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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.

To erase any doubt on the matter, and confirming the point we have been making on this issue, the Chief Counsel's Office of IRS, in an Information Letter dated February 17, 2009, has stated that Section 7 of Rev. Proc. 2008-54, 2008-38, I.R.B. 722 provides for Sec. 179 revocations as well as elections without the Commissioner's consent, and before the issuance of Treasury Regulations on the matter.  The letter notes that Rev. Proc. 2008-54 provides that for any tax year beginning after 2007 and before the last year provided in Sec. 179(c)(2) for revoking a Sec.

The passive loss rules apply to activities that involve the conduct of a trade or business and the taxpayer does not materially participate in the activity or in rental activity on a basis which is regular, continuous and substantial. If the passive loss rules apply, deductions (losses) from passive trade or business activities, to the extent the deductions exceed income from all passive activities, may not be deducted against other income (non-passive activity gains).

Overview

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. 

The Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001 made tremendous changes to the Internal Revenue Code.  EGTRRA included numerous provisions that were only temporary in nature, phased-in over a period of time, had delayed effective dates, and some that had retroactive effective dates.  In addition, subsequent legislation has extended some of the provisions (sometimes on a retroactive basis) and made permanent some of the 2001 provisions.  Those subsequent tax acts also created entirely new provisions.  Needless to say, keeping all of these provisions straight is incredi

Overview

November 23, 2009 | Roger McEowen

To read the full article: tax-extenders.pdf

Overview

May 10, 2010 | Roger McEowen

The United States Tax Court announced on May 6, 2010, that most parties that are represented by legal counsel before the court will be subject to mandatory e-filing.  The new rule will be effective for petitions filed on or after July 1, 2010, and will generally make filing with the court subject to the same rules that other federal courts follow.  There are exceptions.  Petitioners that are not represented by legal counsel, those represented by low-income taxpayer clinics and Bar-sponsored free legal service programs that participate in the court’s calendar calls will not have to the e-fil

July 5, 2010 | Roger McEowen

Last month, the Treasury Inspector General for Tax Administration (TIGTA) released a report detailing numerous areas of fraud associated with the first-time homebuyer tax credit.  The report is 30 pages long.  To summarize TIGTA's report, an estimated 14,132 persons received a tax credit that they weren't entitled to, amounting to $26.7 million.  Of that $26.7 million, $17.6 million was received by 2,555 taxpayers who bought homes before the effective date of the law for which they were claiming the credit.  That computes to a $6,900 gift to these tax-cheats from law-abiding taxpayers.  Wha

As it does by the end of September every year, the IRS has issued a Notice announcing the extension of the replacement period for livestock that farmers must sell because of severe weather conditions, and has published a list of affected counties.  The Notice points out the change in the law concerning the involuntary conversion of livestock that was made a few years ago.  Under that change, the usual four-year the usual four-year replacement period was extended to the end of a livestock producer's first tax year after the first drought-free year for a particular region.

September 27, 2010 | Roger McEowen
December 17, 2010 | Roger McEowen

Over the past couple of weeks, the White House gave up on its push for a tax increase on higher income earners and began pushing a deal with key tax legislators in the House and Senate to addresses a number of tax provisions in addition to keeping 2011 individual income tax rates at the 2010 level, at least for a short period of time.  While the bill does contain a tax increase on decedent’s estates(and generation skipping transfers) compared to the 2010 law, the estate tax provisions are more favorable than many expected.  The bill passed the Senate on December 15 by a vote of 81-19, and j

January 4, 2011 | Roger McEowen

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. 

Due to IRS processing delays caused by late 2010 enactment of tax legislation, some taxpayers will not be able to file 2010 returns until the latter half of February.  The IRS has announced that those taxpayers that will be impacted include those that file Schedule A (itemized deductions), those taxpayers claiming tuition and fees deductions (Form 8917), and those claiming the schoolteacher deduction (Form 1040, line 23 or 1040A, line 16. 
    

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)

Passenger Vehicles

July 1, 2011 | Roger McEowen

We now have insight into how long a "temporary" tax lasts according to legislators in Washington, D.C. It's 35 years! Effective July 1, 2011, the FUTA surtax of 0.2% has expired. That means the FUTA tax will be 6.0% rather than 6.2%. The surtax has never been a permanent part of the law, and its original purpose was to reimburse the Federal Treasury for unemployment benefits that were paid from 1973-1975. But, over time, the surtax has collected about $73 billion. That's far more than the amount that was needed to repay the Treasury.

As it does by the end of September every year, the IRS has issued a Notice announcing the extension of the replacement period for livestock that farmers must sell because of severe weather conditions, and has published a list of affected counties. The Notice points out the change in the law concerning the involuntary conversion of livestock that was made a few years ago. Under that change, the usual four-year the usual four-year replacement period was extended to the end of a livestock producer's first tax year after the first drought-free year for a particular region.

November 22, 2011 | Roger McEowen

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. 

As it does by the end of September every year, the IRS has issued a Notice announcing the extension of the replacement period for livestock that farmers must sell because of severe weather conditions, and has published a list of affected counties. The Notice points out the change in the law concerning the involuntary conversion of livestock that was made a few years ago. Under that change, the usual four-year the usual four-year replacement period was extended to the end of a livestock producer's first tax year after the first drought-free year for a particular region.

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:

Normally, a security interest in tangible property is perfected by filing a financing statement. An effective financing statement indicates that the creditor may have a security interest in the described collateral and is sufficient if it provides the name of the debtor, gives the name and address of the secured party from which information concerning the security interest may be obtained, gives the mailing address of the debtor and contains a statement indicating the types or describing the items of collateral.

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.

August 6, 2007 | Roger McEowen

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

September 10, 2007 | Roger McEowen

Governor Culver has signed into law House File 367, a bill intended to hold employers responsible for overdraft charges on employee’s bank accounts, if the employer fails to direct-deposit employee funds in a timely manner.  Under prior law, there was no recourse for employees should an employer fail to deposit funds. The new law allows overdraft charges incurred on account of an employer’s failure to timely deposit funds to be the basis for a wage claim under Iowa Code §91A.10.

February 29, 2012 | Erika Eckley and Roger McEowen
August 5, 2008 | Roger McEowen

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.

August 29, 2008 | Roger McEowen

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.

This case involved a dispute over water rights to California’s two largest rivers.  An association of 16 water contracting agencies from north of the San Joaquin-Sacramento River Delta sought to establish superior water rights under water service contracts that would limit and exclude the export of water south of the Delta until its members received 100% of their contractually-allocated water supply. The plaintiff, Tehama-Colusa Canal Authority (TCCA) filed suit against the U.S. Department of the Interior and it’s Bureau of Reclamation, among others, asking the U.S.

Nebraska State Senator Ernie Chambers has sued God.  The Senator seeks an injunction against God to stop him from making and delivering on terroristic threats, among other claims.  Chambers, a non-practicing attorney, filed the case on behalf of his constituents.  The petition asks the Douglas County Court to waive personal service “by virtue of the fact the Defendant, being Omniscient, shall be deemed to have actual knowledge of this action.”  Chambers claims God has caused “fearsome floods, egregious earthquakes, horrendous hurricanes, terrifying tornadoes” and “continues to make terroris

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.

October 7, 2008 | Roger McEowen

As we've been saying for sometime now, there is going to be a major shake- out in ethanol production with most of the currently existing plants not producing corn-based ethanol by the end of the next five years.  The inefficiencies of the fuel, the high-cost of the inputs, and concerns over pollution will make things tough for ethanol production - all in spite of massive, government-mandated taxpayer support.  So much for the free-market, politicians love tax subsidies coming into their states and districts - especially when they come largely from people that can't vote for (or against) the

April 14, 2009 | Roger McEowen

An ethanol plant near Oshkosh, Wisconsin, has been sued under the Clean Water Act’s (CWA) citizen suit provision (33 U.S.C.

May 20, 2009 | Roger McEowen

Times continue to be tough for the ethanol industry.  Gasoline demand continues to fall and corn prices remain relatively high.  In April, Aventine Renewable Energy Holdings, an Illinois-based ethanol producer, filed for Chapter 11 (reorganization) bankruptcy, and the largest West Coast ethanol producer, Pacific Ethanol, Inc., filed Chapter 11 on May 18.  Aventine has an annual production capacity of 207 million gallons of ethanol, and operates distilleries in Illinois and Nebraska.

August 9, 2011 | Erin Herbold-Swalwell

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.

New Iowa Legislation Impacting Rural Landowners and Agricultural Businesses (Most Provisions Effective Jul. 1, 2011)
 
New Iowa Legislation Impacting Rural Landowners and AgriculturalBusinesses (Effective July 1, 2010)

The extent of federal jurisdiction over isolated wet areas on private property has been an issue since the mid-1970s. The regulatory agencies (U.S. Army Corps of Engineers and the Environmental Protection Agency) and the federal courts have generally taken an expansive view of the scope of the federal government’s ability to regulate activities that impact these wetlands. That means that a farmer, rancher or other landowner generally can not conduct activities such as land clearing, drainage or customary farming practices without first obtaining a federal permit.

The United States Department of Justice (DOJ) has filed a complaint against Seaboard Foods and PIC USA alleging that the companies have failed to comply with an Environmental Protection Agency order to prevent swine manure from contaminating drinking water.  The companies were ordered to clean up five confinement hog operations on June 26, 2001. The complaint notes that each confined pig generates approximately 6-8 pounds of manure daily per 100 pounds of animal weight.  Each confinement building contains approximately 1,000 pigs.

The federal Environmental Protection Agency (EPA) and U.S. Army Corps of Engineers (Corps) regulate “wetlands” under the Clean Water Act. The CWA prohibits the “discharge of any pollutant” into regulable waters without a federal permit.

For purposes of Clean Water Act (CWA), the federal government has jurisdiction over “waters of the United States.” Under the CWA, a permit is required before a “pollutant” can be discharged into such waters.The definition of “pollutant” is very broad, as is the definition of “waters of the United States.” In 2001, the U.S. Supreme Court ruled that the federal government had no regulatory authority over isolated wetlands that did not have a substantive connection to interstate commerce.

March 12, 2007 | Roger McEowen

It seems that conservation is in vogue at the moment in all different areas. But, an Arizona ski resort recently found out that there can be a limit to conservation efforts. In this case, the resort proposed an expansion plan that would use recycled sewage water to make snow on peaks that are sacred to 13 Indian tribes.  Arizona Snowbowl is a ski area on Humphrey’s Peak, the most religiously significant of the San Francisco Peaks in the Coconino National Forest. Several tribes say they have a duty to protect the sacred peaks.

September 10, 2007 | Roger McEowen

Community and environmental groups sued the EPA challenging the validity of consent agreements that EPA had entered into with participating animal feeding operations (AFOs).  The court, however, upheld the EPA’s ability to enter into the consent agreements.  The plaintiffs claimed that the consent agreements amounted rules disguised as enforcement actions and that, as a result, the EPA had not followed proper procedures for rulemaking.  The plaintiffs also claimed that the EPA had exceeded its statutory authority by entering into the agreements.  The court disagreed, holding that the consen

In a recent opinion, a majority of the U.S.

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