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On July 22, 2020, the Iowa Court of Appeals issued an opinion reversing a district court decision interpreting a family trust. The district court had ruled that the income beneficiary was entitled to a distribution of the gross income of the trust, but her children argued that she was only entitled to the net income. The court agreed, ruling that a settlement agreement and the Iowa Uniform Principal and Income Act required a net income distribution.
On June 23, 2020, IRS issued Notice 2020-51, providing guidance for the waiver of 2020 required minimum distributions (RMD) made possible by the CARES Act. The guidance also provides sample plan amendments.
Update: On July 4, 2020, President Trump signed S.4116 into law. This new law allows new PPP loans to be made through August 8, 2020. The law does not allow businesses that have already obtained a loan to receive a second one.
On June 10, 2020, Governor Reynolds signed SF 2413 into law. The law went into effect immediately. Among other things,[i] the bill added new Iowa Code § 716.7A to prohibit “food operation trespass”:
A person commits food operation trespass by entering or remaining on the property of a food operation without the consent of a person who has real or apparent authority to allow the person to enter or remain on the property.
On June 19, 2020, the Iowa Supreme Court ruled that the Iowa Department of Revenue rationally interpreted Iowa Code § 422.7(21)(a) to prevent a typical cash rental landlord from taking the Iowa capital gain deduction.
On Friday, June 19, IRS issued Notice 2020-50, expanding the definition of “qualified individuals” eligible for coronavirus-related distributions from eligible retirement accounts. The Notice also provides detailed guidance for coronavirus-related distributions and expanded plan loans made available by the CARES Act.
On June 12, 2020, the Iowa Supreme Court issued an opinion concerning the right of first refusal to purchase farmland. The plaintiffs did not seek specific performance, but instead sought monetary damages for an alleged breach of contract. The Court found that the statute of limitations for real estate transactions did not apply and no other grounds warranted granting summary judgment on the issue.
On June 16, the Small Business Administration and the Treasury issued guidance on forgiveness, as it applies to the self-employed, in light of the Paycheck Protection Flexibility Act enacted June 5.
On June 16, 2020, the Center for Agricultural Law & Taxation hosted a crop marketing seminar presented by Dr. Steve Johnson, Extension Farm Management Specialist. In this webinar, Steve reviewed both old & new crop supply/demand & cash price projections, highlighted crop marketing strategies & tools and featured written crop marketing plans for a 1,000 acre row-crop example farm. The webinar also included an extensive Q & A period.
In this one-hour event, farm management specialist Steve Johnson and the Center's Kristine Tidgren provided an update to farmland owners on key farm program and legal developments. Kristine discussed the status of dicamba-based herbicides and reviewed the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDLs). Steve discussed Coronavirus Food Assistance Program (CFAP) payments, 2020 crop budgets and Iowa State University's 2020 Farmland Cash Rental Rate Survey.
On June 8, 2020, IRS and Treasury issued proposed regulations (REG-109755-19) that will (once they become final) open the door for those involved with health care sharing ministries and direct primary care arrangements to realize tax savings for the cost of these programs.
Update: On June 19, the Ninth Circuit denied the plaintiff's emergency motion to enforce the vacature and hold EPA in contempt.
UPDATE: On September 28, 2020, a federal judge in the District of Minnesota granted the Packing Defendants motion to dismiss on all accounts.
Update: Late on June 8, the U.S. EPA issued a final cancellation order for the registrations of the three herbicides impacted by the Ninth Circuit's ruling.
On May 29, 2020, Katie Kramer and Justin Muir, agricultural program specialists from the Iowa USDA-FSA office, and ISU agricultural economist Chad Hart joined us for a webinar on the Coronavirus Food Assistance Program. The panel reviewed eligibility information and the application process for the new program and answered a number of producer questions.
Please join us for a free webinar on Friday, May 29, to review the CFAP application process.
On May 13, 2020, the Iowa Court of Appeals issued an opinion concerning the award of attorney fees in a farm lease dispute. The court found the contractual attorney-fee clause of a farm lease allowed attorney fees to be awarded to the prevailing party, but this amount did not include the fees incurred after a settlement offer.
Update: Late on May 13, Treasury extended the deadline for repaying a PPP loan without review from May 14 to May 18.
Update: On May 13, 2020, SBA and Treasury issued additional guidance providing a safe harbor and extending the deadline for returning a loan to May 18.
Note: On May 4, SBA began accepting applications for EIDL advances from agricultural businesses only.
It’s official. The President signed H.R. 266, the Paycheck Protection Program and Health Care Enhancement Act, into law today. This law provides another opportunity for some small businesses, including agricultural producers, to get in line for a potential loan to help them through the next few months.
Late on April 30, 2020, IRS issued Notice 2020-32, stating that no deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan under the Paycheck Protection Program (PPP).
On April 29, 2020, the Iowa Court of Appeals issued an opinion concerning an insurance company’s alleged breach of contract with a hog farmer. The court concluded that the farmer’s equipment was damaged by a power surge, but that the electrical system for the buildings was not harmed by a power surge. The court also modified the loss-of-income award to be within policy limits.
On April 29, 2020, the Iowa Court of Appeals affirmed a district court’s ruling finding a classification of property to be residential rather than agricultural. The court found the primary use of the property was not agricultural and the property owner did not have a genuine intention to profit.
The question before the U.S. Supreme Court was whether the Clean Water Act requires a permit when pollutants originate from a point source but are conveyed to navigable waters by a nonpoint source, in this case, groundwater. Many had hoped the Court’s answer to this question would clarify longtime ambiguity under the CWA. But given the complexity of the issue, that was not to be.
Note: This case was reversed on appeal on 11/25/2020.
A bankruptcy court recently ruled in a Chapter 12 case that federal and state taxing authorities do not have the right to offset a refund with tax debt stripped of its priority by 11 U.S.C. § 1232. This was a court’s first opportunity to rule on this question since the passage of the Family Farmer Bankruptcy Clarification Act of 2017. The case was In re DeVries, No.19-00181 (Bankr. N.D. Iowa April 28, 2020).
The Iowa Supreme Court recently issued a decision in a key case involving competing claims by a secured lender and a grain elevator over the costs of storing and drying the grain. The April 17, 2020, case--MidWestOne Bank v. Heartland Co-op, No. 19-1302 (Iowa 2020)--has caused grain warehouses and lenders to take a closer look at their business practices.
On April 15, 2020, the Iowa Court of Appeals affirmed a defendants’ motion for quiet title on the establishment of a new boundary line. The court found the two neighbors treated a row of culverts as the boundary line for a period of more than ten years, thereby creating a boundary by acquiescence.
Late Friday, April 17, U.S. Secretary of Agriculture Sonny Perdue announced the creation of the Coronavirus Food Assistance Program (CFAP).
On April 15, 2020, the Iowa Court of Appeals issued an opinion in a breach of contract case brought by a subcontractor against a business owner and his LLC to collect for work done during a building remodel. The court ruled that the district court incorrectly pierced the veil of the LLC and imposed personal liability on the LLC owner.
On April 15, 2020, the Iowa Court of Appeals reversed a jury verdict in favor of plaintiffs in a breach of contract action against their contractor. The court ruled that the plaintiffs did not complete the required terms and conditions under the contract and that further performance by the contractor was excused.
On April 15, 2020, the Iowa Court of Appeals issued a ruling finding a boundary by acquiescence and denying damages for a trespass claim. Because previous adjoining landowners treated a cement seam as the boundary line for more than ten years, they created a new boundary through the doctrine of boundary by acquiescence. Although determining that a new boundary was created, the court ruled that the prevailing landowner presented insufficient evidence of trespass damages.
The CARES Act created three temporary unemployment programs: the Federal Pandemic Unemployment Compensation (FPUC) program, the Pandemic Emergency Unemployment Compensation (PEUC) program, and the Pandemic Unemployment Assistance (PUA) program. These programs are 100% federally funded through a voluntary agreement between individual states and the Department of Labor. With federal guidance issued by the Department, we have more information on how these programs are to be implemented.
President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law on March 27, 2020. This economic stimulus package included provisions providing financial relief to individuals, businesses, as well as the agricultural industry. The Act provides nearly $49 billion to producers, nutrition assistance programs, and rural development programs under USDA jurisdiction. While we are still waiting for details on how these programs will be implemented, this post provides a general overview of the new USDA programs.
Update: On June 29, IRS stated via FAQ that taxpayers will have until July 15, 2020, to file a Form 1139 or Form 1045 that otherwise would be due June 30. This is because of the general extension relief provided by Notice 2020-26.
Update:On April 24, Congress replenished PPP funds and made farmers eligible for EIDLs.
On April 9, 2020, IRS issued Notice 2020-23, which significantly expands the deadline relief for filings and payments earlier provided through Notices 2020-18 and 2020-20.
Update: On April 24, Congress replenished the PPP fund. Additional guidance was also provided: Congress Authorizes More Funds for PPP and EIDL and Says Farms Can Apply
Farmers, like other business owners, may deduct “ordinary and necessary expenses paid . . . in carrying on any trade or business.” IRC § 162. In agriculture, these ordinary and necessary expenses include car and truck expenses, fertilizer, seed, rent, insurance, fuel, and other costs of operating a farm. Schedule F itemizes many of these expenses in Part II. Those properly deductible expenses not separately listed on the Form are reported on line 32. Following is a summary of several key expense deductions for farmers.
On March 18, 2020, the Iowa Court of Appeals issued a ruling regarding a boundary-line dispute. The Court of Appeals affirmed the district court’s denial of the plaintiff’s petition to quiet title because the plaintiff failed to meet his burden for either adverse possession or boundary by acquiescence.
On March 13, 2020, President Trump announced all student loan interest would be suspended due to the Covid-19 outbreak in the United States. On March 27, 2020, the President signed the CARES Act into law. Intended as an economic stimulus package, this law has several important changes for federal student loan borrowers.
On March 20, 2020, the USDA approved the Iowa Department of Agriculture and Land Stewardship’s hemp plan for the State of Iowa. IDALS will publish the official notice that the USDA accepted Iowa’s state plan in the Iowa Administrative Bulletin on April 8th. This means that farmers are much closer to being able to grow hemp in Iowa during the 2020 season. It does remain illegal to grow, possess, buy or sell hemp in Iowa until official notice is published in the Iowa Administrative Bulletin (April 8) AND the grower has received a license from IDALS.
On March 27, 2020, the Iowa Supreme Court issued a ruling finding that two plaintiffs who voluntarily dismissed their agricultural nuisance claims a second time were liable to the defendants for costs and expenses.
Update: On April 9, 2020, IRS issued Rev. Proc. 2020-24, providing guidance to taxpayers with net operating losses that are carried back under the CARES Act.
Update: On April 10, IRS launched a new tool to help non-filers provide information so they can receive Economic Impact Payments.
The Senate has been discussing provisions contained in what's being called the Coronavirus Aid, Relief, and Economic Security (CARES) Act or Phase 3 Coronavirus legislation. The proposal would include $2 trillion of spending. Full text of the legislation has not been publicly released, but Chairman Grassley from the Senate Finance Committee has released a summary of provisions under consideration.
In a March 22, 2020, Proclamation of Disaster Emergency related to the COVID-19 crisis, the Iowa Governor temporarily suspended foreclosures of residential, commercial, and agricultural real property.
Update: The Department of Labor has created a webpage devoted to this new law.
