Iowa Code §468.621 states that a landowner “may drain the land in the general course of natural drainage by constructing or reconstructing open or covered drains, discharging the drains in any natural watercourse or depression so the water will be carried into some other natural watercourse…”.  In addition, if the drainage is done solely upon the landowner’s property, the landowner is not liable for damages for the drainage unless it increases the quantity of water or changes the manner of discharge on the land of another.  In this case, a landowner claimed that his property had be

After numerous attempts spanning several months, the Congress has repealed the 1099 reporting requirement that was contained in the Patient Protection and Affordable Care Act of 2010 (Health Care Act) and the 1099 reporting requirement that was included in the Small Business Jobs Act of 2010 (Jobs Bill).   Both provisions were widely unpopular with taxpayers and practitioners.  The bill was signed into law on April 14, 2011.

Iowa Code Ch. 650 governs boundary by acquiescence disputes. In the past few years, we have seen several cases involving boundary disputes in Iowa, usually stemming from a change in ownership that triggers a survey of the property. Here, owners of two adjoining parcels disagreed as to whether they or their predecessors had acquiesced to use of an existing fence line as the boundary between their adjoining parcels. A farmer owned the north parcel for many years before selling the property to the plaintiff in 1998.

Development agricultural property around the Des Moines metro area provided the background for this case in which the Iowa Court of Appeals affirmed a Dallas County trial court’s ruling recognizing an easement for access to farmland across developed lots. The plaintiffs owned and farmed the ag property adjacent to the existing housing development.  They sued seeking judicial recognition of their right to access a farm field through the driveways of the lots. The defendant lot owners countersued, asking the court for damages caused by the farmer crossing their lots. 

The full Tax Court, in August of 2009, knocked the IRS off its heels when the court said that a single-member LLC must be respected for gift tax purposes.   Such entities are ignored for federal income tax purposes - they are treated as a disregarded entity under the so-called "check-the-box" regulations.  But, the court said, the entity is separate from the single-member for gift tax purposes with the result that the taxpayer in the case was not responsible for gift tax on transfer of membership interests in the LLC – she didn’t have an interest in the LLC’s underlying assets.  The court w

In the early 1900’s, the Iowa Legislature created a system of drainage districts to facilitate construction and repair of drainage tile, levies, waterways and terraces in certain parts of the state. Normally, the county board of supervisors acts as the drainage district board in the event of disputes or drainage issues. In this case, workers for a rail line discovered a sink hole under the railroad tracks in a drainage district. The sink hole was the result of old clay drainage tiles collapsing and sucking the soil from the railroad embankment.

In Iowa, challenges to property tax assessments are first made at the county level. If the county board of review rejects the taxpayer’s arguments, the taxpayer may appeal to the county district court (trial court). If the taxpayer does not find relief at this level, they may appeal to the state’s appellate courts. In this case involving a property tax assessment challenge, the definition of “manufacturing equipment” was at issue.  “Manufacturing equipment” is exempt from tax. 

We reported on this case two years ago.  Now, there is another development to report.  By way of background on this drainage dispute, 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.

The floods of 2010 created many problems for Iowa farmers this summer, including flood-damaged land and crops.  The Iowa Department of Agricultural and Land Stewardship (IDALS) issued a Press Release and Q & A Fact Sheet on Sept. 30, 2010, regarding the harvest of flood-damaged grain in Iowa.

In recent years, an important issue that has produced opinions by the U.S. Tax Court and several Federal Circuit Courts of Appeal involves the question of whether a full dollar-for-dollar discount should apply when valuing interests in a C corporation to reflect built-in capital gain tax.  The IRS had maintained successfully (until 1998) that no discount should apply, but the courts have disagreed with that view.

The U.S.

This case involves a farmer’s lawsuit against a local cooperative for damage done to his corn crop when the co-op sprayed the wrong herbicide on twenty-five acres of corn. The entire crop on that twenty-five acres was destroyed. 

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.

Here, the plaintiff purchased a tract of land and obtained a mortgage on the real estate from the defendant, a bank.  The real estate secured the mortgage and the bank had an additional security interest in the plaintiff’s horses. A few years later, the plaintiff defaulted on her mortgage with the bank, and the bank filed a petition for foreclosure. However, before the sheriff’s sale, the plaintiff moved herself and her horses to her sister’s property. After the sheriff’s sale, there remained a $7,990 deficiency on the bank loan.

Lending equipment to a neighbor may seem harmless, but can it lead to a lawsuit? In this vicarious liability case, the issue was whether the owners of a trailer can be held vicariously liable under Iowa’s Owner Consent statute (Iowa Code §321.493).  Ultimately, the courts agreed that the plaintiff’s claims should be dismissed against the trailer owners, because a trailer is not a motor vehicle in Iowa.
 

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.

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. 

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.

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.

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.

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

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.