- Ag Docket
Last week, the Iowa Court of Appeals upheld a trial court’s order specifically enforcing a partition fence agreement between neighbors. The opinion illustrates that such an agreement does not necessarily preclude costly litigation. It also demonstrates the importance of engaging legal counsel at the beginning of a dispute.
The plaintiff and defendant were adjoining landowners. Plaintiff had cattle, but it appears that defendant did not. Under Iowa law, adjoining landowners must share the cost of a partition fence if one of the landowners makes such a request. Both neighbors are equally responsible, even if only one of them has livestock.
The plaintiff and defendant had entered into a partition fence agreement in 2012. Iowa Code § 359A.12 allows such an agreement to memorialize which portion of the partition fence is to be maintained and/or built by which neighbor. Once written and recorded, the agreement is binding upon the neighbors and their successors. Iowa Code § 359A.13.
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A custom feeding endorsement may not cover growers for unexpected or negligent losses to livestock. A recent opinion from the Iowa Court of Appeals again raises this important warning.
In Schulz Farm Enterprises v. IMT Insurance, the court found that a custom feeding endorsement in a contract growers’ insurance policy did not provide coverage for the loss of 837 hogs caused by an electrical breaker malfunction in the hog building. This ruling extended the application of Boelman v. Grinnell Mut. Reinsurance Co., 826 N.W.2d 494 (Iowa 2013). Specifically, the 2017 case found that the custom feeding endorsement protected the grower only from damages caused by the hogs, not damage to the hogs.
The facts in the case were typical. A New Hampton, Iowa, farming company contracted with a grower to custom feed its hogs. The grower contacted his insurance agent to secure additional coverage to protect this new operation. The insurance agent recommended that the grower purchase a farmer’s personal liability coverage policy with a custom feeding endorsement for an additional $118 per year. The basic liability policy excluded coverage for property damage arising out of a “custom feeding” operation. It also excluded coverage for damage to any property that must be replaced because “your work” was incorrectly performed and for damage to property “in the care of” the insured, unless caused by fire, smoke, or explosion. The custom feeding endorsement stated that the liability policy was extended to apply to “custom feeding” operations performed by the insured. Specifically, the endorsement stated that it acted to delete “the exclusions [under the liability policy] pertaining to custom feeding.”
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On January 27, 2017, the Iowa Supreme Court issued a ruling favoring the drainage districts in three northwest Iowa counties in the high profile Des Moines Water Works nitrate litigation. This ruling effectively means that the federal court will enter summary judgment in favor of the districts with respect to DMWW’s claims for money damages and injunctive relief and will likely grant similar relief with respect to DMWW’s claims alleging violations of DMWW’s constitutional rights.
Today’s Iowa Supreme Court ruling has no immediate impact on the core federal claim in the lawsuit, the allegations that the districts have violated the Clean Water Act (and the companion Iowa statute) by discharging nitrates via a point source into “Waters of the United States” without a National Pollutant Discharge Elimination System (NPDES) permit. Those claims will soon be addressed by the federal court when it evaluates the drainage districts’ second motion for summary judgment.
As we’ve explained in past articles, this litigation arose March 16, 2015, when the Des Moines Board of Water Works Trustees (DMWW) filed a federal Clean Water Act (CWA) lawsuit against 10 drainage districts (and their trustees) in Buena Vista, Sac, and Calhoun Counties in Iowa. The lawsuit, which was filed in the United States District Court for the Northern District of Iowa, asserts causes of action falling into two categories.
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Open enrollment for purchasing 2017 health plans on the Marketplace ends today. In the meantime, Congress and President Trump have been paving the way to unwind and recalibrate the Affordable Care Act, a massive chunk of (largely) tax legislation.
Trump concluded his first day on the job by signing an Executive Order stating that, pending repeal of the ACA:
It is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market
The Order goes on to urge the responsible agencies to: exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.
What is the impact of this Order? Does it mean that individuals who did not have insurance in 2016 or large employers who did not offer insurance in 2016 will not have to pay their respective “shared responsibility payments” (i.e. penalty taxes)?
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In light of the tough farm economy, dealers are offering producers even more options when it comes to purchasing upgraded equipment. Because different tax implications flow from different contractual arrangements, it is crucial that a producer understand the true nature of a lease or purchase contract before he signs it. This will avoid big surprises come tax time.
It is important to understand that the IRS does not always consider a “lease” a “lease.” What matters is not the name given to a transaction by the dealer, but the economic realities of that transaction. If a “lease” doesn’t act like a “lease,” the IRS won’t treat it as one for tax purposes.
True equipment leases are often called “operating leases.” An operating lease is one where the farmer pays for the use of the equipment for a term, nothing more, and nothing less. An operating lease is not a rent-to-own agreement. If the producer does wish to purchase the equipment at the end of the term of the operating lease, the purchase price will be roughly equivalent to the fair market value of the equipment at the time of the purchase. If equipment is leased pursuant to a true operating lease, the farmer can deduct the rental payments from income as ordinary and necessary business expenses.
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We know how busy you are now that tax seaon is in full swing. We're working to keep you updated on important updates as they occur. Check our website or follow us on Twitter or Facebook for the latest. Also, if you would like to be on Kristy's email list, please contact her at firstname.lastname@example.org. She often sends daily updates. Below are some highlights.
Faced with a $118 million budget shortfall, Iowa legislators have decided to not conform Iowa tax law with federal tax law for 2016. That means, for some, Iowa taxable income will look very different from federal taxable income, and some Iowans will have much higher tax liability. It also means that tax preparers will have a large headache as they try to sort out the difference and balance two sets of books for different provisions.
"No coupling" means that Iowa references to the Internal Revenue Code are to the Internal Revenue Code in effect on January 1, 2015. Consequently, federal income tax changes made by Congress in 2015 and 2016 are not part of Iowa tax law for 2016 or beyond.
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We've prepared a chart to help you stay abreast of the new due dates for 2016 returns. It can be found here.
One of our tax preparers shared these helpful examples with us as to how the treatment of an additional premium tax credit can differ on the federal and Iowa return.
We've received a number of questions from practitioners wondering about a new question that is being asked by some e-file software providers when business returns are filed: "Number of W-2s Filed." This question appears to be an e-file "safeguard" question some states have required in their effort to detect fraudulent returns. The idea is that if a company has filed 51 W-2s, but the filer answers "125" in response to the question, the return may be flagged as potentially fraudulent. It does not appear that either Iowa or IRS has required this question. For more information from the IRS on how these types of safeguards are being implemented, click here.
CALT 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. CALT'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.