What an exciting year it has been! We are so grateful to each of you who attended a seminar, webinar, or workshop. We also appreciate those of you who contacted us with problems you were facing in the field. We look forward to continuing the partnership in 2019 and welcome suggestions for services that would be useful to you in the new year.
On December 5, 2018, the Iowa Court of Appeals considered a taxpayers challenge to the Tax Amnesty Act of 2007. The Court of Appeals found that because plaintiff failed to file a 2002 tax return, amnesty was waived and the Department of Revenue could disallow deductions for the following four years.
On December 5, 2018, the Iowa Court of Appeals issued a decision regarding the ownership rights of land located in Clayton County. The court held that the City of Garber was estopped from asserting ownership over property because it never developed, used, or maintained it and the owners had acquired it through adverse possession.
On November 21, 2018, the Iowa Court of Appeals issued a ruling regarding a county’s duty to properly maintain a soil and conservation structure. The court found that the defendants had no statutory, contractual, or common law duty to maintain the structure.
On December 5, 2018, the Iowa Court of Appeals issued a ruling regarding a private nuisance dispute between two neighbors. The court held that a ditch running between two neighbors had not changed substantially because of the addition of a culvert and that no nuisance was proven.
Kristy Maitre retired from Iowa State University on December 14, 2018. We wish her the best in her future endeavors and will miss her. But our work supporting tax professionals continues without interruption! Stay tuned for future announcements regarding exciting new programming we will be offering. We are also always interested in speaking with smart tax professionals with advanced skills in writing, research, and teaching. If you know such a person who is looking for a service opportunity, please contact Kristine at 515-294-6365 or by email at firstname.lastname@example.org.
On this, the last day of 2018, we look back at key agricultural and taxation developments from the past year. Many of these issues continue to significantly impact agricultural producers, and we will continue to monitor these evolving issues as we head into 2019. Happy New Year! Reviewed in this post are the following developments:
To read this post, click here.
The grain glitch and the fix to the grain glitch were big news during the first quarter of 2018. Then the excitement subsided.
But now with filing season approaching for the 2018 tax year, it’s important for producers and their tax advisors to review what the new law means for income received from transactions with agricultural and horticultural cooperatives in 2018, particularly the less-discussed transition rule.
The grain glitch fix is complicated and creates a separate qualified business income deduction (QBID) calculation for income flowing to a patron from a sale to an agricultural or horticultural cooperative. Details of this new calculation and the law that created it can be found here. Also included in this “fix” was a transition rule. Our March article summarized it as follows:
The new law also includes a transition rule for farmers who receive a cooperative payment in 2018 that is attributable to QPAI for which the old DPAD deduction was applicable. This will include any QPAI attributable to a cooperative tax year beginning before 2018. See Section 101(c)(2). With the original DPAD gone in 2018, taxpayers were left to wonder how to report such DPAD allocations. The law clarifies that such farmers will still be able to take the old DPAD deduction in 2018, as long as it is attributable to QPAI which was allowed to the cooperative for a tax year beginning before 2018. No 199A deduction, however, will be allowed for such payments.
This rule will impact a lot of 2018 returns. Unanswered questions remain regarding how to handle this rule. Continue reading here.
2018 ended with President Trump signing a new farm bill into law on December 20, 2018. The Agricultural Improvement Act of 2018, generally referred to as the 2018 Farm Bill, stems from the work of a conference committee convened to reconcile differences between Senate and House versions passed earlier this year. The final bill is a compromise, prompted by the need to implement programs to assist farmers struggling with market and price uncertainties. Generally the bill veers little from status quo.
The new Act overhauls the failed dairy margin protection program, legalizes the production of hemp as an agricultural commodity, and tweaks funding for various conservation programs. The new law does not, however, change payment limitations or enhance “active participation” requirements. In fact, it extends an exception from “actively engaged in farming” requirements to first cousins, nieces, and nephews within family farming operations.
For a more detailed review of provisions in the new farm bill, click here.
On December 11, 2018, the Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers proposed a revised definition for “waters of the United States” or WOTUS. This definition, if finalized, would determine which waters are subject to the jurisdiction of the federal Clean Water Act. As proposed, the rule would significantly narrow the scope of WOTUS, particularly in comparison to the 2015 Clean Water Rule.
WOTUS has been the subject of litigation and controversy since the final Clean Water Rule was unveiled on May 27, 2015. Because of the pending litigation, the 2015 rule is currently in effect in only 22 states. The rule is stayed for the remaining states because federal courts have determined that states challenging the rule were likely to succeed on the merits of their legal claims. In those states, a pre-2015 legal framework applies.
The 2018 proposed rule sets forth six specific categories of jurisdictional WOTUS, as compared to the 2015 rule’s eight categories. It also eliminates provisions and definitions that would subject isolated lakes, streams, and wetlands to federal jurisdiction. Continue reading here.
As you know, our work at the Center is dependent on the fees generated by seminar registrations and gifts. If you would like to donate to further the Center's efforts, please contact our Program Administrator, Micki Nelson at email@example.com or (515) 294-5217. You can also give online with a credit card. We thank you for your generous support.
The Tax Cuts and Jobs Act modified IRC § 5000A(c) to set the individual shared responsibility payment to 0 for months beginning after December 31, 2018. A federal court recently ruled that the ACA itself is void in light of this change. On December 14, 2018, United States District Court Judge Reed O’Connor ruled that when Congress set the individual shared responsibility payment to zero, it invalidated the Affordable Care Act in its entirety. Continue reading here.
On December 17, 2018, the USDA announced that President Trump had authorized the second round of market facilitation program payments (MFP) to be made. Many payments have already hit mailboxes, meaning that they will be taxed in 2018. Continue reading here.
A number of draft IRS forms and other publications were issued this month. Among them include:
This year is particularly challenging for publications and forms. Expect some errors, as some have already been discovered. Publication 225, for example, states that all farm equipment and machinery now has a 5-year MACRS life. This change, however, applies only to new farm equipment and machinery. IRS will update these publications as guidance is issued and mistakes are discovered. Then there are statements in publications that lead to questions. For example, Draft Publication 535 states that real estate agents and brokers and insurance agents and brokers are specified services trades or businesses. This statement directly conflicts with proposed regulations IRS issued in August. Does that mean the final regulations will change this definition or that the Publication is wrong? We will have to wait and see.
Mark your calendars for two upcoming webinars to help prepare for the 2019 tax filing season.
We are partnering with the Iowa Bar to offer this webinar covering key issues impacting the 2019 filing season. The webinar will run from 12:00 to 2:00 pm. For more information or to register, click here.
The Iowa Department of Revenue will be offering a free webinar in partnership with CALT to tax professionals filing Iowa returns. More information and a registration link will be available shortly.
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.