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On January 9, 2023, the Tax Court found that a ranch-owning couple was entitled to $421,503 in deductions over three years for expenses claimed on their Schedule F, even though they had sold most cattle associated within a few months after the purchase of the property. The IRS had also assessed § 6662(a) accuracy-related penalties for the years, but those were not upheld since the Court determined the taxpayers were entitled to the deductions.
On January 25, 2023, the Iowa Court of Appeals reversed the district court’s order denying damages stemming from a replevin action of farm equipment. After determining that the plaintiffs were the rightful owners, the district court denied the plaintiffs’ request for damages reasoning that the defendant was justified in holding onto the equipment. Although the defendants reasonably claimed to be the rightful owner, the court ultimately determined they were not. Therefore, the plaintiffs were entitled to damages for the illegal detention of the equipment. Iowa Code § 643.17.
As the 2023 filing season begins, taxpayers and their preparers must sort through new guidance and rules to determine their requirements for the 2022 tax year. This post details 10 key considerations for these returns.
Agricultural supply dealer liens—intended to encourage suppliers to provide necessary feed and supplies to agricultural producers—can be difficult to enforce. An opinion issued by the Iowa Supreme Court today illustrates some of the complexity of this remedy. Quality Plus Feeds, Inc. v.
Hunting ground is a precious commodity in Iowa. Hunters often approach landowners looking for ground to hunt. Whether to grant such permission and to whom to grant that permission is a complex decision. This article was orginally written in June 2014, and updated in January 2023.
On December 16, 2022, the North Carolina Supreme Court denied an appeal claiming that the state’s Right to Farm Act was unconstitutional. Previously, the North Carolina Court of Appeals had granted the State’s motion to dismiss under the Federal Rules of Civil Procedure Rule 12(b)(6). Rural Empowerment Ass’n for Cmty. Help v. North Carolina, 2021 WL 6014722 (N.C. App. Dec. 21, 2021).
On November 2, 2022, the Iowa Court of Appeals affirmed that a niece who added herself to her aunt’s bank accounts failed to rebut the presumption of undue influence. A transfer from a grantor to their fiduciary is presumptively fraudulent. To refute this, the niece had the burden to show 1) that she acted in good faith and 2) that her aunt acted voluntarily. Because the niece instead presented evidence that undue influence was not established, she failed to meet this burden.
On December 5, 2022, the United States Tax Court found that a farmer who had purchased 29 used tractors over the course of three years did purchase the tractors for legitimate business purposes. Consequently, the farmer’s IRC §179 expense deduction for those tractors was upheld. The taxpayer was also able to substantiate that the majority, but not all, of his pickup trucks were “qualified nonpersonal use vehicles” as defined under IRC §247(i). The Tax Court eliminated most of the accuracy related penalty assessed by IRS under §6662.
On November 2, 2022, the Iowa Court of Appeals affirmed that a sheriff’s sale should not be set aside for failure to record the sheriff’s deed within the statutory time period. See Iowa Code § 654.16A. The purpose of Iowa Code § 654.16A(1) is to give the debtor notice of his right of first refusal. The court held that the debtor did not suffer prejudice because the deed was not recorded in a timely manner and that there was no statutory authority to set aside the sale.
Three companies are seeking to build carbon capture pipelines across Iowa. The goal of the projects is to capture carbon dioxide from ethanol plants, fertilizer plants, and other industrial agricultural plants to prevent greenhouse gas from escaping into the environment. The projects each propose liquefying the carbon dioxide and transporting it through underground pipelines to secure, permanent storage facilities in remote sites.
On October 19, 2022, the Iowa Court of Appeals affirmed the discount rate for transactional costs in a farm corporation buyout. After the Iowa Supreme Court held that transaction costs for asset liquidation should be included in the valuation, it remanded the case to the district court to determine and apply the appropriate discount rate. Guge v. Kassel Enterprises, Inc., 962 N.W.2d 764 (Iowa Sup. Ct. 2021). Here, the district court followed the Supreme Court’s remand order and conducted a credibility assessment of the parties’ expert witnesses to find the appropriate discount.
The National Bioengineered Food Disclosure Standard law requires all bioengineered food to disclose its bioengineered status to consumers through “text, symbol, or electronic or digital link.” 7 U.S.C. § 1639b(b)(2)(D). The USDA, through the Agricultural Marketing Service (AMS), promulgated the National Bioengineered Food Disclosure Standard rule in 2018 .A group of retail stores and food advocacy groups brought suit in the Northern District of California claiming that the regulations violated the Administrative Procedure Act. A federal judge agreed and found that the USDA failed to comply with the disclosure statute’s directive to “provide additional and comparable options” to ensure that consumers could access the electronic disclosure.
On October 5, 2022, the Iowa Court of Appeals affirmed the dismissal of a petition contesting the distribution of trust assets. After her father passed away, a beneficiary brought a lawsuit claiming that her father lacked testamentary capacity and that the trustees had exerted undue influence over him. Because the beneficiary only provided “suspicion and surmise,” the court affirmed that she failed to meet the burden to establish either claim.
On October 5, 2022, the Iowa Court of Appeals affirmed the division of two properties between a farmer and his two sisters. Relying on the factors set forth in Iowa Code § 651.31, the farmer claimed he would experience “great prejudice” if he was not awarded both farms. However, the court must only consider these factors when weighing the whether the presumption of a partition in kind is equitable. After the court orders a partition in kind, “the proceedings shall be governed by the procedures set forth in subchapter II that are applicable to a partition in kind.” Iowa Code § 651.32.
On September 26, 2022, a federal judge in the Southern District of Iowa again found an Iowa farm trespass law to be unconstitutional. Under Iowa Code § 727.8A (the “Trespass Surveillance law”), anyone who trespasses and “knowingly places or uses a camera or electronic surveillance device that transmits or records images or data while the device is on the trespassed property” is guilty of an aggravated misdemeanor. This is Iowa’s third farm fraud and trespass law found to be in violation of the First Amendment by this court.
On August 31, 2022, the Iowa Court of Appeals held that a creditor cannot collect distributions from a spendthrift trust until the funds are in the beneficiary’s control. A creditor attempted to garnish funds of two spendthrift trusts which were being held by a trustee for the debtor’s benefit. The district court denied the debtor’s motion to quash the garnishment. Because the debtor had not yet received the distributions, the Court of Appeals reversed the district court’s order.
On August 31, 2022, the Iowa Court of Appeals affirmed the denial of a motion for a new trial in an erosion lawsuit. Landowners claimed that their neighbor’s construction caused erosion damage on their farmland. Because there was sufficient evidence that the landowners’ failure to maintain the waterway contributed to the damage, the court affirmed the denial.
On August 3, 2022, the Iowa Court of Appeals settled a boundary dispute between two neighboring family members. Because neither party established their allegations of boundary by acquiescence or easement by prescription, the court affirmed the denial of their claims.
On August 17, 2022, the Iowa Court of Appeals affirmed that two sisters could not have interfered with their brother’s alleged contract with their parents to become the sole owner of an 80-acre parcel of farmland. The brother claimed to have an oral contract with their mother. Because the farmland was owned by the siblings’ father, the brother did not have a contract with the owner of the property.
On August 24, 2022, IRS issued broad penalty relief to most taxpayers who filed 2019 and 2020 returns late. The relief, provided in IRS Notice 2022-36, applies to failure to file (not failure to pay) penalties, as well as some late information return penalties. For the most part, the relief is automatic.
As production costs continue to rise, farmland owners and tenants may be reconsidering the terms of their farm leases. Both tenants and landlords should be aware of Iowa’s farm lease auto-renewal statute.
On August 23, 2022, the Iowa Department of Agriculture and Land Stewardship (IDALS) announced that the court-appointed receiver for B & B Farm Store Inc., a grain dealer and warehouse operator from Jesup, Iowa, had consented to a voluntary revocation of its Iowa warehouse and grain dealer l
Update: President Biden signed this bill into law on August 16, 2022.
On August 3, 2022, the Iowa Court of Appeals affirmed that the plaintiff failed to prove that his sibling exercised undue influence over their father. For personal reasons, a farmer intentionally left two of his three children out of his will and trust. The court concluded that it was unlikely the farmer was susceptible to coercion; thus, no undue influence occurred.
On July 20, 2022, the Iowa Court of Appeals affirmed a $960,000 jury verdict against a swine management company and its owner. A group of farmers began a business venture with the management company to purchase, feed, and sell pigs. The business was financially unsuccessful. The investor-farmers brought this lawsuit against the management company and its owner alleging breach of contract, fraudulent misrepresentation, and breach of fiduciary duty.
On July 20, 2022, the Iowa Court of Appeals affirmed the dismissal of a petition to void the transfer of a farm. A farmer filed for divorce five months after the couple gifted two-thirds of their farm operation to their son. His ex-spouse brought this lawsuit for fraudulent misrepresentation and sought to void the farm transfer. The Court of Appeals concluded that the circumstances surrounding the farm transfer did not indicate an intent to defraud, but instead supported a finding that the farmer desired to keep the farming operation in the family.
On July 20, 2022, the Iowa Court of Appeals ruled that the statute of limitations to set aside a trust established by a decedent during his lifetime cannot be tolled using the discovery rule. The applicable statute, Iowa Code § 633A.3108, unambiguously states that any such claim must be brought within one year of death. The court found, however, that a claim of equitable estoppel could extend the statute of limitations if the petition was filed within a reasonable time after alleged fraud was discovered. The court ruled that it was for a fact finder to decide whether that happened.
On July 20, 2022, the Iowa Court of Appeals affirmed the denial of a petition asking for a writ of mandamus to compel the Madison County Board of Supervisors to destroy noxious weeds on a neighbor’s land. While the county Weed Commissioner can destroy the weeds and charge the expense to the landowner, that is not the exclusive remedy available for a landowner’s noxious weed violation. Instead, a county weed commissioner can work with a landowner over extended periods of time to address noxious weed violations. The Court further reasoned that a writ of mandamus is an inappropriate legal remedy in this circumstance since the landowner could file a nuisance lawsuit against the neighbor.
On July 20, 2022, the Iowa Court of Appeals affirmed that a farmland owner’s Uniform Commercial Code (UCC) filing listing a farm tenant’s crops as collateral did not constitute “tortious conduct.” The farm tenant claimed that the UCC financing statement was false and interfered with his ability to obtain a loan after the lease terminated. The court disagreed with the tenant, instead finding that there was no genuine issue of material fact that the filing was false or that it caused the tenant’s injuries.
On June 29, 2022, the Iowa Court of Appeals affirmed the dismissal of a negligence lawsuit against a title company. The title company prepared an abstract for a sale of land, but failed to identify a sewer easement. Although the title company made an error, the Court of Appeals held that this mistake was not the proximate cause of the buyer’s alleged injury.
On June 15, 2022, the Iowa Court of Appeals determined the primary beneficiary of a $3.5 million individual retirement account (IRA). Before passing away, the decedent opened an IRA and executed a beneficiary designation form. The court affirmed that the form was not ambiguous and clearly showed the decedent’s intent to name his wife as the primary beneficiary of the IRA.
On July 20, 2022, the Iowa Court of Appeals affirmed that a surviving spouse inherited one-half of the deceased spouse’s interest in real property as well as the proportional share of the mortgage. The court held that the probate code does not give a surviving spouse a special privilege to inherit an unencumbered homestead at the expense of the other beneficiaries.
On June 29, 2022, the Iowa Court of Appeals issued an opinion involving a partition action and the subsequent assessment of attorney fees and costs. After three siblings filed a petition seeking a partition in kind against their other two siblings, the five siblings agreed to a partition in kind for the “heirs property” they owned as tenants in common. See Iowa Code § 651.1(5). Because the division was equitable and practicable, the Court of Appeals affirmed the referee’s recommendation. However, the court held that the district court erred in taxing all costs against the defendants.
On June 30, 2022, the Iowa Supreme Court, in a 4-3 decision, overruled 18-year-old precedent to find that Iowa’s right to farm statute, Iowa Code § 657.11, does not violate the inalienable rights clause of the Iowa Constitution. This decision generally restores statutory immunity from nuisance lawsuits seeking special damages for many animal feeding operations.
On June 24, 2022, the Iowa Supreme Court affirmed that allowing the public to use an easement does not establish a public dedication. A landowner granted a written access easement to his family members and invitees. Because there was clear evidence the landowner did not intend to dedicate the easement, the Court affirmed that the driveway was not for public use.
On June 17, 2022, the Iowa Supreme Court affirmed that the ten-day deadline to post a notice of commencement of work applies to general contractors, not subcontractors. See Iowa Code § 572.13A. After a developer defaulted on a residential project, the bank initiated a foreclosure action claiming to have priority over the mechanics’ liens filed by two subcontractors on the property. Considering the statute as whole, the Court concluded that the subcontractors properly filed the required notices and, thus, had priority over the bank’s mortgages.
On June 15, 2022, the Iowa Court of Appeals reversed a grant of summary judgment in a drainage dispute in favor of the City of Council Bluffs, the owner of the dominant estate. A couple alleged that improvements on the city property caused erosion and flood damage to the couple’s two servient properties. The court held that the express drainage easement only governed one property. Additionally, the statute of limitations did not bar the plaintiffs’ nuisance claim because the alleged offense was continuous rather permanent. Accordingly, the Court of Appeals reversed the district court’s grant of summary judgment in favor of the city and remanded the action for further proceedings.
On May 6, 2022, the Iowa Supreme Court held that all claims involving administration of an estate must be asserted during the probate proceedings. A beneficiary of a will disputed the fees awarded to the personal representative of the estate. After the probate court reduced the fees awarded, the beneficiary initiated a separate lawsuit seeking damages. Because all estate administration disputes must first be raised during the probate proceedings, the Court affirmed the grant of summary judgment in favor of the personal representative.
President Biden signed the Extending Government Funding and Delivering Emergency Assistance Act (P.L. 117-43) into law on September 30, 2021. It authorized $10 billion to assist agricultural producers impacted by wildfires, droughts, hurricanes, winter storms, and other eligible disasters experienced during calendar years 2020 and 2021. The USDA has determined that the money will be funding two new programs, the Emergency Livestock Relief Program (ELRP) and the Emergency Relief Program (ERP).
On May 6, 2022, the Iowa Supreme Court affirmed that a drainage district improperly reclassified the benefits of a drainage tile repair project. A reclassification commission assessed the benefits conferred upon the railroad company at 100 percent because compliance with federal railroad safety regulations essentially doubled the cost of the project. The Court determined that only the benefit of the drainage repair project, not its cost, could be considered during reclassification.
On May 6, 2022, the Iowa Supreme Court affirmed that court approval is required to modify an irrevocable trust once one of the settlors has died. After one spouse passed away, a couple’s joint trust became irrevocable. The surviving spouse attempted to modify the trust by obtaining the written consent of all the trust beneficiaries. The Court ruled that the amendment was invalid because irrevocable trusts may be modified by either obtaining the consent of all the settlors and beneficiaries or by obtaining court approval. Iowa Code § 633A.2202-.2203. Here, because one of the settlors had died, she could not provide her consent, and court approval was required.
On May 19th, 2021, Governor Reynolds signed SF 356 into law establishing the “Iowa Agricultural Tourism Promotion Act.” See Iowa Code § 673A et seq. Agricultural tourism is a growing industry in Iowa. In 2017, Iowa had 350 agri-tourism operations, an increase from 275 in 2012.
Probate is a court-supervised process for transferring assets after death. While the term “probate” often describes the process by which the court administers a will, probate may be required for those who die without a will as well. The probate process seeks to ensure an orderly transfer of assets, all the while protecting the rights of creditors and heirs.
When someone dies with a will, a surviving family member or other person close to the decedent must ensure that the decedent’s wishes specified in the will are followed. This usually requires the will to be “probated” or submitted to and administered by the court in the jurisdiction where the decedent lived.
When someone dies, another individual will need to handle the affairs of the deceased individual.
On April 27, 2022, the Iowa Court of Appeals determined that the district court’s grant of summary judgment was not appropriate because genuine issues of material facts existed in a case involving the priority of competing perfected security interests and agricultural-supply-dealer liens. After a dairy operation liquidated its assets, there were insufficient proceeds to satisfy all claims against the farm. A financial institution and a feed dealer each claimed to have priority to these proceeds. Because the record did not adequately provide the facts necessary to resolve the dispute under Iowa Code chapters 554 and 570A, the court denied both parties’ motions for summary judgment and remanded the case for further proceedings.
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.