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On February 21, IRS issued a long-awaited revenue procedure, IRS Rev. Proc. 2020-13, to allow farmers who had elected out of UNICAP prior to the Tax Cuts and Jobs Act to revoke that election if they qualify as a small business taxpayer.
With filing season well underway, IRC §199A (Section 199A) has been generating a lot of questions, particularly with respect to patrons of agricultural and horticultural cooperatives. Below we discuss several common issues.
On February 19, 2020, the Iowa Court of Appeals denied a beneficiary’s request to invalidate a September 2018 court order approving a plan to make property distributions and then terminate a family farm trust
A married couple created an irrevocable trust and placed farmland into the trust. The parents named their three children as beneficiaries. The trust originally provided for terminating distributions once the three children reached fifty-five years of age.
On February 5, 2020, the Iowa Court of Appeals found that trustees of a drainage district improperly annexed and reclassified land into their district. The ruling affirmed the district court's order vacating the annexation.
On January 23, 2020, the Environmental Protection Agency (EPA) and the U.S. Department of the Army signed the final Navigable Waters Protection Rule (NWPR), a rule that defines “waters of the United States” or the jurisdictional scope of the Clean Water Act (CWA).
On January 23, 2020, the Iowa Court of Appeals issued a ruling finding that cash gifts given by the husband’s parents while the couple was married constituted divisible property during their later divorce. The court found that the gifts were made to the couple with the intent to keep the farm in the family.
It’s always good to get answers to unresolved questions, and it’s even better when the answer provides good news. IRS recently provided such an answer in PMTA 2020-01, posted to the IRS website on January 15. In this memo, the Office of Chief Counsel answered an important lingering question we’ve had since 2018:
As we move into 2020, we're dedicating this post to reviewing important agricultural law developments from the past year. Most of these issues continue to evolve, and we look forward to providing updates as they occur. Happy new year!
On December 20, 2019, President Trump signed into law the Further Consolidated Appropriations Act, 2020, HR 1865, part two of a spending bill designed to keep the government running through September 2020.
On December 18, 2019, a divided panel of the United States Court of Appeals for the Fifth Circuit affirmed a Texas district court’s December 2018, ruling that the individual mandate in the Affordable Care Act is unconstitutional in light of changes made by the Tax Cuts and Jobs Act of 2017 (TCJA). Texas v. U.S., No.
On December 20, 2019, President Trump signed into law the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act).
The $1.4 trillion year-end spending package passed by Congress and signed into law on December 20, 2019, contains a number of provisions impacting taxpayers. The package, including the Consolidated Appropriations Act, 2020, H.R.
On November 8, 2019, the Iowa Supreme Court denied the motion to include a tractor driver in a second trial involving a motorcycle collision. The Court found that while there was an error in the verdict form, it did not influence the jury’s decision to exonerate the tractor driver of fault in the accident.
On November 27, 2019, the Iowa Court of Appeals ruled that a farmer who had solicited the services of a harvester was a “debtor” subject to a harvester lien because he was the person for whom the services were rendered.
On November 8, 2019, the Iowa Supreme Court ruled that a restriction of alienation placed on a charitable gift could not be modified. The Court found the restriction did not make the purpose of the gift impracticable, and therefore could not be modified under the Uniform Prudent Management of Institutional Funds Act or the common law doctrine of cy pres.
On November 22, 2019, IRS released TD 9884, finalizing regulations confirming that individuals taking advantage of increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.
On November 6, 2019, the Iowa Court of Appeals affirmed a district court order dismissing a challenge by landowners to a county's condemnation of their property. The county sought to condemn the private land for the purpose of upgrading a dirt road to a Level A road.
On October 23, 2019, the Iowa Court of Appeals ruled that farm borrowers lacked good faith when they filed a motion to continue a mortgage foreclosure. The district court’s summary judgment allowing foreclosure by Farm Credit Services was thus allowed to stand.
On October 23, 2019, the Iowa Court of Appeals ruled that a boundary by acquiescence was established between two farms because the neighbors had treated the edge of a fenced corridor as the boundary line for more than ten years.
On October 16, 2019, the United States Tax Court issued an opinion determining the correct way for an agricultural cooperative to characterize payments made to patrons and to calculate its DPAD deduction.
On October 4, 2019, the North American Meat Institute (AMI) filed a complaint against the state of California over Proposition 12, which passed last year. The complaint alleges Proposition 12 violates the Commerce Clause by discriminating against out-of-state veal and pork producers through a sales ban on veal and pork products not raised under certain conditions.
On September 25, 2019, the Iowa Court of Appeals issued a ruling regarding a will created by a man who suffered from schizophrenia. His sister claimed that he lacked the testamentary capacity to create a will and that it should be set aside. The court affirmed the district court’s decision and held that the decedent did have testamentary capacity to create a will and deed his portion of the farm to his distant relatives.
On September 26, 2019, the USDA announced that producers participating in the federal crop insurance program who had a 2019 prevented planting indemnity because of flooding or excess moisture will receive an automatic “top-up” payment on their inde
The Seventh Circuit recently ruled that the USDA acted arbitrarily and capriciously when it treated several acres of an Indiana couple’s farm as a converted wetland and rendered their entire farm ineligible for USDA benefits. Boucher v. USDA, No. 16-1654 (7th Cir. 2019).
On August 29, 2019, IRS issued draft instructions for Form 8995, Qualified Business Income Deduction Simplified Computation. The instructions provide some useful soft guidance, as well as a new QBI flowchart. Detailed below are some highlights. We we will watch for the instructions for Form 8995-A.
As many farmers continue to struggle with high debt and uncertain markets, new attention is focused on remedies for financially distressed farmers. President Trump signed into law the Family Farmer Relief Act of 2019 on August 23, 2019. This law increases the amount of debt a farmer may have, yet still remain a “family farmer” eligible for Chapter 12 bankruptcy protection.
On August 21, 2019, the United States District Court for the Southern District of Georgia became the second federal court in the past three months to rule that the 2015 Waters of the United States Rule (the WOTUS Rule), was improperly issued by the Environmental Protection Agency and the U.S. Army Corps of Engineers.
A recent case from the Tax Court explains the special “qualifying child” rule for children of divorced parents. Although it has been in place for decades, the rule still causes confusion, especially among clients. A divorce decree may grant a noncustodial parent the “right” to claim a child as a dependent.
On August 7, 2019, the Iowa Court of Appeals ruled that an alleged farm nuisance was a continuous, rather than permanent, nuisance. As a result, the court held that the statute of limitations did not bar the neighbors’ claims of nuisance, trespass, and negligence.
In this August article published in the Bloomberg Tax Tax Management Real Estate Journal, Kristine explains the proposed 199A cooperative regulations, as they impact cooperative patrons. Part II, due for release in September, will examine the impact of the proposed regulations on specified cooperatives.
Update: President Trump signed this bill into law on August 23,2019.
In this webinar for I-29 Moo University, Don Swanson and Kristine Tidgren address practical financial, tax, and bankruptcy issues impacting producers facing financial distress.
CALT has recently received several inquiries on the Iowa property tax assessment process, including the process for appealing property classifications. This article provides an overview of how property is classified, provides an overview of several recent administrative cases, and gives information on how landowners can appeal if they believe their land has been misclassified.
On July 25, 2019, USDA published details as to how payments will be made under the 2019 Market Facilitation Program (MFP). First announced May 23, 2019, the 2019 MFP will include up to $14.5 billion in direct payments to producers. Payment details are now posted on the MFP page of the USDA website.
On July 24, 2019, the Iowa Court of Appeals issued a ruling concerning damage done to drainage tile in Webster County. The court found the neighbor’s trees damaged a farmland’s drainage tile causing water to pool and damage the crops in the field. Therefore, the court found the neighbor liable for the damage and responsible for replacing the damaged tile.
On July 24, 2019, the Iowa Court of Appeals issued summary judgment against a nephew in his lawsuit alleging claims of undue influence and tortious interference with a bequest of farmland against members of his family. The court found insufficient evidence to establish either claim.
Kitt talks about two recent Iowa Court of Appeals cases and the Property Assessment Appeal Board.
On July 3, 2019, the Iowa Court of Appeals issued a ruling concerning the amount of child support a farmer was required to pay. The court found, in this case, the farmer’s depreciation expenses should not be used when determining income for the purposes of assessing child support, but his farming expenses should be deducted from his gross income.
On July 3, 2019, the Iowa Court of Appeals issued a ruling regarding the creation of an easement over the boundary of a gravel road. The court found that because the owner of the property did not have notice of an easement claim, no easement was created.
In this tax edition of the CALT Brief Podcast, Kristine discusses:
Taxpayer First Act of 2019, H.R. 3151, signed into law July 1, 2019
President's 2020 Budget Proposal and JCT Analysis
TD 9861, Final Regs Allowing Truncated Social Security Numbers on W-2s
TD 9869, Final Regs Clarifying that Partners are not Employees when Partnership Owns Disregarded Entity
Brown v. Commissioner, TC Memo 2019-69 (Parsonage Allowance Case)
N.C. Dept of Rev. v. Kaestner, No. 18-457 (U.S. Sup. Ct. June 21, 2019) (Tax Jurisdiction Case Involving a Trust)
TD 9864, Final Regs Detailing Impact of State Credits on Charitable Deductions
IRS Email Regarding Data Breach Instructions
Generally, cash basis farmers must include proceeds from crop insurance and federal disaster programs in gross income for the tax year during which they receive the payments.
The United States Supreme Court Supreme Court issued a decision on June 21, 2019, holding that landowners are no longer effectively required to exhaust state remedies before filing Fifth Amendment federal takings claims in federal court. Knick v. Township of Scott, Pa., No. 17-647 (U.S. 2019).
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.