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In this video, CALT staff discuss common terminology used in the estate planning and farm succession planning process.
On March 11, 2021, President Biden signed the $1.9 trillion American Rescue Plan Act (ARPA) into law. The ARPA set aside approximately $10.4 billion for agriculture and nutrition programs to address food supply chain disruptions, provide funding for rural areas, and increase nutrition assistance. Among its relief provisions, the new law provides specific loan payment assistance to “socially disadvantaged farmer or ranchers.”
On April 14, 2021, the Iowa Court of Appeals issued a ruling on a foreclosure of agricultural real estate. After the borrower defaulted on two mortgages, the creditor petitioned to foreclose on the properties. Because the creditor gave proper notice 12 months prior to the default, the borrower no longer had the right to cure and the court affirmed the foreclosure decree.
On April 14, 2021, the Iowa Court of Appeals issued a ruling in a dispute over a conservatorship. Two sisters separately incurred substantial attorney fees in a court battle over the proposed conservatorship of their mother. The court found that the district court did not abuse its discretion in determining that the mother, as the proposed protected person, would pay for her daughter’s attorney fees.
On April 14, 2021, the Iowa Court of Appeals issued a ruling regarding an interference with an easement. The plaintiff had a written easement over the neighboring property to access 40 acres of farmland. Because the defendant substantially interfered with the plaintiff’s easement rights, the court affirmed a permanent injunction entered by the lower court.
The 2018 Farm Bill required the USDA to create a regulatory framework for the production of hemp in the United States. States and Tribes can choose to operate under the Federal plan or submit their own plan for approval. Federal regulations require producers to obtain a license from the USDA, State, or Tribal hemp program which has jurisdiction over the intended growing location.
As farmers and ranchers approach retirement (however defined) generating an income stream to meet lifestyle needs comes into focus. An obvious resource is renting the land, either using a cash rent or crop-share model. What about the machinery and equipment? The farmer or rancher can decide to have an equipment sale which generates a lump-sum payment, less sales costs, but this will trigger IRC § 1245 recapture resulting in a sizable tax bill. A second sales strategy is to sell the equipment in a piecemeal fashion over time to manage the tax bill resulting from IRC § 1245 recapture.
On March 29, 2021, the Iowa Department of Revenue announced a filing and payment extension for individual taxpayers, from April 30, 2021, to June 1, 2021. In the same notice, IDOR provided instructions for reporting unemployment compensation on 2020 returns.
Update: Sign-up for this program opened April 5. https://www.farmers.gov/cfap/apply
By a vote of 92-7, the Senate today passed HR 1799, the PPP Extension Act of 2021. The House had passed this bill on March 16, 2021, by a vote of 415 to 13.
On March 17, 2021, the Iowa Court of Appeals issued an opinion regarding a will dispute. The will, among other things, created an option for certain beneficiaries to obtain ownership of the farmland subject to various terms and restrictions. Because the will gave the probate court authority to determine the reasonableness of the terms for the transfer of farmland, the court ruled that the probate court properly exercised its authority in resolving the beneficiaries’ disputes.
In this introduction to Farm Succession Planning video, CALT Staff discuss ten common mistakes to avoid during the estate planning process.
It’s been difficult enough to keep up with federal tax changes this year, let alone worry about how Iowa is treating these changes. Confusion has been complicated by the fact that many software companies have not adjusted their products to comply with Iowa law.
On March 17, 2021, IRS issued the following news release:
On March 17, 2021, the Iowa Court of Appeals issued another opinion in a family dispute regarding the management and ownership of a trust. The court affirmed the trial court’s judgment finding that the father had breached a trust established for the benefit of his daughter.
President Biden signed the American Rescue Plan Act of 2021 (ARPA), H.R. 1319, into law on March 11, 2021. The $1.9 trillion package includes money for states and localities, schools, socially disadvantaged farmers, public health, small business relief, and much more.
Note: This post has been updated to include new guidance and forms published March 12 and March 18 at the bottom.
Between the pandemic, a trade war, and assorted natural disasters, agricultural producers, like most other businesses, faced a difficult 2020. As many farmers file 2020 income tax returns, they and their tax professionals are sorting through unusual sources of income, analyzing whether new COVID-19 tax benefits apply, and determining how to report these items on their income tax returns.
On March 2, 2021, the United States Court of Appeals for the Tenth Circuit determined that the district court abused its discretion when it granted the State of Colorado’s request to stay the effective date of the Navigable Waters Protection Rule in Colorado. The district court had granted the preliminary injunction, pending a determination on the merits of Colorado’s case challenging the legality of the rule.
With tax software missing key updates and some important questions remaining unanswered, some farmers who did not pay estimated tax by January 15 may not be in a position to file their returns by March 1.
It’s almost March 1, which means that many farm leases around Iowa are beginning anew.[i] This key date is a good time to remind landlords of several available options to reduce the risks associated with nonpayment.
On February 26, 2021, the Iowa Supreme Court issued an opinion concerning whether a county board of adjustment illegally granted an area variance. Because the homeowners did not present sufficient evidence of an unnecessary hardship, the Court ruled that the board illegally granted the request for the variance.
Update: On March 11, the American Rescue Plan Act was signed into law. The new law extends the ERC through December 31, 2021, with some modifications to quarters 3 and 4. On April 2, IRS issued guidance as to the CAA expansion for quarters 1 and 2 of 2021.
On February 19, 2021, the Iowa Supreme Court considered whether an interested party can challenge the validity of a will while the testator is alive. The Court found that neither Iowa Code § 633.637 nor any other section of the Probate Code allows a predeath will challenge.
On February 10, I had the opportunity to speak at the Illinois Soybean Association's 2021 Soybean Summit regarding recent updates to the Paycheck Protection Program and the tax law. The information in this presentation is up to date through February 10, 2021. A copy of the slides may be downloaded below.
On February 3, 2021, the Iowa Court of Appeals issued an opinion in a father-son dispute over their member-managed LLC. The court recognized that the father, a farmer who created the LLC and gifted 50 percent of the shares to the son, did violate the operating agreement and engage in mismanagement. Overall, however, the court agreed with the district court that the farmer did not generally breach his fiduciary duties and did not harm the LLC through his actions as alleged in the son's derivative action.
On February 3, 2021, the Iowa Court of Appeals denied the request of farm borrowers to remand for a hearing on whether the district court should set aside the sale of their real property in a sheriff’s sale. The court found that any “irregularities” in the sale were due to the plaintiffs’ own actions.
On February 4, 2021, the Iowa Department of Revenue issued guidance on its nonconformity with the Consolidated Appropriations Act of 2021.
On January 21, 2020, the Iowa Court of Appeals issued an opinion interpreting an alleged oral agreement between two cattle producers. The court affirmed that because the plaintiff did not present evidence that both parties agreed to the terms of a repurchase option contract, no contract existed. Additionally, the court affirmed that the plaintiff contracted with the defendant’s LLC rather than the defendant as an individual. Therefore, the defendant was not personally liable for damages.
On January 21, 2021, the Iowa Court of Appeals affirmed a trial decision ruling that an insurance company did not have a duty to defend its policy holder against claims for fire damage. Specifically, the court affirmed that the insured did not prove that the fire occurred on land covered under the insurance policy and that the insured did not preserve the issue of whether the location where the fire occurred qualified for coverage under a “vacant land” provision in the policy.
On January 21, 2021, the Iowa Court of Appeals issued a ruling considering whether a county zoning Board of Adjustment properly granted an application for a wind turbine project. Despite the Board misinterpreting which ordinances were applicable, the court affirmed that the Board did rely on the relevant ordinances and factors when granting the utility company’s request. Additionally, the court affirmed that the Board gave proper notice.
Note: On January 19, the PPP was opened to all lenders. SBA released guidance regarding how to calculate revenue reduction and loan amounts for a Second Draw PPP loan.
Update: On the evening of December 27, 2020, President Trump signed the Consolidated Appropriations Act into law.
On December 16, 2020, the Iowa Court of Appeals issued an opinion on the timeliness of a redemption of agricultural real estate sold at a sheriff’s sale. Because the assignee did not pay the full amount due within the redemption period, the redemption attempt was untimely.
On November 4, 2020, the Iowa Court of Appeals issued an opinion determining whether an assessor properly appraised a feed manufacturing facility’s machinery for property tax purposes. The court analyzed whether a feed mill and steel grain storage bins met the definition of machinery under Iowa Code chapters 427A and 427B. Machinery must be used directly in manufacturing and a necessary part of the manufacturing process, used solely for effectuating that purpose, to qualify as tax exempt machinery.
On November 30, 2020, the Iowa Court of Appeals issued an opinion regarding a district court’s order modifying farm leases. The court reversed the lower court’s order because the leases were not subject to judicial revision, nor was there evidence that court reformation was necessary.
On November 30, 2020, the Iowa Court of Appeals issued an opinion regarding a trustee’s actions before she was replaced by judicial order. The court affirmed that the trustee’s inheritance should be reduced for tax penalties and interest incurred because she engaged in self-dealing. The court also affirmed a $20,000 trustee fee award and the denial of sanctions.
On November 18, 2020, IRS issued Rev. Rul.
On November 4, 2020, the Iowa Court of Appeals affirmed a district court order granting a permanent injunction preventing the defendant from interfering with the plaintiffs' use of an easement and private roadway. The court found that the defendant had improperly obstructed the easement with gates, fencing, and speed bumps, and that Iowa's partition fence law was inapplicable to the case.
On November 4, 2020, the Iowa Court of Appeals affirmed a district court’s judgment in a property dispute between a dairy farmer and his new neighbors. The court ruled that the dairy farmer failed to show that both landowners accepted a fence as the boundary line. The court also affirmed that a 1955 easement did not grant the neighbors the right to cross the dairy farmer’s land.
On November 4, 2020, the Iowa Court of Appeals determined that beneficiaries of a trust had not shown that a trust advisor should be removed from her role. The court found that any potential conflict of interest was waived when the settlor created the trust and that the advisor had not committed fraud, dishonesty, or abuse of discretion so as to require removal.
On November 4, 2020, the Iowa Court of Appeals issued an opinion regarding the distribution of farm property in a will. The will created a sale restriction on the farmland and listed several requests regarding future treatment of the testator’s farm tenant. The court affirmed that the sale restriction created an unenforceable restraint on alienability. Additionally, the court ruled that the decedent’s requests for the beneficiary to lease the farmland to the current tenant and provide favorable terms to that tenant were optional, not mandatory.
On November 4, 2020, the Iowa Court of Appeals issued a ruling in a seven-sibling dispute over the inheritance of 240 acres of farmland. The court affirmed a jury verdict setting aside a mother’s will due to lack of mental capacity and undue influence, but reversed the portion of the verdict finding intentional interference with an inheritance. The court remanded for a new trial.
As October comes to an end, it may be helpful to review the Iowa Department of Revenue’s tax filing deadlines during this crazy year. A recent news release from IDOR details this information.
It has certainly been a year of challenges. COVID-19 triggered widespread economic harm, a once-in-a-lifetime derecho flattened fields and pummeled grain bins, and drought compounded the damage. Because of these disasters, most farmers received some unexpected payments in 2020.
On October 7, 2020, the Iowa Court of Appeals issued an opinion on whether a document signed by the trust grantor the day before he passed away was an amendment to his estate plan or merely instructions to his attorneys to redraft the plan. Because the document was “vague, obscure, and ambiguous,” the court affirmed that it was not an amendment to the trust.
On October 27, 2020, the EPA announced that it had approved the applications of Bayer and BASF for new registrations of dicamba-based XtendiMax and Engenia for over-the-top use on dicamba-tolerant cotton and soybeans. It also approved Syngenta’s application for a label amendment to extend the December 20, 2020, expiration date for dicamba-based Tavium.
On October 7, 2020, the Iowa Court of Appeals reversed a district court order which had denied a farming cooperative summary judgment on a claim of negligent hiring. The claim arose in a wrongful death lawsuit brought by the estate and family members of a farmer killed when an employee of a trucking company drove into the back of the farmer’s tractor with a grain truck. The court ruled that the cooperative could not be liable for the negligent hiring of its independent contractor’s employee.
With the election just around the corner, American tax policy faces uncertainty. The Tax Cuts and Jobs Act of 2017 ushered in the most significant changes to the tax code in 30 years. Depending upon the outcome, the 2020 election could significantly alter the landscape again.
On October 7, 2020, the Iowa Court of Appeals issued an opinion concerning a city’s intent to develop land for a park and new high school. A landowner claimed the city committed an unconstitutional taking when it “earmarked” approximately nine acres of land for a potential right-of-way. Because the plans to acquire the land were theoretical, the court affirmed that the city did not create a servitude or uneconomical remnant.