment rate is 49 percent higher than what Administration promised it would be in March of 2013 if 2009 "stimulus" bill passed, and 45 percent higher than what Administration promised it would be in March of 2013 if 2009 "stimulus" bill not passed; if laborforce participation rate would have remained at the rate it was at when President Bush left office and laborforce would not have shrunk, unemployment rate would be 10.98 percent). 


(petitioners, married couple, filed joint return for 2003; petitioners held partial ownership in S corporation and claimed $279,289 loss as pro-rata share of S corporation's loss; IRS allowed loss to extent of petitioners' basis in S corporation - $153,282.93; issue was whether petitioners’ basis in S corporation reduced by suspended losses in the first year that the basis is adequate to absorb the losses; petitioners, in 1997, did not claim deduction for suspended loss even though, in 1997, they had sufficient basis to absorb the loss, and hence, petitioners claim, there was no basis reduction at that time; court disagreed with petitioners because I.R.C. Sec. 1367 requires basis reduction to occur in first tax year when there is sufficient basis to absorb a loss, and basis is still reduced even if shareholder fails to take deduction for loss; language in I.R.C. Sec. 1367(b)(1) providing that basis is increased by corporate income only to extent of inclusion in shareholder's income bolster's position of IRS because no comparable exception for corporate losses provided; substantial understatement penalty upheld).


(trustee sought to recover payments as postpetition transfers from the bank account of one of debtor’s unrelated entities to an adult entertainment entity, which is protected by the good faith defense; trustee’s argument that the entity should be deemed the alter ego of debtor rejected by court for same reasons as stated in In re Duckworth, No. 10-83603, 2012 Bankr. LEXIS 4379 (Bankr. S.D. Ill. Sept. 21, 2012)).


(petitioner was employed as consultant and also operated an interior design business out of her home; no deduction for claimed business expenses - no documentation of purpose of legal fees and lack of substantiation for office expenses; no deduction for home mortgage interest beyond what IRS allowed; while petitioner paid additional amounts for points, petitioner didn't establish that points were for use or forbearance of money as opposed to services performed in connection with loan; no medical expense deduction above amounts allowed due to lack of substantiation). 


(defendant, U.S. Forest Service, seized and sold 354 head of plaintiff's cattle grazing in Apache-Sitgreaves National Forest in Arizona; plaintiff did not get federal grazing permit on basis that his water and forage rights entitled him to grazing use; defendant issued notice of trespass and ultimately seized the cattle; plaintiff waited until seven years after seizure to sue and defendant claimed six-year statute of limitations applied to bar the suit; if seizure constituted taking, then six-year statute of limitations applied, but defendant's lawyers, at oral argument, argued that defendant's actions were not a taking but an exercise of police power; plaintiff brought suit within six years of sale of cattle; court refused to dismiss case because defendant's position that neither seizure nor sale constituted taking but pursuant to regulatory scheme). 


(contiguous landowners entered into an oral agreement to share in the expense and benefits from an artesian well; when one of the parcels changed hands, the new owner denied that an easement for pipe existed; landowner argued the agreement was oral, so Statute of Frauds applied; trial court held that part performance took the agreement out of Statute of Frauds and the agreement granted an easement; on appeal court held that landowner’s claim of a mere license failed because she presented no facts regarding a license; court also held that contract had been fully performed and it was clear an agreement to run pipelines across land to supply water to contiguous landowners existed; trial court affirmed).


(appeal from town court proceedings declaring respondent’s pit bull a dangerous dog under state law; respondent had been walking dog when another dog came loose from its porch where it had been leashed and attacked respondent's dog; owner of loose dog came to try to break up fight and neighbor also helped; attacking dog suffered severe injuries; pit bull never left leashed hold of its owner and never threatened people while inflicting serious damage on dog that started attack; town court held pit bull was dangerous under state statute (Agriculture and Markets Law Sec. 123) and respondent ordered to pay 65% of veterinarian costs to owner of dog that started attack; on appeal, court reversed on basis that pit bull did not display aggressive behavior, it only responded after being attacked which justified dog's reaction and removed dog from definition of "dangerous dog" under statute; dog did not fit definition of "dangerous" solely by virtue of its breed).


(grain operator debtor and the company- also a debtor- stored grain for grain dealer; dealer discovered debtor was selling its grain and removed its grain from debtor’s possession after discovering the theft but before bankruptcy filed; trustee alleged grain seized by dealer was commingled with grain owned by debtor and constituted property of bankruptcy estate; court held because grain was seized by dealer was not in debtor’s possession during bankruptcy and dealer need not account for grain or its value; court also held that dealer was not insider because debtor had stolen more than one million bushels of grain from dealer so there should be no avoidance of a preferential transfer; for similar reasons, court held dealer’s removal of its grain was also not fraudulent; dealer’s motion to dismiss trustee’s complaint allowed).


(decedent executed a deed transferring several hundred acres to himself and his son as joint tenants with rights of survivorship during a period when his son was acting as the decedent’s medical power of attorney; after decedent’s death, the executor expended funds to investigate whether the son exercised undue influence; the investigation was insufficient; the son petitioned the court to order the estate to expend no further funds in its investigation, which the court granted; the executor appealed and further review was made in which the issue of fiduciary duties under a healthcare power of attorney were reviewed; the question was certified to the state appellate court; on the certified question, the court held under the facts there was no fiduciary duty created because no evidence existed that son accepted agency on healthcare power of attorney; in general fiduciary duty would be limited to scope of the power of attorney and not to matters outside the scope of health care decisions; by itself, the healthcare power of attorney does not create a presumption of undue influence).


(utility company need not obtain NPDES permit or RCRA solid waste disposal permits for the use of utility poles treated with oil-pentaclorophenol mixture; plaintiff claimed that utility poles leached the chemical mixture that found its way into waters of the United States via stormwater drainage or because the poles were already saturated in the water; trial court dismissed case because utility poles are not a point source pollutant under CWA; on appeal, court affirmed and refused to expand definition of "point source" and "discharge"  to cover utility poles and like items such as fence posts and other structures that use pre-treated wood products).  


(Chapter 12 case; debtor and brother formed co-equal farm partnership in 1993 that owned livestock and machinery used in farming; partnership dissolved in late 2010 and debtor continued farming a smaller farming operation; debtor then filed Chapter 12; both IRS and state (IA) Dept. of Rev. (IDOR) filed priority claim for pre-petition taxes arising from partnership dissolution which they treated as sale of "partnership interest" rather than sale of "farm assets" which, therefore, would not be entitled to non-priority treatment in accordance with 11 U.S.C. Sec. 1222(A)(2)(a); debtor's expert witness attempted to characterize debtor's partnership as not a partnership for tax purposes due to the small partnership exception of I.R.C. Sec. 6231(a)(1)(B) and, thus, partnership is treated as non-existent and debtor's income arose from sale of personal interest in farm partnership rather than capital interest in partnership; court rejected testimony of defendant's expert witness as irrelevant and stated, "...the decision here will not rely in any way on his testimony."; court noted that small partnership exception enacted in 1982 as part of TEFRA was enacted to implement unified audit examination and litigation provisions which centralized treatment of partnership taxation issues and ensured equal treatment of partners by uniformly adjusting tax liability of partners;  while court noted that some statutory language may be supportive of position of debtor's expert, expert's position was not dispositive of the issue, given much case law and legislative language contrary to such position including judicial opinions noting the effect of TEFRA and small partnership exception was to keep the old rules in place for small partnerships rather than create new ones; ultimately, court determined that 11 U.S.C. Sec. 1222(A)(2)(a) applied to sale of farm assets in general, including capital assets used in farming; because underlying assets that were sold were farm assets, they are covered by 11 U.S.C. Sec. 1222(A)(2)(a) as determined by Eighth Circuit inKnudsen, et al. v IRS, 581 F.3d 696 (8th Cir. 2009); U.S. Supreme Court decision in Hall v. United States, 132 S. Ct. 1882 (2012) did not overrule Knudsen on issue of definition of "farm assets" for purposes of 11 U.S.C. Sec. 1222(A)(2)(a); debtor's farm partnership interest was "used in" the farm partnership farming operation - debtor farmed by using farm partnership interest; 11 U.S.C. 1222(A)(2)(a) not limited in application to farming operation under the reorganization plan; debtor meets all other requirements for Chapter 12 bankruptcy; defendants' objections to debtor's confirmed Chapter 12 plan overruled). 


(petitioner claimed deduction for office in the home; court upheld IRS denial of deduction on basis that only evidence of deduction was petitioner's own testimony which was insufficient to establish that office used exclusively for business purposes; court disallowed meal and travel expenses due to lack of substantiation). 


(petitioner worked full-time as research associate, but also owned multiple rental apartments; petitioner incurred losses on apartment rentals and claimed loss deductions; IRS denied losses on basis that petitioner couldn't satisfy real estate professional test under I.R.C. Sec. 469; court upheld IRS position and rental real estate losses disallowed). 


(blackberries, raspberries, and papayas no longer in the list of plants (published in Notice 2000-45) that have a preproductive period of two years or more for purposes of the UNICAP rules of I.R.C. Sec. 263A that cash method farmers are subject to; also, effective for tax years beginning after Feb. 15, 2013, with respect to an accounting method change, the procedures for obtaining automatic consent such that I.R.C. Sec. 263A does not apply to the production of plants that IRS has removed from the list of plants having a nationwide weighted average preproductive period exceeding two years, or to a revocation of an election to not apply I.R.C. Sec. 263A to the production of plants that have been removed from the list; scope limits of Sec. 4.02(1)-(4) and (7) of Rev. Proc. 2011-14 inapplicable to taxpayers wanting to make change for first or second tax year ending after Feb. 15, 2013; taxpayer not applying I.R.C. Sec. 263A to blackberry, raspberry or papaya plants in compliance with I.R.C. Sec. 263A(d)(1) won't have their method of accounting raised as issue by IRS in tax year ending on or before Feb. 15, 2013; likewise, existing method of accounting issues under exam by IRS for years ending on or before Feb. 15, 2013, will be dropped). 


(case involved transfer of LLC interests; LLC owned stock in closely held corporation; corporation sold its stock on Nov. 24 and LLC owners sold their interests to three corporations in Cayman Islands in exchange for annuities on same day; stock sale publicly announced on Nov. 27 with closing on Jan. 8; court determined that sale of LLC interests subject to assignment of income doctrine such that gains from sale of corporate stock taxable to LLC owners; court based opinion on Ferguson v. Comr., 174 F.3d 997 (9th Cir. 1999); basic principle involved is that appreciated property transferred where transferee sells the property, any resulting gain taxed to original transferor if original transfer is too close in time to date property sold).   


(homebuyers brought suit against sellers, realtor, and home inspector after discovering the house purchased “as is” and inspected was full of mold and deteriorating; district court granted judgment on the pleadings and summary judgment to defendants ultimately dismissing all claims; court upheld dismissal of claims under state consumer protection act against realtor and inspector because the actions complained of were taken pursuant to pure real estate transaction not covered by statute; summary judgment of fraud and civil conspiracy claims also upheld because no facts alleged of knowledge of condition by sellers and evidence existed showing buyers provided notice of need to inspect for mold, but did not do it; summary judgment for inspector also upheld because certification of home inspector irrelevant and misrepresentation claim failed because buyers did not review report; claims against seller’s agents filed because no deceptive acts alleged; buyer’s agent claims also dismissed because statements complained of were “puffery”; complaints against title agency also dismissed because title was true and any errors created no loss to plaintiffs). 


(case involved transfer of LLC interests; LLC owned stock in closely held corporation; corporation sold its stock on Nov. 24 and LLC owners sold their interests to three corporations in Cayman Islands in exchange for annuities on same day; stock sale publicly announced on Nov. 27 with closing on Jan. 8; court determined that sale of LLC interests subject to assignment of income doctrine such that gains from sale of corporate stock taxable to LLC owners; court based opinion on Ferguson v. Comr., 174 F.3d 997 (9th Cir. 1999); basic principle involved is that appreciated property transferred where transferee sells the property, any resulting gain taxed to original transferor if original transfer is too close in time to date property sold).


(debtor sought appeal of bankruptcy ruling from prison while serving time for bankruptcy fraud; sought appeal of bankruptcy court’s denial to add exhibits and amend schedules due to attorney’s error; attorney had settled matter with bankruptcy trustee on conspiracy and fraud allegations relating to debtor’s bankruptcy petition; appellate court held bankruptcy court’s conclusion that debtor acted in bad faith in waiting eight years to disclose assets was not clearly erroneous).


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