Because $75,000 Equals $580,000, Court Orders In-Kind Partition of Farm Land.

The parties, brother and sister, owned two parcels of farmland with each of them owning an undivided one-half interest in each tract.  They received complete ownership in the tracts upon the last of their parents to die.  Tract A contained 315 acres with 157 of those acres tillable, and had been the parents homestead.  The brother had farmed Tract A for over 40 years and a portion of it continued to be leased to the brother.  Tract A contained 5 grain bins, three of which the brother put up.  The bins were valued at $59,000 and one expert appraiser valued Tract A at $929,000 and the other expert appraiser valued Tract A at $778,000.  Tract B contained 163 acres, 110 of which were tillable and had some developmental potential.  The expert appraisers valued the tracts at $1,200,000 and $620,000 respectively.  The brother sought a partition and sale of the tracts and the sister sought a partition in-kind, seeking to retain ownership of Tract A and having her brother own Tract B with an equalization payment.  The trial court determined that the sister had not established that a partition in-kind would be equitable and practical and that such a partition would involve "too much guesswork" and dismissed the sister's proposal that she retain Tract A coupled with an equalization payment to her brother of $75,000.  The trial court held that the Tracts should be partitioned by sale via public auction unless the parties agreed otherwise.  The sister appealed, and the appellate court reversed.  The court noted that any sale of Tract A would trigger approximately $150,000 of capital gain tax if it were to be sold, but Tract B would not trigger capital gain tax due to its high basis.  The court determined that it would not be equitable to divide Tract A due to the need to construct fencing and because livestock would not have a water source.  Thus, the court held that the sister had met her burden to establish that an in-kind partition would be equitable if she retained Tract A, her brother retained Tract B and she paid him a $75,000 "equalization payment believing that this resulted in each party retaining one-half of the farmland value.  A dissenting judge pointed out that the two properties, according to the expert appraisers, had a difference in value of $580,000 and that a $75,000 equalization payment was nowhere close to evening out value.  Accordingly, the dissent would have affirmed the trial court that a sale and split of the proceeds was the only equitable result for the parties.  Newhall v. Roll, No. 14-1622, 2015 Iowa App. LEXIS 920 (Iowa Ct. App. Oct. 14, 2015).