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The Iowa General Assembly completed its 2009 session in the early morning hours of April 26. It will be a memorable session - one that included significant questions being raised about the extent of public input on a tax issue and the failure to take action to either legitimize homosexual marriage or clarify existing Iowa law concerning its illegitimacy. The legislature also approved a massive budget (the largest in Iowa history) of $6.258 billion and $765 million in new borrowing. Here's a rundown on the most important tax issues the legislature dealt with:
The IDOR has recently issued three policy letters concerning various aspects of the Iowa capital gains exclusion, the application of Iowa inheritance tax to trusts and whether the vehicle trade-in credit requires the same natural ownership.
On April 12, Governor Branstad signed into law legislation that finally settle Iowa’s tax law rules for 2010. By line-item vetoing the parts of SF 512 he found unacceptable (particularly the portion of the bill that would have allowed the Governor to transfer funds among agencies), the Governor was able to approve the rest of the bill, including the “code conformity” provisions for Iowa’s tax law. Here are the key points:
On March 13, the South Dakota Governor Rounds signed H.B. 1320 into law. The legislation exempts power-generating wind farms from most state and local taxes, but subjects them to an alternative annual tax that is based on the number of kilowatts a wind farm can produce. Also, the bill specifies that any company owning or leasing a wind farm is subject to retail sales and service taxes. But, wind energy facilities and energy transmission equipment is exempt for other state, county, municipal and district taxes.
In mid-February, the Georgia Senate approved a constitutional amendment (SR 859) that would eliminate the state’s share of the property tax – approximately $30 per household. The vote was 49-4 and is supported by the Governor. If the measure is supported by two-thirds of the House, the resolution will appear on the November ballot. In Georgia, the largest portions of property taxes are levied by school districts and local governments. The measure would prevent local and school officials from shifting the blame for property tax increases to the state.
On January 16, 2008, the U.S. Supreme Court decided the question of whether trust expenses for investment advisory fees are fully deductible or may be deducted only to the extent they exceed 2% of adjusted gross income. The Court ruled unanimously in affirming the opinion of the U.S. Circuit Court of Appeals for the Second Circuit that such expenses will usually be subject to the 2% floor. It's an important issue because financial institutions often set a single "bundled" fee for all of the services that they perform.
One of the hot topics at our recently concluded tax schools was the preparer registration rules that IRS has developed. Now, those rules have changed again. In Notice 2011-6, IRS has said that the competency testing requirement won't apply to non-signing preparers in law, accounting or actuary firms as well as for enrolled agents. In addition, all supervised staff in such firms is also excluded from the examination and continuing education requirements of Circular 230 that were in the proposed regulations.
On March 29, the IRS released Rev. Proc. 2011-26. The Rev. Proc. offers guidance on the bonus depreciation rules enacted in 2010, and creates a safe harbor applicable to luxury automobiles. Here are the 2011 depreciation numbers for vehicles first placed in service in 2011:
2011 - (Rev. Proc. 2011-21)
On November 21, the President signed into law H.R. 674. Title II of the legislation is entitled the "Vow To Hire Heroes Act." The legislation passed both bodies of the Congress unanimously (at least the final vote was unanimous). Title II, Sec. 261, includes tax credits for qualified wages paid to qualifying veterans that are hired from November 22, 2011 through 2012 (even if some of the wages are paid after 2012) as part of the existing Work Opportunity Credit as follows:
Overview of Extension Provision
On February 17, the U.S. House and Senate approved H.R. 3630, the “Middle Class Tax Relief and Job Creation Act of 2012.” The vote on the legislation was partisan, particularly on the Senate side – with 90 percent of Democratic Senators voting for the bill and 68 percent of Republican Senators voting against the bill. On the House side, 78 percent of Democratic members voted for the bill, and 62 percent of Republicans supported it. The President is expected to sign the bill into law.
A lien gives the lienholder an enforceable right against certain property that can be used to pay a debt or obligations of the property’s owner. Most states have laws that give particular parties a lien by statute in specific circumstances. Statutory liens have generally taken priority over Uniform Commercial Code (UCC) perfected security interests. The rationale behind statutory liens is that certain parties who have contributed inputs or services to another should have a first claim for payment. For example, section 9-310 of the UCC states:
This case involved several issues that arose during the administration of a farmer’s Chapter 7 bankruptcy surrounding the security interest of multiple lenders. A key factor was that the debtor had taken out two loans from a bank and a third loan from another Company.
Weather-related problems are a significant risk of agricultural production. Consequently, the Congress has recognized the impact of weather on the livestock industry and the difficulty producers have in protecting themselves from this risk by enacting special tax rules. Due to prolonged drought in certain areas in recent years, the Congress made important amendments to the weather-related livestock sale rules in 2004.
Sale and reinvestment provision
A southeast Missouri farmer has plead guilty to Clean Water Act criminal violations. James Raulerson, 48, of Holland, Mo., admitted to dumping an undetermined amount of decomposing glycerin, methanol and oil generated from the Natural Biodiesel Plant LLC in Braggadocio, MO. The pollutants were discharged into the Belle Fountain Ditch, a water of the United States, killing more than 30,000 fish and other aquatic life. Raulerson faces up to three years in prison and $250,000 at his Nov. 24, 2008, sentencing.
In many of the states west of the Mississippi River, water is owned by the state and a landowner must receive a permit from the state before water can be used for agricultural or other beneficial purposes. That permit typically sets limits on the amount of water that can be used and may limit the point of diversion of the water. In addition, water laws in these states may also specify that if the right to appropriate water is not used for a statutorily prescribed amount of time, the holder of the right can lose the water right. That was the issue presented in this case.
As times continue to grow tougher in the ethanol industry - proposed projects fail to raise the necessary capital and bankruptcy rate of existing plants rises – the possibility of crooked conduct increases. That was the case recently in North Carolina, an area that had planned on being at the center of the bio-fuels craze on the East Coast, but where those plans have been dashed by failing plants.
Earlier this spring, the Illinois House and Senate passed legislation amending the state’s Wildlife Code by adding a provision to §5/2.30 allowing Illinois residents without back child support obligations to take or possess “fur-bearing mammals” found dead or “unintentionally killed” by a vehicle along a public roadway. The amendment does restrict the carcass retrieval to open hunting season for that particular fur-bearing mammal and the person collecting the animal must possess the appropriate licenses, stamps, and permits to hunt the species of animal at issue.
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.