August 2019

August 2019


President Signs Family Farmer Relief Act Into Law

As many farmers continue to struggle with high debt and uncertain markets, new attention is focused on remedies for financially distressed farmers. President Trump signed into law the Family Farmer Relief Act of 2019 on August 23, 2019. This law increases the amount of debt a farmer may have, yet still remain a “family farmer” eligible for Chapter 12 bankruptcy protection. The new law raises this threshold from $4,411,400 (indexed for inflation) to $10,000,000.

The industry will be watching to see what impact this change might have. Recent statistics from the U.S. Bankruptcy Courts show that Chapter 12 bankruptcy filings increased from 475 between July 1, 2017, and June 30, 2018, to 535 between July 1, 2018 and June 30, 2019. In Iowa this number increased from 18 to 24 during the same time frame. Although increasing, these numbers remain low. In 1987, by contrast, nearly 5,000 farmers filed for Chapter 12 protection.

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IRS Draft Form 8995 Instructions Include Helpful QBI Flowchart

On August 29, 2019, IRS issued draft instructions for Form 8995, Qualified Business Income Deduction Simplified Computation. The instructions provide some useful guidance, as well as a new QBI flowchart. Detailed below are some highlights. We we will watch for the instructions for Form 8995-A.

The instructions explain a new reporting category for K-1s: QBI/Qualified PTP Items Subject to Taxpayer-Specific Determinations. The instructions state that these items are not automatically included in QBI. Instead, the character of the item will depend upon how it is reported on the taxpayer’s individual return. For example, the instructions state that ordinary business income or loss is generally included in QBI if it was used in computing taxable income, not excluded, suspended, or disallowed under any other section of the Code. Also, a section 1231 gain or loss is only includible in QBI if it is not a capital gain or loss.

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Another Court Says 2015 WOTUS Rule Is Unlawful

On August 21, 2019, the United States District Court for the Southern District of Georgia became the second federal court in the past three months to rule that the 2015 Waters of the United States Rule (the WOTUS Rule), was improperly issued by the Environmental Protection Agency and the U.S. Army Corps of Engineers. Rather than vacate the rule, the court remanded it to the agencies for further action. This case is Georgia v. Wheeler, No. 2:15-Cv-00079 (S.D. Ga. August 21, 2019).

The plaintiffs in this case included the States of Georgia, West Virginia, Alabama, Florida, Kansas, Kentucky, South Carolina, and Utah. They filed a lawsuit shortly after the WOTUS Rule was finalized, asking the court to vacate the Rule on the grounds that:

  1. The agencies exceeded their statutory authority under the Clean Water Act,
  2. The agencies failed to adhere to the Administrative Procedures Act, and
  3. The Rule violated the Tenth Amendment and Commerce Clause of the U.S. Constitution

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