In Divorce, Tax Consequences Of Selling Land Matter When Dividing Property Even If No Sale Ordered.

The parties in this case were married in 1980.  In 1979, the husband purchased 98 acres on contract for approximately $1,400 per acre.  The tract contained the marital home and was paid off during the marriage.  The wife started a milking operation on the tract and generally conducted the farming operations along with the three children of the marriage.  The wife filed for divorce in 2011, and the trial court dissolved the marriage with the wife getting all of the farm real estate with making an "equalization payment" of $1,548,287 to the husband.  The husband appealed on the basis that the property distribution was inequitable to him arguing that he should either be a joint owner on the real estate or that is should be sold and the proceeds split, and claiming that there were valuation errors.  On appeal, the court affirmed.  The court noted the public policy of preserving family farming operations in the hands of the farming spouse.  Importantly, the Iowa Court of Appeals, contrary to a prior opinion of the Iowa Supreme Court, said that tax considerations surrounding the sale of the land were to be factored even if there was no order to sell the land.  In re Marriage of McDermott, 827 N.W.2d 671 (Iowa 2013).  The court also noted that it would not further the policy of preserving the farming operation if the husband were to be a joint owner of the land given his past history and relationship with the children and wife.  On the valuation issue, the court held that the husband did not properly preserve the issue.  The court also upheld the trial court's award of $10,000 of attorney fees.  In re Marriage of Simon, No. 14-0735, 2014 Iowa App. LEXIS 1256 (Iowa Ct. App. Dec. 24, 2014).         

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