A June 18 update posted to the Syngenta settlement claims administration page states that eligible class members will receive notices of determination showing their "compensable recovery quantities" as early as July. This is the number of bushels for which they can recover, not the amount of the payment to which they are entitled.
On June 5, 2019, the Iowa Court of Appeals ruled that a family farm LLC automatically dissolved 90 days after the death of its sole member. The court ruled that the manager of the LLC who inherited one-third of the LLC’s units had not become a member because he failed to execute a joinder agreement.
On June 5, 2019, the Iowa Court of Appeals issued a ruling concerning a disagreement over property rights between two neighboring landowners. The court found little evidence to support a finding to grant the land in question in fee simple ownership to the defendants, but affirmed the lower court’s grant of a prescriptive easement to them.
On June 5, 2019, the Iowa Court of Appeals ruled that Wells Fargo Bank gave proper notice to any unknown heirs of a decedent when foreclosing on real estate that had been mortgaged by the decedent during his lifetime.
Interview with Farm Management Specialist Ryan Drollette regarding prevented planting.
New draft W-4, Depreciation Deduction Limits for Passenger Vehicles, 2020 HSA Limits, End of Faxing/Third-Party Mailing Tax Transcript Service, and more.
Generally, cash basis farmers must include proceeds from crop insurance and federal disaster programs in gross income for the tax year during which they receive the payments. IRC § 451(f), however, provides a special deferral provision for insurance proceeds received as a result of “destruction or damage to crops.” Farmers who meet the requirements of the statute may elect to include the proceeds in gross income for the tax year following the destruction or damage. This one-year deferral protects farmers from recognizing excessive income in one year when their regular practice would have been to sell the crop in the following tax year.
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On June 6, President Trump signed H.R., 2157, the $19.1 billion disaster relief bill passed by Congress. This package should provide much-needed relief for producers most impacted by recent natural disasters. The article provides a summary of provisions within this new law. As discussed, a number of questions remain regarding how this aid will be distributed and its potential impact on specific farmers.
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On June 18, 2019, IRS and Treasury issued proposed regulations for the application of IRC §199A to cooperatives and their patrons. These rules were a missing piece of the initial §199A regulatory package. Although the agencies published proposed §199A regulations (REG-107892-18) on August 16, 2018, and final rules (TD 9847) on February 8, 2019, the agencies delayed the issuance of cooperative-specific rules until June 18. IRS also posted new questions and answers relating to patrons and cooperatives on its QBI FAQ page (see questions 34 to 47).
This article details two major sections of this new guidance: (1) rules for how patrons of cooperatives calculate their §199A QBI deduction by applying a potential reduction, and (2) how Specified Cooperatives calculate and pass through the §199A(g) deduction (the new DPAD). Both sections incorporate significant reporting requirements for cooperatives. They also contain specific requests for comments from practitioners. Future articles will look at other provisions within the proposed regulation.
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On June 21, the Iowa Supreme Court held that three siblings failed to show that their father was a “vulnerable elder” subject to elder abuse by their brother and nephew. The siblings had argued that the brother and nephew unduly influenced their father to enter into a below-market-rate farmland lease and to gift land to them. The Court, however, ruled that the evidence supported a finding that the 85-year-old father’s number one priority in his estate plan was to maintain the family farming operation beyond his lifetime. Because the brother and nephew were the only family members who pursued farming as an occupation, the transactions at issue were merely a continuation or culmination of a plan to keep the farms within the family.
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Our July 18-19 Agricultural Tax, Business, and Transition Planning Seminar is fast approaching, and we hope you'll join us! This year, our live webinar will feature a video stream of the speakers, as well as the slides. Here's what you'll see:
DAY 1—July 18
Joe Kristan—Hangovers and the Next Round: Lingering issues for 2018 Extended Returns and What They’re Serving up for Next Year
Bob Jamison—11 ½ Hot Issues in Entity Taxation
Kurt Konek—Disaster Hits the Farm: Tax Considerations
DAY 2—July 19
Paul Morf—Avoiding and Resolving Disputes involving Family Farm Estates and Businesses
Bob Jamison—Making the S Election: Traps for the Unwary
Bob Jamison—Leaving the S Behind and Other Entity Transitions
Congress Passes Taxpayer First Act
On July 1, President Trump signed HR 3151, the Taxpayer First Act, into law. This law is designed to implement a number of IRS reforms, including:
- Establishing IRS Independent Office of Appeals to resolve federal tax controversies
- Requiring IRS to develop comprehensive customer service and personnel training strategies
- Exempting certain low-income taxpayers from payments when submitting an offer-in-compromise
- Codifying the VITA program and creating a Community Volunteer Income Tax Assistance Matching Grant Program
- Establishing requirements for cybersecurity and identity protection
- Providing notification to taxpayers of suspected identity theft;
- Expanding electronic filing of tax returns
- Prohibitng the rehiring of IRS employees removed for misconduct
- Requiring mandatory e-filing by tax-exempt organizations and notice before revocation of tax-exempt status for failure to file
- Increasing penalties for failure to file tax returns
We will write more on this new law soon.
The Center for Agricultural Law and Taxation 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. The Center'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.