As the reports of damages stemming from dicamba drift increase, questions swirl. Just what is the problem? Who’s responsible? What can be done to prevent future damage? While there are no clear answers to many of these questions, it may be useful to review the general legal principles that apply to herbicide drift and discuss how they apply to the current problem. Continue reading here.
The Iowa Court of Appeals recently affirmed a jury verdict awarding a plaintiff $70,100 after her neighbor built a trail encroaching upon her property. The damages included $50,000 for trespass and loss of lateral support and $20,100 in treble damages for the loss of trees. The jury found the neighbor 75 percent responsible for the damage and his contractor 25 percent responsible. The case should remind landowners and contractors to conduct a survey before engaging in any construction or removal of trees near a neighbor’s property. Continue reading here.
Can a family settlement agreement (FSA) govern the imposition of inheritance tax liability? Under the right set of circumstances, yes. After a recent case, the answer to that question in Iowa appears to turn on whether the FSA seeks to avoid tax or to reach a compromise as to an alleged wrong that created the tax liability in the first place. In this case, the court found that the facts supported a finding of the latter. Thus, the FSA was allowed to effect a reduction in Iowa inheritance tax liability. Continue reading here.
A recent case out of the tax court ruled that IRS had the power to examine the estate tax return of a predeceased spouse for the purpose of lowering the DSUE (deceased spousal unused exclusion) claimed by the second-to-die spouse’s estate. The tax court opinion stands for the proposition that there is no limit to the number of years the IRS can go back to review (and correct) a DSUE reported by the estate of the spouse who died first. This lends a bit of uncertainty to the benefit of portability. Continue reading here.
On September 27, the U.S. Tax Court ruled that a Texas farm couple was not liable to pay self-employment tax on rents they received from the S corporation through which they conducted a poultry growing operation. The decision in Martin v. Commissioner, 149 T.C. 12 (Sept. 27, 2017), adopted the analysis of McNamara v. Commissioner, 236 F.3d 410 (8th Cir. 2000), and comes 14 years after the IRS announced its non-acquiescence with that key 8th Circuit case.
The taxpayers, who were husband and wife, acted as contract poultry growers for Sanderson Farms, Inc. Although they originally signed their broiler production agreement with Sanderson Farms as individuals, they later formed an S corporation and assigned their responsibilities under the agreement to that entity. The S corporation, CL Farms, Inc., employed the wife to provide bookkeeping services and the husband to provide labor and management services. Nothing in the agreement required the taxpayers to personally perform the duties of grower, and the company hired additional employees.
The taxpayers then entered into a five-year agreement under which CL Farms would rent from the taxpayers their farm, including 176,000 square feet of poultry houses and equipment, in exchange for $1.3 million. This was fair market rent and was consistent with amounts paid by other Sanderson Farm growers for the use of similar premises. The rent was due whether or not CL Farms fulfilled its grower requirements or received sufficient income to pay the rent.
Continue reading here.
First there was the Blueprint, then the Bullet Points, and now the “Framework." On September 27, the White House, the House Committee on Ways and Means, and the Senate Committee on Finance made public an outline of their proposals for long-awaited tax reform. While accompanied by fanfare and superlatives, the new Framework provides no more detail than earlier outlines. Consequently, it’s impossible to predict who would win or lose or stay the same under any future tax reform. The announcement will usher in a season of intense tax legislation drafting in the Committees, as well as much policy debate, including concerns about the deficit and just who will be helped or hurt as vague proposals evolve into cold, hard tax bills.
The nine-page Framework, printed in large font with ample white space, outlines the following:
The plan calls for reducing the current number of tax brackets from seven to three. The new brackets would be set at 12%, 25%, and 35%. No details are given as to the all-important income cutoffs accompanying this new rate schedule. The Framework says that it “envisions the use of a more accurate measure of inflation for purposes of indexing the tax brackets.”
Because of the lack of specificity, it’s impossible to predict how this change would impact taxpayers. Unlike earlier proposals, the Framework leaves open the possibility of a higher tax rate by stating “an additional top rate may apply to the highest-income taxpayers to ensure that the reformed tax code is at least as progressive as the existing tax code and does not shift the tax burden from high-income to lower- and middle-income taxpayers.” Continue reading here.
It was announced on September 26, 2017, that Syngenta agreed to settle claims brought against it by U.S. farmers on account of its allegely premature marketing of Viptera and Duracade GMO corn. These claims include those in the Syngenta MIR 162 Corn Litigation, as well as those in the class action in Minnesota state court. The initial settlement agreement was reached in the middle of a multi-week trial occurring in Hennepin County District Court in Minnesota. This trial involved more than 20,000 Minnesota farmers seeking $400 million in damages. In June, a jury awarded Kansas farmers $217.7 million in damages against Syngenta. Syngenta was appealing the award, and additional trials were scheduled.
The details of the settlement have not been released, but news agencies are reporting that Syngenta has agreed to pay $1.5 billion. Details, including the process for filing claims, are yet to be finalized. The court will also have to approve settlement of the class claims.
A Syngenta press release states:
The settlement, which is subject to court approval, would establish a settlement fund for the submission of claims by eligible claimants who contracted to price corn or corn by-products after September 15, 2013. Information concerning the settlement fund, claims process, and other details will become available after the parties execute and submit the proposed settlement agreement and other papers to the court later this year.
In any event, eligible farmers should not expect checks anytime soon. The settlement does not impact the claims brought against Syngenta by Cargill and ADM.
We will keep you posted!
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We had a great time at the September Seminars. Thanks to all who participated, either in person or online! We've now turned our attention to preparing for the 44th Annual Federal Income Tax Schools. We have a great slate of locations and speakers, and we're looking forward to seeing you around the state! Reserve your spot today.
November 2-3, 2017 – Maquoketa, Iowa – Centerstone Inn and Suites
November 6-7, 2017 – Le Mars, Iowa – Le Mars Convention Center
November 8-9, 2017 – Atlantic, Iowa – Cass County Community Center
November 9-10, 2017 – Mason City, Iowa – North Iowa Area Community College
November 16-17, 2017 – Ottumwa, Iowa – Indian Hills Community College
November 20-21, 2017 – Waterloo, Iowa – Hawkeye Community College
December 11-12, 2017 – Ames, Iowa and Live Webinar – Quality Inn and Suites
We're also offering a number of webinars in October. Remember, that any of our webinars or live seminars that you cannot attend are available for playback at your convenience on TaxPlace. For subscription details, click here.
September 19, 2017 Applicable Federal Rates (AFRs): October 2017
September 1, 2017 IDOR Has Proposed Using 2016 W-2/1099 Filing Requirements for 2017
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.