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Three parties were involved in this case: a real estate brokerage company, the buyer of the property (a real estate investment LLC), and the property seller (a hotel management company). The real estate broker generated a written contract to be used in the purchase of the real estate consistent with the buyer’s ultimate offer. The parties agreed to the terms of the agreement.
When property is leased, the tenant is entitled to “peaceable possession” of the leased premises. Sometimes that is termed “quiet enjoyment.” But, just exactly what does “quiet enjoyment” involve.
On March 18, 2010, the Hiring Incentives to Restore Employment Act (Act) became law. It is estimated that the HIRE Act will cost approximately $18 billion, and its cost is only partially offset by a tweak in the somewhat obscure foreign account tax compliance rules (i.e., offshore tax enforcement), acceleration in corporate estimated tax payments and various tax penalties. The intent of the law is to incentivize employment.
The passive loss rules can have a substantial impact on farmers and ranchers as well as investors in farm and ranch land. Until 1987, it was not uncommon for non-farm investors to purchase agricultural land and incur losses which the investor would then use to offset against the investor’s wage or other income. However, the passive loss rules, enacted in 1986, reduce the possibility of offsetting passive losses against active income. The effect of the rules is that deductions from passive trade or business activities, to the extent the deductions exceed income from all passive activitie
The Small Business and Work Opportunity Act of 2007 (Act) included a provision that allows some husband-wife business ventures to elect out of the partnership rules for federal tax purposes as a qualified joint venture (QJV). While the election will ease the tax reporting requirements for husband-wife joint ventures that can take advantage of the election, the Act also makes an important change to I.R.C.
On May 25, 2007, the President signed into law the Small Business and Work Opportunity Act (Act). The Act makes several amendments to the WOTC (I.R.C. §51), but perhaps the most important change to the WOTC from agriculture’s standpoint is that the WOTC now has expanded application for employers that hire new employees in a “rural renewal county.”
Agricultural legal and tax developments continued to impact the agricultural sector in 2009. Here’s the list of what we believe to be the “Top Ten” developments in 2009 based on their impact to agricultural producers and rural landowners across the nation.
Under present law, 2010 is the final year in which capital gains and qualified dividends will not be subject to tax in the hands of certain individual taxpayers – those in the two lowest tax brackets. This zero percent rate became available beginning in 2008 and raises significant planning questions and opportunities for lower-income taxpayers, and other taxpayers that can utilize tax management strategies to minimize income to take advantage of the zero percent rate.
The Congress has overwhelmingly approved legislation that expands the first-time homebuyer tax credit and extends the net operating loss carryback period. The Act is titled the Worker, Homeownership, and Business Assistance Act of 2009, was approved by the Senate 98-0 and the House 403-12 and has as its primary purpose an extension of unemployment insurance benefits for unemployed persons in areas plagued by high unemployment. The Act also contains numerous other tax provisions and revenue offsets. The legislation, H.R.
The homosexual marriage issue is important to practitioners because of the potential impact any change in the definition of “spouse” would have on various estate planning, inheritance, property ownership and tax concepts and rights to various government benefits.
In late 2008 and early 2009, two major pieces of legislation were enacted into law with the stated goal of spurring the economy. The 2008 legislation (H.R 1424) was titled the Emergency Economic Stabilization Act of 2008. Division B of the 2008 law contains the energy-related provisions. The 2009 law (H.R. 1) is known as the American Recovery and Reinvestment Act of 2009 and is the largest spending bill in U.S. history. Energy-related provisions are included among the various provisions of the bill.
For some farm families, the cost of health care is a major expense. In some instances, at least one of the spouses may deem it necessary to find off-farm employment for the purpose of obtaining health insurance for the family. For these families health insurance is very important, and a consideration of the various planning options associated with health insurance is critical.
The Iowa Supreme Court has determined that America Online (AOL) does not offer telecommunication services in Iowa because members could only access the services through AOL's out-of-state call centers. Thus, AOL's services were not subject to sales tax because the tax can only be imposed on services that originate and terminate within Iowa. Iowa law taxes the gross receipts from the sale, furnishing or service of communication services when they are sold at retail in Iowa to consumers or users.
The National Milk Producers Federation began sponsoring a program in 2003 to reduce the supply of milk in order to increase the price dairy producers receive for their milk. The program is called CWT, which stands for Cooperatives Working Together. Under the program, members of participating cooperatives and other dairy producers who join the program contribute 10¢ per hundredweight (cwt.) of milk they send to market. (Initially, the contribution was 5¢ per hundredweight.) Currently, 70% of the nation’s milk supply is paying into the program.
Surface water drainage disputes can arise between property owners when an adjacent landowner does something to interfere with the natural or historical flow of water to or from their property. Historically, the law did not permit much alteration of a natural water course. But, a landowner of higher elevation (the owner of the “dominant estate”) is entitled to drain excess surface water onto land of lower elevation (the “servient estate”) along and within the natural watercourse. However, a drawback of this approach was that it did not allow landowners to fully develop and utilize their
In recent years, 46 states have enacted legislation designed to encourage the continued existence of equine-related activities, facilities and programs, and provide the equine industry limited protection against lawsuits. The laws generally require special language in written contracts and liability releases or waivers, require the posting of warning signs and attempt to educate the public about inherent risks in horse-related activities and immunities designed to limit tort liability. Under the typical statute, an “equine activity sponsor,” “equine professional,” or others can only be
In general, a deduction is not available for charitable contributions of partial interests in property and an easement, by definition, is a partial interest in property. But, an exception exists for an easement that is a “qualified conservation contribution.” A “qualified conservation contribution” is defined in as the contribution of a qualified real property interest to a qualified organization exclusively for conservation purposes.
Estate planning, land contracts, transfer of management and wealth, and buy-sell agreements are all components of a good succession plan. In order to successfully transfer the family farm to the next generation, the parties involved should have a specific plan in place. This case demonstrates the need for a viable succession plan and the damage that lack of communication can do to family relationships.
Crop insurance and disaster payments are normally reported as income in the year of receipt. However, operators and share-rent landlords on the cash method of accounting may elect to defer crop insurance proceeds and federal disaster payments to the year after the year of the destruction or damage to the crops. While the statute does not expressly require a farmer to have a practice of deferring all crop income to the following year to be eligible to defer receipt of crop insurance or disaster payment, the IRS has interpreted the statute to require a “substantial amount” of the crop to b
In recent years, “related party” transactions have been utilized to defer and/or avoid income tax. Sometimes, the transactions have risen to the level of being abusive tax transactions according to the IRS. Related parties may also be involved in I.R.C.
The most basic principle of law involving negligent torts is that a party is liable for negligent conduct (i.e., breaches a duty owed to another party) that causes foreseeable injury to someone else’s person or property.
In a recent news release, IRS has reversed its previous position and announced that credit or debit card convenience fees associated with the payment of federal tax are deductible as miscellaneous itemized expenses. Only miscellaneous expenses that exceed 2 percent of a taxpayer's adjusted gross income are deductible, but IRS says that the fees charged by card processors average about 2.5 percent of the amount of the tax payment. The announcement reverses the IRS position set forth in IRS Publication 529 in which IRS said that while taxpayers may pay tax via credit card, they can't deduct
The IRS Chief Counsel's Office has recently issued a legal memorandum in which it determined that the $1 million limitation on the deduction of mortgage interest on acquisition indebtedness under I.R.C. Sec. 163(h)(3)(B) applies on a per-mortgage basis, rather than on a per-taxpayer basis. That means for multi-million dollar homes that are co-owned by unmarried persons, interest is deductible only on $1 million of acquisition indebtedness, not the interest attributable (at the maximum) to a single $2 million mortgage (attributed due to ownership equally between the spouses).
The 2008 Farm Bill and subsequent regulations have established new adjusted gross income (AGI) and adjusted gross farm income (AGFI) limitations for program eligibility. The new limitations are considerably lower than the previous limitation of $2,500,000 and could have application to more producers than did the limitation under prior law. As a result, the correct computation of AGI and AGFI can be critical for ensuring that a producer remains eligible for farm program payments.
Questions abound concerning how to report disaster assistance received by clients this tax season. Recently, IRS clarified the tax consequences of financial assistance received under the Jumpstart Iowa Housing and Small Business programs. IRS says that any financial assistance received under these programs first reduces the amount of casualty loss allowed as a deduction on an individual’s or small business’s federal and Iowa income tax return. That means they are to be treated similarly to the receipt of insurance proceeds. For example, if a taxpayer receives $5,000 of Jumpstart assista
Last fall, House Ways and Means Committee Chairman Charles Rangel (D.
We begin 2009 with our annual look at the most significant agricultural law developments of the previous year. Legal issues continue to be at the forefront of developments that are shaping the present and future of American agriculture, and it is very likely that the involvement of the legal system in agriculture will continue to grow. The following is my list of what I view as the top ten agricultural law developments of 2008 based on their impact (or potential impact) on U.S. agricultural producers and the sector as a whole.
Iowa law specifies that once a drainage district is established, additional land that is contiguous to the land in the district may be annexed into the district if the contiguous lands are benefitted by the improvement. The question of whether land was benefitted by a drainage district and could, therefore, be annexed into the district was involved in this case.
For purposes of Iowa sales and use tax, Iowa Code §428.20 defines a “manufacturer” as a person who purchases, receives, or holds personal property of any description for the purpose of adding to its value by a process of manufacturing. In Iowa, a “manufacturer” is exempt from sales and use tax on purchases of equipment if the equipment is “directly and primarily used in processing.” The application of the exemption to a paint company was at issue in this case.
Iowa law specifies that the natural drainage of surface water cannot be diverted by one landowner to the damage of another landowner. But, courts only grant injunctive relief in situations where it is necessary to prevent irreparable harm or afford relief where there is no other adequate remedy. A drainage issue and injunctive relief were involved in this case.
Hundreds of economists (including Nobel Prize winners Gary Becker, James Buchanan, Robert Mundell, Edward Prescott, and Vernon Smith) have signed a statement pointing out the shortcomings of Democrat Presidential candidate Barack Obama’s tax plan. The economists note their concerns with his proposals to increase tax rates on labor income and investment. They also note that Obama’s proposed dividend and capital gains tax increases would reduce investment and cut into the savings of millions of Americans.
Iowa has specific rules governing the drainage of surface water. But, is the state subject to those same rules?
Under the general rule, any taxpayer that produces or sells goods must report the income from the sale of the goods under the accrual method of accounting. But, farmers and ranchers are allowed to use the cash method. That’s a big deal because it allows farmers to time income and expenses through tax planning techniques which gives them a greater chance of adjusting income throughout the year to take advantage of the marginal tax brackets when it is advantageous to do so. If farmers were limited to the accrual method, they would likely have greater annual fluctuations in income because o
The IRS has recently released data showing that the share of the federal income tax borne by taxpayers in the highest income tax brackets has increased under the Bush Administration. The data lays to rest the myth that the Bush tax cuts of 2001 and 2003 amounted to tax cuts for the rich. The data reveal that the share of total federal income taxes paid by the wealthiest 1 percent of tax filers (those with adjusted gross income over $388,806) increased to 39.89 percent in 2006 (up from 37.42 percent in 2000). In 2006, the top 5 percent accounted for 60.14 percent of all federal income tax
Wind blows across broad stretches of northern Iowa at an average speed of 15.7 to 17.9 mph. year round, scouring the soil, swirling the leaves and chapping our lips. Those winds also light our homes, cook our food and power our computers.
It’s a well-known rule that a private landowner cannot assert a claim of adverse possession against the government. But, can the government acquire title to private property via adverse possession? If so, the government is able to side-step the Fifth Amendment requirement that it pay “just compensation” for the taking of private property. The issue of the government’s assertion of ownership via adverse possession was involved in this case.
Crop insurance and disaster payments are normally reported as income in the year of receipt. However, operators and share-rent landlords on the cash method of accounting may elect to defer crop insurance proceeds and federal disaster payments to the year after the year of the destruction or damage to the crops. I.R.C.
On February 13, the President signed into law H.R. 5140, the Economic Stimulus Act (Act) of 2008. Perhaps the part of the Act that has received the most attention is provision authorizing a refundable credit against tax (known as the “recovery rebate credit”) to low and middle-income persons for 2008. However, there are several important business tax incentives contained in the Act. In any event, the Act creates numerous questions and presents administrative issues for IRS.
On February 8, 2006, the President signed into law the Deficit Reduction Act of 2005. The Act is designed to cut the federal budget deficit. Among other provisions, the Act contains fundamental changes to the Medicaid eligibility rules and long-term care coverage. The new rules will impact significantly estate plans where preservation of family business assets is a major objective. That is a common estate planning objective for farm and ranch families.
Drainage law is important to many Iowa farmers, and the issues frequently involve not only principles of Iowa water law, but also statutes and regulations involving drainage districts and County officials. That was certainly the situation in this case.
Iowa law (Iowa Code §422.7 (21)) provides that certain capital gains can be excluded from taxable income. For the sale of business property to be eligible, the taxpayer must have either been employed in the business or materially participated in the business for ten years and held the property for ten years. Also, the statute defines sale of a business as the sale of “all or substantially all of the tangible personal property or service of the business.” The statute has been modified in recent years, but the provision defining “sale of a business” has not changed.
A local Vermont Board of Civil Authority (BCA) has ruled that a wind turbine reduced the value of adjacent property by 10 percent for real property tax purposes. The evidence showed that the wind turbine was within 300 feet of the petitioner’s home, and the petitioner claimed that the turbine’s noise, blinking light, glare from the blades, and resulting vibrations decreased the home’s value. Before reaching their decision, the BCA sent a committee of three persons to visit the petitioner’s property to evaluate the situation. The committee reported back that the turbine produced constant
The USDA denied the plaintiffs’ applications for federal disaster assistance triggered by freeze damage to citrus crops. The trial court granted summary judgment for the USDA, but that judgment was vacated on appeal because, with respect to two of the three plaintiffs, the defendant acted arbitrarily and capriciously in denying their claims for relief under the 2000 Crop Disaster Program. Mahon v. United States Department of Agriculture, 485 F. 3d 1247 (11th Cir. 2007).
Contract poultry growers sued the defendant for breach of contract. The trial court ruled that the production contract did not require the parties' selected arbitrators to be neutral, and even if the poultry growers' chosen arbitrator exhibited evidence bias, the defendant presented no evidence of prejudice. Winfrey v. Simmons Foods, Inc., 495 F.3d 549 (8th Cir. 2007).
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.