Friday, February 14, 2025
The “Top Ten” of 2024 (Part One)
Overview
With today’s article I start my annual trek through what I believe to be the “Top 10” ag law and tax developments of the previous year. It’s always difficult to determine the ten “big ones.” I start with a much larger list and slowly pair it down. Some significant ones always get left on the cutting room floor. But, what I am looking for are those developments that I think will have the biggest impact on the agricultural production sector as a whole.
With that in mind, the following is what I see as developments Nos. 10-8 in agricultural law and taxation for 2024.
10. States’ Water Compact Must Include Federal Government. Colorado, New Mexico, and Texas signed the Rio Grande Compact in 1938, and Congress approved it in 1939. The Compact equitably apportions the waters of the Rio Grande Basin. Under the Compact, Colorado committed to deliver a certain amount of water to the New Mexico state line. A minimum quality standard was also established. At the time of the Compact’s approval in 1939, there wasn’t as much groundwater pumping as there is now. Beginning in the 1950s groundwater pumping increased. Because of the interconnectedness of groundwater and surface water, the increase in groundwater pumping decreased the amount of surface water in the Rio Grande Basin that flowed to Texas. In 2014, Texas sued New Mexico for allowing the Rio Grande’s water reserves to be channeled away for its use which deprived Texas of its equal share in the river’s resources. In 2018, the Supreme Court said the federal government should be a party to the case because of its treaty obligation to deliver a quantity of Rio Grande River water to Mexico and because the water is delivered via a federal reclamation project administered by the Department of the Interior which, in turn, has an obligation to Indian tribes what also have an interest in the water. To resolve the dispute, Texas and New Mexico entered a proposed consent decree that introduced some additional metrics to account for changed circumstances in the Basin since 1939. The federal government objected that the settlement was inconsistent with the original compact and undermined the Compact’s plain language, which the states cannot do without congressional approval. The court agreed, sending the case back to a Special Master on the basis that Article I, Section 10, Clause 3 which states: “No State shall, without the Consent of Congress,… enter into any Agreement or Compact with another State”…. Thus, when the federal government has an interest in a water agreement among states, it must be a party to the agreement. That’s a key point. The Supreme Court did not rule that the Constitution requires the Congress to be involved in every state water law Compact, just that the facts of this case involved Congressional involvement. The case was sent back to the special master assigned to the matter (basically a person (in this instance a senior appellate judge from the U.S. Court of Appeals for the Eighth Circuit) who acts as a one-person jury. Texas v. New Mexico, 602 U.S. 943 (2024).
9. Public Lands Rule. The Bureau of Land Management (BLM) published a new “Public Lands Rule” in the Federal Register on May 9, 2024. 89 Fed. Reg. 40308. The Rule is part of the Biden/Harris administration’s effort to conserve at least 30 percent of U.S. lands and waters by 2030 and is projected to apply to approximately 245 million acres of public lands – about one tenth of the U.S. land area Since then, multiple lawsuits were filed challenging the rule. In Alaska v. Haaland, No. 3:24-cv-00161 (D. Alaska, filed Jul. 24, 2024), the State of Alaska claims that the “vast majority” of the rule was not authorized by the Federal Land Policy Management Act and other federal and state laws and violated the “major questions doctrine” and failed to comply with the National Environmental Policy Act (NEPA). In American Farm Bureau Federation v. United States Department of the Interior, No. 2:24-cv- 00136 (D. Wyo., filed July 12, 2024), an additional claim is made that the Congressional Review Act bars the rule and that supposed “climate change” as a basis for the rule does not excuse unlawful rulemaking. In Utah v. Haaland, No. 2:24-cv- 00438, (D. Utah, filed Jun. 18, 2024), the states of Utah and Wyoming challenged the rule based on the BLM’s reliance on a categorical exclusion for NEPA compliance. Later in 2024, the American Farm Bureau Federation and 10 other groups filed an action in federal court challenging the validity of the Rule. Bureaus of Land Management’s (BLM) Public Lands Rule (Rule). The Rule, published at 89 Fed. Reg. 40308 (May 9, 2024), prioritizes land conservation via restoration and mitigation by restricting grazing on public lands. The Rule is being challenged as exceeding the BLM’s authority under the Federal Land Policy and Management Act in that the Rule sets aside land for conservation which is a power the Congress has reserved for itself and is vague in when land can or will be set aside for mitigation or restoration. The case is American Farm Bureau Federation, et al. v. U.S. Department of the Interior, et al. No. 2:24-cv-00136 (D. Wyo. filed Jul. 12, 2024).
Note: Grazing issues will continue to be big in 2025. Will a change in Administration mitigate these disputes on federal rangeland? Only time will tell.
8. Takings” Cases at the U.S. Supreme Court. In 2024, the U.S. Supreme Court decided two cases involving “takings” under the Fifth Amendment where the implications of the Court’s decisions will be important to agriculture.
In the first case, the family involved in Devillier has farmed the same land for a century. There was no problem with flooding until the State renovated a highway and changed the surface water drainage. In essence, the renovation turned the highway into a dam and when tropical storms occurred, the water no longer drained into the Gulf of Mexico. Instead, the farm was left flooded for days, destroying crops and killing cattle. The family sued the State of Texas to get paid for the Taking.
Note: Constitutional rights don’t usually come with a built-in cause of action that allows for private enforcement in courts – in other words, “self-executing.” They’re generally invoked defensively under some other source of law or offensively under an independent cause of action.
The family claimed that the Takings Clause is an exception based on its express language – “nor shall private property be taken for public use, without just compensation.” The case was removed to federal court and the family won at the trial court. However, the appellate court dismissed the case on the basis that the Congress hadn’t passed a law saying a private citizen could sue the state for a constitutional taking. In other words, the federal appellate court determined that the Fifth Amendment’s Takings Clause isn’t “self-executing.”
The U.S. Supreme Court agreed to hear the case with the question being what the procedural vehicle is that a property owner uses to vindicate their right to compensation against a state. The U.S. Supreme Court unanimously reversed the lower court, although it did not hold that the Fifth Amendment is “self-executing.” Texas does provide an inverse condemnation cause of action under state law to recover lost value by a Taking. The Supreme Court noted that Texas had assured the Court that it would not oppose the complaint being amended so that the case could be pursued in federal court based on Texas state law. Devillier v. Texas, 144 S. Ct. 938 (2024).
In the second case, a landowner sought to build a modest residential home and claimed that a local ordinance requiring all similarly situated developers pay a traffic impact mitigation fee posed the same threat of government extortion as those struck down in Nollan v. California Coastal Commission, 483 U.S. 825 (1987), Dolan v. City of Tigard, 512 U.S. 374 (1995), and Koontz v. St. Johns River Water Management District, 570 U.S. 595 (2013). Those cases, taken together, hold that if the government requires a landowner to give up property in exchange for a land-use permit, the government must show that the condition is closely related and roughly proportional to the effects of the proposed land use.
In this case, the landowner claimed that test meant that the county had to make a case-by-case determination that the $24,000 fee was necessary to offset the impact of congestion attributable to his building project - a manufactured home on a lot that he owns in California. He paid the fee but then filed suit to challenge its constitutionality under the Fifth Amendment. The U.S. Supreme Court unanimously ruled in his favor. The Court determined that nothing in the Takings Clause indicates that it doesn’t apply to fees imposed by state legislatures. Sheetz v. El Dorado County, 144 S. Ct. 893 (2024).
Conclusion
Property rights were at issue in each of these developments. Next time I continue the journey through the list as I count down to the top development of 2024.
February 14, 2025 in Regulatory Law, Water Law | Permalink | Comments (0)
Sunday, November 10, 2024
More Legal and Tax Issues for Farmers and Ranchers
Introduction
I have been on the road with seminars a lot recently and haven’t had time to write much for the blog. I am off the road now for a few days and thought I’d take a moment to write about a few more legal and tax issues that farmers and ranchers must deal with on occasion. And, now that the political season is over (for the moment) I will pen my thoughts on that and the implications for agriculture and the producers of food and fiber for my substack – mceowenaglawandtax.substack.com
For today, however, I dive into water rights and conservation easements, the handling of long-term care costs, the definition of a tax home, negative easements and landlocked parcels. Those are the topics of today’s post
Water Rights and Conservation Easements
Water is generally plentiful in the Eastern U.S., but not in the West. So, if you grant a conservation easement on your farm to a land trust that requires water to fulfill its objectives, that can raise some legal issues in the more arid parts of the country. What are the big issues? For starters, make sure you know what the precise water rights are. Most title insurance policies and title opinions on real estate won’t tell you anything about water rights associated with the land.
If there are water rights on the donated land, you’ll need to determine if the rights are material to the easement’s conservation purpose. If so, then determine what’s required to enforce those rights. You’ll also need to restrict the use of the water rights consistent with the easement’s conservation purpose. And you should make sure the water rights are maintained and used, and not abandoned. If they aren’t enforced, you could lose the charitable deduction you claimed for donating the easement. And it could cause other problems for the land trust.
Needless to say, grants of permanent conservation easements on land with water rights require careful drafting of deed language. Make sure you get good legal advice. The value of the charitable deduction associated with the donation of a conservation easement is almost always claimed to be very large.
Handling Long-Term Care Costs
Planning for long-term care costs should be an element of a complete estate plan for many farm and ranch families. One way to address long-term care costs involves long-term care insurance. That makes it important to consider the terms and conditions when exploring long-term care policies. So, what are some things to examine when exploring long-term care insurance? One is the duration of benefits. Policies cover from one to five years. Also, what triggers payment under the policy? There will be terms and conditions attached to those triggers. Make sure you understand them
Long-term care policies also have a waiting period that can be anywhere from a few days to a year. The longer the waiting period for benefits to pay out, the lower the policy premiums. Also, consider the daily benefit amount. Will the policy pay all of the daily long-term care costs or only a percentage? Perhaps the policy can be tailored to pay only the portion of costs that income doesn’t. In that event, all the family’s assets will be protected, and you may not have to gift assets to protect them.
Also make sure the policy has an inflation adjustment provision and that you understand the type of inflation adjuster.
Many insurance agents and financial advisors can provide estimates for policies and help you determine the type of policy that might be best for you.
Where’s Your Tax Home?
The tax Code allows an employee or independent contractor to deduct temporary travel expenses while away from home. The problem is that “home” does not necessarily mean what you might think.
If you travel on business but are not “away from home” your travel expenses are nondeductible personal expenses. So, what does “home” mean? The IRS says that “home” is defined by being in the vicinity of your work. If you choose to live a great distance away for personal reasons, that means that the travel between the personal residence and the place of business is not business related. So, if you don’t relocate soon after you’re hired to work at a place of business that is far from your residence, you can’t deduct travel expenses to and from the new place of business.
If you are hired for an “indefinite” assignment your tax home likely switches to the new place of business soon after the date you are hired. If you don’t have a regular place of business and move from area to area for jobs, the IRS says you can’t be “away from home” because you don’t have a tax home, and you can’t deduct travel-related expenses.
These “tax home” rules sometimes trip up farmers and ranchers that have non-farm jobs. Make sure you keep the rules straight to know when you can deduct travel-related expenses.
Negative Easements for Light, Air and View
An easement can be either affirmative or negative. Most easements are affirmative and entitle the holder to do certain things on the land subject to the easement. But if your land is subject to a negative easement, you can’t do certain things. Negative easements are the same as restrictive covenants on land. Examples include riparian rights, lateral and subjacent support rights, and the right to be free from nuisances. However, most courts refuse to recognize a negative easement for light, air and view. With one exception – malice.
For example, in a case involving two Miami beach hotels, the court allowed a proposed 14-story addition to one hotel that would block the sunlight on an adjoining hotel’s beachfront and cabana. The law didn’t recognize a negative easement for light, air or view. Fontainebleau Hotel Corporation v. Forty-Five Twenty-Five, Inc., 114 So. 2d 357 (Fl. Ct. App. 1959). But a different court shut down a pig farm on a four-acre parcel in town next to a motel. The pig farm wasn’t operated with any semblance of a real farming operation. Coty v. Ramsey Associates, 149 Vt. 451, 546 A.2d 196 (1988). Conditions were so bad that the court didn’t have much trouble determining that it had been created for “spite” and with malice and was a nuisance. So, while the motel owner didn’t have a negative easement for light, air or view, the pig farm was shut down and was liable for damages because of the owner’s bad conduct.
Accessing Landlocked Parcels
Sometimes agricultural land is landlocked with no access to a public roadway. This can happen in several ways, but often arises when a portion of a tract is sold off, resulting in a landlocked parcel. In that event, how does the new owner get access? There are generally two possibilities.
The law may imply the existence of an easement from prior use if there has been a conveyance of a physical part of the grantor's land and before the conveyance there was a usage on the land that, had the two parts then been severed, could have been the subject of an easement that was required to use the adjacent parcel.
The law may also imply an easement based on necessity if the facts involve a conveyance of a physical part of the grantor's land, and after severance of the tract into two parcels, it is “necessary” to pass over one of them to reach a public road from the other. No pre-existing use needs to be present. Instead, the severance creates a land-locked parcel unless its owner is given implied access over the other parcel.
Ag land transactions should have any access easements specifically agreed upon in writing and recorded on the land records. This can help avoid future disputes.
November 10, 2024 in Estate Planning, Income Tax, Real Property, Water Law | Permalink | Comments (0)
Monday, July 1, 2024
From Transition Documents to Inflation to Recent SCOTUS Opinions on Agency Deference and Water Compacts
Buy-Sell Agreements
Buy-sell agreements can be very important to help assure smooth transitioning of the business from one generation to the next. But it’s important that a buy-sell agreement be carefully drafted and followed.
In my view, next to a properly drafted will or trust, a buy-sell agreement is often an essential part of transitioning the family farming or ranching operation to the next generation. A well-drafted buy-sell agreement is designed to prevent the transfer of business interests outside the family unit.
But the key is that they must be drafted carefully and strictly followed. In a recent case, two brothers owned the family business. The corporation owned life insurance on each brother so that if one died, the corporation could use the proceeds to redeem his shares – it was a standard redemption-style buy-sell agreement. One brother died, and the IRS included the value of his stock interest in his estate on the basis that the corporation’s fair market value included the life insurance proceeds intended for the stock redemption.
The courts have reached different conclusions as to whether that’s correct, and the U.S. Supreme Court took the case to clear up the difference. Recently, the Supreme Court said the policy proceeds were included in the corporate value. That had the effect of increasing the deceased brother’s estate such that it triggered about an additional $1 million in estates tax compared to what would have been the result had the policy proceeds not been included in the corporation upon his death.
The problem was that the brothers didn’t annually certify the value of the corporation or have it appraised. Going forward, proper drafting of buy-sell agreements will be critical and naming the corporation as the beneficiary of the insurance proceeds may not be best. That indicates that a cross-purchase agreement is the correct approach, perhaps pairing it with an insurance LLC.
I will have more details on the implications of the Court’s decision on business transition planning in Vol. 1, Ed. 2 of the Rural Practice Digest at mceowenaglawandtax.substack.com
The case is Connelly v. United States, 144 S. Ct. 1406 (2024).
Effects of Inflation
It’s a “Tax”
Inflation and deflation – what’s its impact on your farming or ranching operation or your plan to transition farm assets to the next generation? The impact is likely substantial.
Much recent news has focused on the Fed leaving interest rates unchanged to fight inflation. But prices are still high and rising faster than expected. Two years ago, inflation peaked at about 9 percent and today it’s hovering around 3 or 4 percent. So why haven’t prices dropped? It’s because inflation isn’t the price level, it’s the rate of increase in prices. A reduction from 9 percent to 3 percent doesn’t mean that prices should drop 6 percent, it means that they will go up 3 percent.
Three years ago, you could transfer $300,000 worth of equipment over two years and the buyer would only have to pay an interest cost of about $1,500. Now that’s almost $25,000. If you want to sell $1 million of farmland on an installment basis to the next generation, the interest cost three years ago was about $160,000. Now it’s $400,000.
Deflation is a different story. When prices drop the dollars in your pocket are worth more, but your loans and debts become more costly in real terms.
So, you’re being taxed by the amount of inflation. The Fed hints at dropping interest rates to manage inflation, but the reality is that it should be raising rates to curb inflation.
Administrative Agencies – Jury Trials and “Chevron” Deference
Right to a Jury Trial. Late in its recently concluded term, the U.S. Supreme Court issued two opinions involving federal administrative agencies. Both opinions could have a significant positive impact or farmers and ranchers involved in the federal administrative process. In the first case, the Court determined that when the Securities and Exchange Commission (SEC) seeks to impose civil penalties against a defendant for alleged securities fraud, the Constitution’s Seventh Amendment requires that the defendant receive a jury trial. The Court based its reasoning that SEC fraud is essentially the same as a common law fraud claim which squarely fits within the Seventh Amendment’s requirement of a jury trial.
The Court’s opinion is of significance to agriculture because of the frequency with which ag producers encounter administrative agencies and sub-agencies such as the USDA, the NRCS, the FSA, the EPA and the COE, for example. Justice Gorsuch noted in his concurrence that during the period under study in the case, the SEC was about 90 percent of the matters that it heard compared to 69 percent of the matters that were litigated in court. Historically, the same is true of USDA disputes involving ag producers. Requiring jury trials when the USDA seeks to impose a fine on an issue that essentially involves a matter of the common law – such as a drainage issue or a Swampbuster issue or crop insurance fraud, could have the effect of fewer enforcement actions against farmers being brought in the first place.
The case is Securities and Exchange Commission v. Jarkesy, No. 22-859, 2024 U.S. LEXIS 2847 (U.S. Sup. Ct. Jun. 27, 2024).
“Chevron Doctrine” Repealed. The day after Jarkesy was decided, the U.S. Supreme Court repealed an administrative review rule known as the Chevron Doctrine. It stems from a prior decision of the Court in 1984. The implications on agriculture of the Court’s most recent decision reversing its 1984 decision could be enormous.
Under the Chevron Doctrine, Courts are to defer to administrative agency interpretations of a statute where the intent of the Congress was ambiguous and where the interpretation is reasonable or permissible. That set a low hurdle for an agency to clear. If the agency’s interpretation of a statute was not arbitrary, capricious or manifestly contrary to the statute, the agency’s interpretation would be upheld.
Now the Supreme Court said it got it wrong back in 1984. The Court said that the Chevron Doctrine’s presumption was misguided because agencies have no special competence in resolving statutory ambiguities. Courts do. The decision is a big one for agriculture because of the many administrative issues farmers and ranchers can find themselves entangled in. At least in theory, the Court’s opinion establishes a higher threshold for agency rulemaking – close may be good enough in horseshoes and hand grenades, but it won’t be any more when it comes to agency rulemaking. That will likely also have an impact on the administrative agency review process.
Time will tell of the true impact of the Court’s decision on agriculture. But since the Chevron decision, the number of pages in the Federal Register - where agencies are required to publish their proposed and final rules – has nearly doubled. And so has the litigation.
Again, I will have more detailed coverage of the implications of the Court’s decision in Vol. 1, Ed. 2 of the Rural Practice Digest found at mceowenaglawandtax.substack.com
The case is Loper Bright Enterprises, et al. v. Raimondo, No. 22-451, 2024 U.S. LEXIS 2882 (U.S. Sup. Ct. Jun. 28, 2024).
Water Law and State Compacts
Water in the West is a big issue for agriculture because of its relative scarcity. Sometimes, the states enter into agreements to determine water usage of water that flows between them. One of those agreements, or Compacts, was recently before the U.S. Supreme Court.
The Rio Grande Compact was signed in 1938 by Colorado, New Mexico, and Texas, and approved by the Congress the next year, to equitably apportion the waters of the Rio Grande Basin. Under the Compact, Colorado committed to deliver a certain amount of water to the New Mexico state line. A minimum quality standard was also established.
In 2014, Texas sued New Mexico for allowing the Rio Grande’s water reserves to be channeled away for its use which deprived Texas of its equal share in the river's resources. In 2018, the Supreme Court said the federal government should be a party to the case.
To resolve the dispute, Texas and New Mexico entered into a proposed consent decree. But recently the Supreme Court blocked it because the federal government’s interests were essential to the Compact. That had been clear since 2018.
So, when states try to determine water allocation, if the federal government has an interest, the Congress must approve the deal – that’s clearly stated in the Constitution at Article I, Section 10, Clause 3: “No State shall, without the Consent of Congress,… enter into any Agreement or Compact with another State”… The federal government is likely to have an interest in water deals among the states, particularly in the West.
More discussion coming in the Rural Practice Digest, Vol. 1, Ed. 2 at mceowenaglawandtax.substack.com
The case is Texas v. New Mexico, No. 141 Orig., 2024 U.S. LEXIS 2713 (U.S. Sup. Ct. June 21, 2024).
July 1, 2024 in Business Planning, Regulatory Law, Water Law | Permalink | Comments (0)
Sunday, June 16, 2024
Rural Practice Digest - Substack
Overview
I have started a new Substack that contains the “Rural Practice Digest.” You can access it at mceowenaglawandtax.substack.com. While I will post other content from time-to-time that is available without a paid subscription, the Digest is for paid subscribers. The inaugural edition is 22 pages in length and covers a wide array of legal and tax topics of importance to agricultural producers, agribusinesses, rural landowners and those that represent them.
Contents
Volume 1, Edition 1 sets the style for future editions - a lead article and then a series of annotations of court opinions, IRS developments and administrative agency regulatory decisions. The lead article for Volume 1 concerns losses related to cooperatives. The USDA is projecting that farm income will be down significantly this year. That means losses will be incurred by some and some of those will involve losses associated with interests in cooperatives. The treatment of losses on interests in cooperatives is unique and that’s what I focus on in the article.
The remaining 19-pages of the Digest focus on various other aspect of the law that impacts farmers and ranchers. Here’s an overview of the annotation topics that you will find in Issue 1:
- Chapter 12 Bankruptcy
- Partnership Election – BBA
- Valuation Rules and Options
- S Corporation Losses
- Nuisance
- Fair Credit Reporting Act
- Irrigation Return Flow Exemption and the CWA
- What is a WOTUS?
- EPA Regulation Threatens AI
- Trustee Liability for Taxes
- Farm Bill
- Tax Reimbursement Clauses in IDGTs
- QTIP Marital Trusts and Gift Tax
- FBAR Penalties
- Conservation Easements
- Hobby Losses
- Sustainable Aviation Fuel
- IRS Procedures and Announcements
- Timeliness of Tax Court Petition
- BBA Election
- SCOTUS Opinion on Fees to Develop Property
- Quiet Title Act
- Animal I.D.
- “Ag Gag” Update
- What is a “Misleading” Financing Statement
- Recent State Court Opinions
- Upcoming Seminars
Substack Contents
In addition to the Rural Practice Digest, I plan on adding video content, practitioner forms and other content designed to aid those representing agricultural clients in legal and tax matters, and others simply interested in keeping up on what’s happening in the world of agricultural law and taxation.
Conclusion
Thank you in advance for your subscription. I trust that you will find the Digest to be an aid to your practice. Your comments are welcome. mceowenaglawandtax.substack.com
June 16, 2024 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Monday, April 1, 2024
Property Rights Edition – Irrigation Return Flows; PFAS; and the Quiet Title Act
Cranberry Bogs and the Clean Water Act
Courte Oreilles Lakes Association, Inc. v. Zawistowski, No. 3:24-cv-00128 (W.D. Wis. Filed Feb. 28, 2024)
The Clean Water Act regulates the discharge of pollutants from a fixed point into a water of the United States. Not regulated is water runoff from irrigation activities on farms. Historically, the EPA has interpreted this exemption to include runoff from irrigated dryland crops, rice farming and cranberry bogs. This means a Clean Water Act permit is not required for these activities.
But a recent case has been filed against a Wisconsin cranberry farm claiming that the discharges involved should not be exempt under the irrigation return flow provision. The claim is that a channel and ditch are point sources of phosphorous and sediment discharges into the nearby lake when the bogs are drained. Phosphorous and sediment are pollutants under the Clean Water Act, and the claim is that the water in the bogs is not used for irrigation, but to aid in the overall growing process and protect the cranberries from freezes and harvesting.
The case is in its early stages, but a ruling against the farm could have a big impact on the cranberry and rice industries nationwide.
PFAS and Rural Landowners
A PFAS is a widely used, long lasting chemical having components that break down slowly over time that have been used since the 1940s. It is found in water, air and soil all over the globe and are used for many commercial and industrial products. Some studies have shown that exposure to PFAS may be linked to harmful health effects in humans and animals. PFAS are a group of more than 15,000 chemicals that are associated with various cancers and other health problems.
Note: Presently, there is no known method for cleaning up PFAS contamination.
The biggest potential problem for agriculture involving PFAS will likely be biosolids – the solid matter remaining at the end of a wastewater treatment process. Biosolids are often land applied and there are benefits to doing so. It recycles nutrients and fertilizers and creates cost savings on chemicals and fertilizers for farmers. The uptake of PFAS by plants varies depending on PFAS concentration in soil and water, type of soil, amount of precipitation or irrigation, and the type of plant.
Note: The EPA treats PFAS as a hazardous substance under the Comprehensive Environmental Response Liability Act – that’s the Superfund law, and it can be a major concern for all rural landowners. Indeed, in 2019, PFAS were discovered on farms in Maine and New Mexico resulting in the disposal of most of the livestock on the farms.
In 2022, a Michigan 400-acre cattle farm (a Century Farm) was forced to shut down due to high levels of PFAS in the beef products from his cattle and in the soil at his farm. The farm received biosolids from a municipal wastewater treatment plant to fertilize his crops which he later harvested and fed to his cattle. Biosolids are a cost-effective fertilizer and are EPA-approved. Unfortunately, the biosolids before they were sold to the cattle farm and, as a result of the PFAS investigation at the farm, beef products from the farm can no longer be marketed. Normal screening is for pathogens and heavy metals (e.g., lead, arsenic and mercury), but most states don’t test biosolids for PFAS. However, Michigan does conduct extensive PFAS investigations that includes testing municipal water systems and watersheds that have suspected contamination.
The farm has sued an auto parts supplier (filed Aug 12, 2023, in Livingston County, MI) for the release of PFAS (hexavalent chromium) into the wastewater system that allegedly contaminated the biosolids. The lawsuit seeks tens of millions of dollars in punitive damages to help cover the cost of remediating the farm’s soil and groundwater.
Note: The State of Kansas does not currently test for PFAS in wastewater. Sampling has occurred of a select number of mechanical wastewater plants for PFAS in the plants’ effluent since 2022, but the Kansas Department of Health and Environment has not sampled biosolids from those facilities.
In early 2024, several Texas farmers filed suit against a major biosolid provider for manufacturing and distributing contaminated biosolid-based fertilizer that was applied to the plaintiffs’ farm fields resulting in damage to the land and personal health problems. Farmer, et al. v. Synagro Technologies, Inc., No. C-03-CV-24-000598 (filed, Feb. 27, 2024, Baltimore Co. Maryland). The claim is that the defendant either knew or should have known that it was putting a contaminated (defective) product in commerce. The plaintiffs’ claims are couched in strict liability product defect, negligence and private nuisance.
Some states have taken preemptive action. For example, Maine has banned land application of biosolids and set up a fund for impacted farmers. Other states are looking into providing compensation for disaffected farmers.
Quiet Title Act is not Jurisdictional – Implications for Property Rights
Wilkins v. United States, 143 S. Ct. 870 (2023)
Farmers and ranchers can sometimes find themselves in various legal battles with the Federal Government. That’s particularly true in the U.S. West as it was in this case. Here, the plaintiffs live along a dirt road in western Montana that provides access to a National Forest from a public highway. The prior owners of the land granted the federal government an easement in 1962 across the land by means of a road to provide government timber contractors access to the forest from the highway. The deeds and an accompanying letter said the purpose of the road was for timber harvest. For about 45 years, the government’s use of the easement didn’t interfere with the landowners’ property. Then in 2006, the government posted a sign saying the road provided public access through private land. The landowners sued in 2018 under the Quiet Title Act. 28 U.S.C. 2409a. The Quiet Title Act allows a private landowner to sue the federal government for intrusion of the landowner’s private property if the lawsuit is brought within 12 years of the claim incurring – when the government expanded the scope of the easement. In this case, the landowner’s sued just outside that 12-year window and the government claimed that, as a result, the court lacked jurisdiction to hear the case.
The trial court agreed and dismissed the case. On appeal the U.S. Court of Appeals for the Ninth Circuit agreed. Both of those lower courts held that the Quiet Title Act’s 12-year filing provision was jurisdictional and, as a result, the statute of limitations had run.
The U.S. Supreme Court reversed, holding that the Quiet Title Act’s provision at issue (28 U.S.C. 2409a(g)) was a non-jurisdictional claims-processing rule that required certain claims-processing steps to be taken at certain times that must be completed before a lawsuit can be filed. The Court, citing its decision in a tax case from North Dakota in 2022 said that a procedural requirement is only to be construed as jurisdictional when the Congress has clearly stated so in the statute at issue. Boechler v. Comr., 596 U.S. 199 (2022). Here, the Court determined that 28 U.S.C. §2409a(g) lacked such a clear congressional statement, and that nothing in the statute’s text or context gave the Court any reason to depart from the general rule of a time bar being non-jurisdictional. Indeed, the Court held that the Quiet Title Act’s jurisdictional grant was in a separate section well separated from subsection 2409a(g) and that there was nothing there that conditioned the jurisdictional grant on the limitations period in subsection 2409a(g).
Note: Three dissenting Justices (including the Chief Justice) maintained that the general rule of a time bar being non-jurisdictional did not apply in this case because subsection 2409(a) is a condition on a waiver of sovereign immunity to be interpreted as a jurisdictional bar (time bar) to bringing a lawsuit.
The Court’s decision means that the two landowners will get their chance in court to establish that the U.S Forest Service changed the terms of its easement to take some of their private property rights. But there might also be broader implications that ultimately flow from the Court’s decision. Clearly, property rights are a fundamental constitutional right. Not so for the doctrine of sovereign immunity which isn’t found in the Constitution. The Quiet Title Act is a tool for private property owners to seek redress for the government’s illegal appropriation of private property. This is particularly important in the U.S. West. There the federal government owns a high percentage of land that either surrounds or even cuts through private property. Numerous federal agencies engage in activity that impacts private property rights. Often it may be very difficult to determine when an intrusion occurs for purposes of a jurisdictional requirement under the Quiet Title Act.
Wilkins could turn out to be a key case in the battle of property rights versus the federal government.
April 1, 2024 in Civil Liabilities, Environmental Law, Real Property, Regulatory Law, Water Law | Permalink | Comments (0)
Saturday, July 8, 2023
Coeur d’ Alene, Idaho, Conference – Twin Track
Overview
On August 7-8 in beautiful Coeur d’ Alene, ID, Washburn Law School the second of its two summer conferences on farm income taxation as well as farm and ranch estate and business planning. A bonus for the ID conference will be a two-day conference focusing on various ag legal topics. The University of Idaho College of Law and College of Agricultural and Life Sciences along with the Idaho State Bar and the ag law section of the Idaho State Bar are co-sponsoring. This conference represents the continuing effort of Washburn Law School in providing practical and detailed CLE to rural lawyers, CPAs and other tax professionals as well as getting law students into the underserved rural areas of the Great Plains and the West. The conference can be attended online in addition to the conference location in Coeur d’ Alene at the North Idaho College.
More information on the August Idaho Conference and some topics in ag law – it’s the topic of today’s post.
Idaho Conference
Over two days in adjoining conference rooms the focus will be on providing continuing education for tax professionals and lawyers that represent agricultural clients. All sessions are focused on practice-relevant topic. One of the two-day tracks will focus on agricultural taxation on Day 1 and farm/ranch estate and business planning on Day 2. The other track will be two-days of various agricultural legal issues.
Here's a bullet-point breakdown of the topics:
Tax Track (Day 1)
- Caselaw and IRS Update
- What is “Farm Income” for Farm Program Purposes?
- Inventory Method – Options for Farmers
- Machinery Trades
- Easement and Rental Issues for Landowners
- Protecting a Tax Practice From Scammers
- Amending Partnership Returns
- Corporate Provided Meals and Lodging
- CRATs
- IC-DISCS
- When Cash Method Isn’t Available
- Accounting for Hedging Transactions
- Deducting a Purchased Growing Crop
- Deducting Soil Fertility
Tax Track (Day 2)
- Estate and Gift Tax Current Developments
- Succession Plans that Work (and Some That Don’t)
- The Use of SLATs in Estate Planning
- Form 1041 and Distribution Deductions
- Social Security as an Investment
- Screening New Clients
- Ethics for Estate Planners
Ag Law Track (Day 1)
- Current Developments and Issues
- Current Ag Economic Trends
- Handling Adverse Decisions on Federal Grazing Allotments
- Getting and Retaining Young Lawyers in Rural Areas
- Private Property Rights and the Clean Water Act – the Aftermath of the Sackett Decision
- Ethics
Ag Law Track (Day 2)
- Foreign Ownership of Agricultural Land
- Immigrant Labor in Ag
- Animal Welfare and the Legal System
- How/Why Farmers and Ranchers Use and Need Ag Lawyers and Tax Pros
- Agricultural Leases
Both tracks will be running simultaneously, and both will be broadcast live online. Also, you can register for either track. There’s also a reception on the evening of the first day on August 7. The reception is sponsored by the University of Idaho College of Law and the College of Agricultural and Life Sciences at the University of Idaho, as well as the Agricultural Law Section of the Idaho State Bar.
Speakers
The speakers for the tax and estate/business planning track are as follows:
Day 1: Roger McEowen, Paul Neiffer and a representative from the IRS Criminal Investigation Division.
Day 2: Roger McEowen; Paul Neiffer; Allan Bosch; and Jonas Hemenway.
The speakers for the ag law track are as follows:
Day 1: Roger McEowen; Cody Hendrix; Hayden Ballard; Damien Schiff; aand Joseph Pirtle.
Day 2: Roger McEowen; Joel Anderson; Kristi Running; Aaron Golladay; Richard Seamon; and Kelly Stevenson
Who Should Attend
Anyone that represents farmers and ranchers in tax planning and preparation, financial planning, legal services and/or agribusiness would find the conference well worth the time. Students attend at a much-reduced fee and should contact me personally or, if you are from Idaho, contract Prof. Rich Seamon (also one of the speakers) at the University of Idaho College of Law. The networking at the conference will be a big benefit to students in connecting with practitioners from rural areas.
As noted above, if you aren’t able to attend in-person, attendance is also possible online.
Sponsorship
If your business would be interested in sponsoring the conference or an aspect of it, please contact me. Sponsorship dollars help make a conference like this possible and play an important role in the training of new lawyers for rural areas to represent farmers and ranchers, tax practitioners in rural areas as well as legislators.
For more information about the Idaho conferences and to register, click here:
Farm Income Tax/Estate and Business Planning Track: https://www.washburnlaw.edu/employers/cle/farmandranchtaxaugust.html
Ag Law Track: https://www.washburnlaw.edu/employers/cle/idahoaglaw.html
July 8, 2023 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Thursday, April 20, 2023
Bibliography – First Quarter of 2023
The following is a listing by category of my blog articles for the first quarter of 2023.
Bankruptcy
Failure to Execute a Written Lease Leads to a Lawsuit; and Improper Use of SBA Loan Funds
Chapter 12 Bankruptcy – Proposing a Reorganization Plan in Good Faith
Business Planning
Summer Seminars
https://lawprofessors.typepad.com/agriculturallaw/2023/03/summer-seminars.html
Registration Now Open for Summer Conference No. 1 – Petoskey, Michigan (June 15-16)
Civil Liabilities
Top Ag Law and Tax Developments of 2022 – Part 1
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 8 and 7
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 2 and 1
Contracts
Top Ag Law and Developments of 2022 – Part 2
Failure to Execute a Written Lease Leads to a Lawsuit; and Improper Use of SBA Loan Funds
Double Fractions in Oil and Gas Conveyances and Leases – Resulting Interpretive Issues
Environmental Law
Here Come the Feds: EPA Final Rule Defining Waters of the United States – Again
Top Ag Law and Developments of 2022 – Part 2
Top Ag Law and Developments of 2022 – Part 3
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 10 and 9
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 6 and 5
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 4 and 3
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 2 and 1
Estate Planning
Tax Court Opinion – Charitable Deduction Case Involving Estate Planning Fraudster
Happenings in Agricultural Law and Tax
Summer Seminars
https://lawprofessors.typepad.com/agriculturallaw/2023/03/summer-seminars.html
RMD Rules Have Changed – Do You Have to Start Receiving Payments from Your Retirement Plan?
Common Law Marriage – It May Be More Involved Than What You Think
The Marital Deduction, QTIP Trusts and Coordinated Estate Planning
Registration Now Open for Summer Conference No. 1 – Petoskey, Michigan (June 15-16)
Income Tax
Top Ag Law and Developments of 2022 – Part 3
Top Ag Law and Developments of 2022 – Part 4
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 8 and 7
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 2 and 1
Tax Court Opinion – Charitable Deduction Case Involving Estate Planning Fraudster
Deducting Residual (Excess) Soil Fertility
Deducting Residual (Excess) Soil Fertility – Does the Concept Apply to Pasture/Rangeland? (An Addendum)
Happenings in Agricultural Law and Tax
Summer Seminars
https://lawprofessors.typepad.com/agriculturallaw/2023/03/summer-seminars.html
RMD Rules Have Changed – Do You Have to Start Receiving Payments from Your Retirement Plan?
Registration Now Open for Summer Conference No. 1 – Petoskey, Michigan (June 15-16)
Real Property
Equity “Theft” – Can I Lose the Equity in My Farm for Failure to Pay Property Taxes?
Happenings in Agricultural Law and Tax
Adverse Possession and a “Fence of Convenience”
Double Fractions in Oil and Gas Conveyances and Leases – Resulting Interpretive Issues
Abandoned Rail Lines – Issues for Abutting Landowners
Regulatory Law
Top Ag Law and Developments of 2022 – Part 2
Top Ag Law and Developments of 2022 – Part 4
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 10 and 9
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 8 and 7
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 6 and 5
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 4 and 3
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 2 and 1
Foreign Ownership of Agricultural Land
Abandoned Rail Lines – Issues for Abutting Landowners
Secured Transactions
Priority Among Competing Security Interests
Water Law
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 2 and 1
Happenings in Agricultural Law and Tax
April 20, 2023 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Saturday, March 11, 2023
Happenings in Agricultural Law and Tax
Overview
The legal issues in agricultural law and tax are seemingly innumerable. The leading issues at any given point in time are often tied to the area of the country involved. In the West and the Great Plains, water and grazing issues often predominate. Boundary disputes and lease issues seem to occur everywhere. Bankruptcy and bankruptcy taxation issues are tied to the farm economy and may be increasing in frequency in 2023 – the USDA projects net farm income to be about 16 percent lower in 2023 compared to 2022. Of course, estate planning, succession planning and income tax issues are always present.
With today’s post, I take a look at some recent cases involving ag issues. A potpourri of recent cases – it’s the topic of today’s post.
Dominant Estate’s Water Drainage Permissible.
Thill v. Mangers, No. 22-0197, 2022 Iowa App. LEXIS 961 (Iowa Ct. App. Dec. 21, 2022)
The plaintiffs sued their neighbor, the defendant, for nuisance. Rainwater from the defendant’s property would run off onto the plaintiffs’ property. In the 1950s and 1960s the city installed a few culverts to help with the water drainage. The water drained into an undeveloped ground area where the plaintiffs later built their home. The plaintiffs tried numerous ways to block the flow, ultimately causing drainage problems for the defendant who then tried to direct the excess water back onto the plaintiffs’ property. The plaintiffs claimed that defendant’s activity caused even more damage to their property than had previously occurred, causing a neighbor to also complain. All of the parties ended up suing each other on various trespass and nuisance claims. The trial court dismissed all of the claims because the court believed that all of the parties’ actions caused the water drainage problems. The appellate court explained that the defendant, as the owner of the dominant estate, had a right to drain water from his land to the servient estate (the plaintiffs’ property) and if damage resulted from the drainage, the servient estate is normally without remedy under Iowa Code §657.2(4). The only time a servient estate could recover damages is if there is a substantial increase in the volume of the water draining or if the method of drainage is substantially changed and actual damage results. Under Iowa law, the owner of the servient estate may not interrupt or prevent the drainage of water to the detriment of the dominant owner. The plaintiffs argued that the defendant violated his obligation by installing a berm and barricade, and presented expert testimony showing that the water flow changed when the defendant added the features, but the defendant had his own expert who provided contrary testimony. The appellate court held that the defendant’s expert was more reliable because the defendant’s expert used more historical information and photographs to analyze how the water historically flowed rather than focusing on the current condition of the neighborhood as did the plaintiffs’ expert. When the plaintiffs’ expert looked at these historical photographs, he even agreed with the defendant’s expert that the natural flow of water was through the culverts onto the plaintiffs’ property. The appellate court affirmed the trial court’s finding that the plaintiffs did not prove that the defendant substantially changed the method or manner of the natural flow of water, because the water would have flowed the same way with or without the defendant’s berm and barricade.
Mortgage Interest Deduction Disallowed
Shilgevorkyan v. Comr., T.C. Memo. 2023-12
The petitioner claimed a mortgage interest deduction for 2012 associated with a home that his brother purchased for $1,525,000 in 2005. The purchase was financed with a bank loan. The brother and his wife were listed as the borrowers on the loan. The brother (and wife) and another brother also took out a $1,200,000 construction loan. Both loans were secured by the home. The construction loan was used to build a separate guesthouse on the property. In 2010, one brother executed a quit claim deed in favor of the petitioner with respect to the property. During 2012, the petitioner didn’t make any loan payments and was not issued a Form 1098 for the year. While the petitioner lived in the guesthouse for part of 2012, he did not list the property as being his place of residence or address. On his 2012 return, the petitioner claimed a $66,354 deduction for one-half of the total mortgage interest paid for the year as reported on Form 1098 that was issued to his brother and his brother’s wife. The IRS disallowed the deduction and the Tax Court agreed. The petitioner failed to prove that the debt on the property was his obligation, did not show ownership (legal or equitable) in the property, and the quitclaim deed did not convey title to him under state law. The Tax Court also determined that the petitioner failed to establish that the residence was his “qualified residence.”
Charitable Deduction Case Will Go to Trial on Numerous Issues
Lim v. Comr., T.C. Memo. 2023-11
During 2016 and 2017, the petitioners (a married couple) were the sole shareholders of an S corporation. In late 2016, after making a presentation to the petitioners concerning “The Ultimate Tax, Estate and Charitable Plan,” an attorney formed a “Charitable Limited Liability Company” for the petitioners to use as a vehicle for making charitable donations. The attorney agreed to transfer assets to the LLC, to transfer LLC units to a charity and to provide the supporting valuation documentation for the donation. He also agreed to represent them before the IRS and the Tax Court if the return(s) were later examined. His fee would be the greater of $25,000 or 6 percent of the “deductible amount” of assets capped at $1 million, plus 4 percent of the “deductible amount” of assets exceeding $1 million. The assets transferred to the LLC were five promissory notes with a face amount of $2,008,500. This generated a fee for the attorney of $84,000 based on a presupposed “deductible amount” of $1,600,000 even though the assets were not appraised until late January of 2017, which valued them at $1,600,000. The fee was to be paid in installments over six months beginning in January of 2017.
The attorney also created a second LLC in late December of 2016 with the petitioners as the managers, the attorney as the registered agent, and the petitioners’ S corporation as the single member. Petitioners promised to pay the second LLC $2,008,500 (the promissory notes) in seven years.
The charitable recipient was a Foundation (an I.R.C. §501(c)(3) organization) for which the attorney was the registered agent. The petitioners claimed that their S corporation donated “units” of the second LLC to the Foundation and claimed a charitable deduction. The IRS denied the deduction, partly on the basis of a lack of evidence that any property was actually transferred to the Foundation. The petitioners did not offer any explanation as to when or how the “units” were created or what physical form they took. The petitioners also claimed that they received an acknowledgement letter of the donation from the Foundation dated January 1, 2017. The letter referred to 1,000 units of an LLC that did not exist during 2016 or as of January 1, 2017. It was not addressed to the S corporation, but to the petitioner (wife) at their residence in a different city than the S corporation. The letter also was not signed by any person and appeared to be a form letter with taxpayer-specific information in bold font. It also did not refer to any property that the S corporation allegedly donated on December 31, 2016.
On January 4, 2017, the attorney submitted an appraisal, but it lacked substance. The appraisal asserted that LLC interests were donated to the Foundation in 2016, but did not denote how many interests had been contributed. The claimed charitable deduction was $1,608,808. The attorney also attached his curriculum vitae stating that he was a CPA, a certified valuation analyst and a licensed attorney in Kentucky. Also attached to the appraisal was a one-page “certification” on which the attorney stated that his fee was not contingent on the report in any manner and that he didn’t have any interest or bias with respect to the parties involved. This was despite his having arranged the entire transaction and being the registered agent for the second LLC.
The S corporation filed Form 1120S for 2016 and attached a copy of the appraisal and Form 8283 which described the donated property as “LLC units” with a basis of $2,008,500 that had been acquired by purchase, and an “appraised market value” of $1,608,808. The petitioners reported a non-cash charitable deduction of $1,608,808 on Schedule A that flowed through to them from the S corporation. Because the amount of the deduction exceeded the maximum allowable deduction for 2016, they claimed a $1,195,073 deduction for 2016 and carried the balance of $415,711 to their 2017 return.
The IRS audited the petitioners’ 2016 and 2017 returns and disallowed the charitable deductions for lack of substantiation. The petitioners challenged the disallowance in the Tax Court and the IRS moved for partial Summary Judgment. The Tax Court determined that the appraisal was not a “qualified appraisal” within the meaning of I.R.C. §170(f)(11)(C). Treas. Reg. §1.170A-13(c)(6)(i) requires, among other things, that “no part of the fee arrangement for a qualified appraisal can be based, in effect, on a percentage (or set of percentages) of the appraised value of the property.” Accordingly, the attorney’s fee was a prohibited appraisal fee within the meaning of the regulation. However, the Tax Court held that the petitioners had shown reasonable cause for failure to comply with the substantiation requirements of I.R.C. §170. They had presented sufficient proof that they relied upon professionals in claiming the charitable contribution deduction. Accordingly, the Tax Court denied the IRS summary judgment on this issue. The Tax Court also denied summary judgment to the IRS on the issue of whether the written acknowledgement was a “contemporaneous written acknowledgement” of the contribution in accordance with I.R.C. §170(f)(8)(A). Accordingly, the Tax Court granted the Summary Judgment motion of the IRS in part, while the remaining issues will be set for trial.
Note: In 2018 the Department of Justice filed a complaint against the attorney, alleging that he promoted the “Ultimate Tax Plan” as a tax evasion scheme. He was accused of running a $35 million federal tax advice scam offering fake deductions using three bogus charities for 19 years. The complaint alleged that he was at the helm of "a national charitable-giving tax scheme" that targeted "wealthy individuals in high tax brackets facing large tax liabilities.” He settled with the Government and agreed to a permanent injunction. On April 26, 2019, the U.S. District Court for the Southern District of Florida entered a final judgment of permanent injunction against him, holding that he had engaged in conduct penalizable under I.R.C. §6700 by promoting the “Ultimate Tax Plan.” The court permanently enjoined him from, among other things, promoting “the Ultimate Tax Plan or any plan or arrangement that is substantially similar.” The court ordered the attorney to perform other actions as well in relation to the plan.
Document Filed with FSA Not a Valid Lease
Coniglio v. Woods, No. 06-22-00021-CV, 2022 Tex. App. LEXIS 8926 (Tex. Ct. App. Dec. 7, 2022)
Involved in this case was land in Texas that the landowner’s son managed for his father who lived in Florida. The landowner needed the hay cut and agreed orally that the plaintiff could cut the hay when necessary. The hay was cut on an annual basis. So that he could receive government farm program payments on the land, the plaintiff filed a “memorialization of a lease agreement” with the local USDA Farm Service Agency (FSA). The landowner’s son also signed the agreement at the plaintiff’s request, but later testified that he didn’t believe the document to constitute a written lease. After three years of cutting the hay, the landowner wanted to lease the ground for solar development, and the plaintiff was told that the hay no longer needed to be cut and there would be no hay profits to share. The plaintiff sued for breach of a farm lease agreement. The trial court ruled in favor of the plaintiff on the basis that the form submitted to the USDA was sufficient to show the existence of a lease agreement. On appeal, the defendant claimed that the document filed with the FSA did not satisfy the writing requirement of the statute of frauds. The appellate court agreed, noting that the document didn’t contain the essential terms of the lease. It didn’t denote the names of the parties, didn’t describe the property, didn’t note the rental rate, and didn’t list any conditions or any consideration. Accordingly, the appellate court determined that no valid lease existed and reversed the trial court’s judgment.
Conclusion
I’ll provide another summary of recent cases in a subsequent post.
March 11, 2023 in Estate Planning, Income Tax, Real Property, Water Law | Permalink | Comments (0)
Monday, January 30, 2023
Bibliography - July Through December 2022
Overview
After the first half of 2022, I posted a blog article of a bibliography of my blog articles for the first half of 2022. You can find that bibliography here: Bibliography – January through June of 2022
Bibliography of articles for that second half of 2022 – you can find it in today’s post.
Alphabetical Topical Listing of Articles (July 2022 – December 2022)
Bankruptcy
More Ag Law Developments – Potpourri of Topics
Business Planning
Durango Conference and Recent Developments in the Courts
Is a C Corporation a Good Entity Choice For the Farm or Ranch Business?
What is a “Reasonable Compensation”?
https://lawprofessors.typepad.com/agriculturallaw/2022/08/what-is-reasonable-compensation.html
Federal Farm Programs: Organizational Structure Matters – Part Three
LLCs and Self-Employment Tax – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/08/llcs-and-self-employment-tax-part-one.html
LLCs and Self-Employment Tax – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/08/llcs-and-self-employment-tax-part-two.html
Civil Liabilities
Durango Conference and Recent Developments in the Courts
Dicamba Spray-Drift Issues and the Bader Farms Litigation
Tax Deal Struck? – and Recent Ag-Related Cases
Ag Law and Tax Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/09/ag-law-and-tax-developments.html
More Ag Law Developments – Potpourri of Topics
Ag Law Developments in the Courts
https://lawprofessors.typepad.com/agriculturallaw/2022/12/ag-law-developments-in-the-courts.html
Contracts
Minnesota Farmer Protection Law Upheld
Criminal Liabilities
Durango Conference and Recent Developments in the Courts
https://lawprofessors.typepad.com/agriculturallaw/20Ag Law Summit
https://lawpr22/07/durango-conference-and-recent-developments-in-the-courts.html
Environmental Law
Constitutional Limit on Government Agency Power – The “Major Questions” Doctrine
More Ag Law Developments – Potpourri of Topics
Court Says COE Acted Arbitrarily When Declining Jurisdiction Over Farmland
Ag Law Developments in the Courts
https://lawprofessors.typepad.com/agriculturallaw/2022/12/ag-law-developments-in-the-courts.html
Estate Planning
Farm/Ranch Tax, Estate and Business Planning Conference August 1-2 – Durango, Colorado (and Online)
IRS Modifies Portability Election Rule
Modifying an Irrevocable Trust – Decanting
Farm and Ranch Estate Planning in 2022 (and 2023)
Social Security Planning for Farmers and Ranchers
How NOT to Use a Charitable Remainder Trust
Recent Cases Involving Decedents’ Estates
Medicaid Estate Recovery and Trusts
https://lawprofessors.typepad.com/agriculturallaw/2022/12/medicaid-estate-recovery-and-trusts.html
Income Tax
What is the Character of Land Sale Gain?
Deductible Start-Up Costs and Web-Based Businesses
Using Farm Income Averaging to Deal With Economic Uncertainty and Resulting Income Fluctuations
Tax Deal Struck? – and Recent Ag-Related Cases
What is “Reasonable Compensation”?
https://lawprofessors.typepad.com/agriculturallaw/2022/08/what-is-reasonable-compensation.html
LLCs and Self-Employment Tax – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/08/llcs-and-self-employment-tax-part-one.html
LLCs and Self-Employment Tax – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/08/llcs-and-self-employment-tax-part-two.html
USDA’s Emergency Relief Program (Update on Gain from Equipment Sales)
Declaring Inflation Reduced and Being Forgiving – Recent Developments in Tax and Law
Ag Law and Tax Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/09/ag-law-and-tax-developments.html
Extended Livestock Replacement Period Applies in Areas of Extended Drought – IRS Updated Drought Areas
More Ag Law Developments – Potpourri of Topics
IRS Audits and Statutory Protection
https://lawprofessors.typepad.com/agriculturallaw/2022/10/irs-audits-and-statutory-protection.html
Handling Expenses of Crops with Pre-Productive Periods – The Uniform Capitalization Rules
When Can Depreciation First Be Claimed?
Tax Treatment of Crops and/or Livestock Sold Post-Death
Social Security Planning for Farmers and Ranchers
Are Crop Insurance Proceeds Deferrable for Tax Purposes?
Tax Issues Associated With Easement Payments – Part 1
Tax Issues Associated With Easement Payments – Part 2
How NOT to Use a Charitable Remainder Trust
Does Using Old Tractors Mean You Aren’t a Farmer? And the Wind Energy Production Tax Credit – Is Subject to State Property Tax?
Insurance
Tax Deal Struck? – and Recent Ag-Related Cases
Real Property
Tax Deal Struck? – and Recent Ag-Related Cases
Ag Law Summit
https://lawprofessors.typepad.com/agriculturallaw/2022/08/ag-law-summit.html
Ag Law and Tax Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/09/ag-law-and-tax-developments.html
More Ag Law Developments – Potpourri of Topics
Ag Developments in the Courts
https://lawprofessors.typepad.com/agriculturallaw/2022/12/ag-law-developments-in-the-courts.html
Regulatory Law
Constitutional Limit on Government Agency Power – The “Major Questions” Doctrine
The Complexities of Crop Insurance
https://lawprofessors.typepad.com/agriculturallaw/2022/07/the-complexities-of-crop-insurance.html
Federal Farm Programs – Organizational Structure Matters – Part One
Federal Farm Programs – Organizational Structure Matters – Part Two
Federal Farm Programs: Organizational Structure Matters – Part Three
USDA’s Emergency Relief Program (Update on Gain from Equipment Sales)
Minnesota Farmer Protection Law Upheld
Ag Law and Tax Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/09/ag-law-and-tax-developments.html
Animal Ag Facilities and Free Speech – Does the Constitution Protect Saboteurs?
Court Says COE Acted Arbitrarily When Declining Jurisdiction Over Farmland
Ag Law Developments in the Courts
https://lawprofessors.typepad.com/agriculturallaw/2022/12/ag-law-developments-in-the-courts.html
Water Law
More Ag Law Developments – Potpourri of Topics
January 30, 2023 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Friday, January 27, 2023
Top Ten Agricultural Law and Tax Developments of 2022 – Numbers 2 and 1
Overview
Today’s article concludes my look at the top ag law and tax developments of 2022 with what I view as the top two developments. I began this series by looking at those developments that were significant, but not quite big enough to make the “Top Ten.” Then I started through the “Top Ten.”
The top two ag law and tax developments in 2022 – it’s the topic of today’s post.
Recap
Here’s a bullet-point recap of the top developments of 2022 that I have written about:
- Nuisance law (the continued developments in Iowa) - Garrison v. New Fashion Pork LLP, 977 N.W.2d 67 (Iowa Sup. Ct. 2022).
- Minnesota farmer protection law - Pitman Farms v. Kuehl Poultry, LLC, et al., 48 F.4th 866 (8th Cir. 2022).
- Regulation of ag activities on wildlife refuges - Tulelake Irrigation Dist. v. United States Fish & Wildlife Serv., 40 F.4th 930 (9th Cir. 2022).
- Corps of Engineers jurisdiction over “wetland” - Hoosier Environmental Council, et al. v. Natural Prairie Indiana Farmland Holdings, LLC, et al., 564 F. Supp. 3d 683 (N.D. Ind. 2021).
- U. S. Tax Court’s jurisdiction to review collection due process determination - Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022).
- IRS Failure to Comply with the Administrative Procedure Act - Mann Construction, Inc. v. United States, 27 F.4th 1138 (6th Cir. 2022); Green Valley Investors, LLC v. Commissioner, 159 T.C. No. 5 (2022).
- State law allowing unconstitutional searches unconstitutional - Rainwaters, et al. v. Tennessee Wildlife Resources Agency, No. 20-CV-6 (Benton Co. Ten. Dist. Ct. Mar. 22, 2022).
- No. 10 – USDA’s Emergency Relief Program and the definition of “farm income.”
- No. 9 - USDA decision not to review wetland determination upheld - Foster v. United States Department of Agriculture, No. 4:21-CV-04081-RAL, 2022 U.S. Dist. LEXIS 117676 (D. S.D. Jul. 1, 2022).
- No. 8 - Dicamba drift damage litigation - Hahn v. Monsanto Corp., 39 F.4th 954 (8th Cir. 2022), reh’g. den., 2022 U.S. App. LEXIS 25662 (8th Cir. Sept. 2, 2022).
- No. 7 – The misnamed “Inflation Reduction Act.”
- No. 6 – Caselaw and legislative developments concerning “ag gag” provisions.
- No. 5 - WOTUS final rule.
- No. 4 – Economic issues
- No. 3 – Endangered Species Act regulations
No. 2 – California Proposition 12
National Pork Producers Council, et al. v. Ross, 6 F.4th 1021 (9th Cir. Jul. 28, 2021), cert. granted, 142 S. Ct. 1413 (2022)
In a huge blow to pork producers (and consumers of pork products) nationwide, the U.S. Court of Appeals for the Ninth Circuit has upheld California’s Proposition 12 in 2021. Proposition 12 requires any pork sold in California to be raised in accordance with California’s housing requirements for hogs. This means that any U.S. hog producer, by January 1, 2022, was required to upgrade existing facilities to satisfy California’s requirements if desiring to market pork products in California. In early 2022, the U.S. Supreme Court announced that it would review the Ninth Circuit’s opinion.
While each state sets its own rules concerning the regulation of agricultural production activities, the legal question presented in this case is whether one state can override other states’ rules. The answer to that question involves an analysis of the Commerce Clause and the “Dormant” Commerce Clause.
The Commerce Clause. Article I Section 8 of the U.S. Constitution provides in part, “the Congress shall have Power...To regulate Commerce with foreign Nations and among the several states, and with the Indian Tribes.” The Commerce Clause, on its face, does not impose any restrictions on states in the absence of congressional action. However, the U.S. Supreme Court has interpreted the Commerce Clause as implicitly preempting state laws that regulate commerce in a manner that disrupts the national economy. This is the judicially-created doctrine known as the “dormant” Commerce Clause.
The “Dormant” Commerce Clause. The dormant Commerce Clause is a constitutional law doctrine that says Congress's power to "regulate Commerce ... among the several States" implicitly restricts state power over the same area. In general, the Commerce Clause places two main restrictions on state power – (1) Congress can preempt state law merely by exercising its Commerce Clause power by means of the Supremacy Clause of Article VI, Clause 2 of the Constitution; and (2) the Commerce Clause itself--absent action by Congress--restricts state power. In other words, the grant of federal power implies a corresponding restriction of state power. This second limitation has come to be known as the "Dormant" Commerce Clause because it restricts state power even though Congress's commerce power lies dormant. Willson v. Black Bird Creek Marsh Co., 27 U.S. 245 (1829). The label of “Dormant Commerce Clause” is really not accurate – the doctrine applies when the Congress is dormant, not the Commerce Clause itself.
Rationale. The rationale behind the Commerce Clause is to protect the national economic market from opportunistic behavior by the states - to identify protectionist actions by state governments that are hostile to other states. Generally, the dormant Commerce Clause doctrine prohibits states from unduly interfering with interstate commerce. State regulations cannot discriminate against interstate commerce. If they do, the regulations are per se invalid. See, e.g., City of Philadelphia v. New Jersey, 437 U.S. 617 (1978). Also, state regulations cannot impose undue burdens on interstate commerce. See, e.g., Kassel v. Consolidated Freightways Corp., 450 U.S. 662 (1981). Under the “undue burden” test, state laws that regulate evenhandedly to effectuate a local public interest are upheld unless the burden imposed on commerce is clearly excessive in relation to the local benefits.
The Court has never held that discrimination between in-state and out-of-state commerce, without more, violates the dormant Commerce Clause. Instead, the Court has explained that the dormant Commerce Clause is concerned with state laws that both discriminate between in-state and out-of-state actors that compete with one another, and harm the welfare of the national economy. Thus, a discriminatory state law that harms the national economy is permissible if in-state and out-of-state commerce do not compete. See, e.g., General Motors Corp. v. Tracy, 117 S. Ct. 811, 824-26 (1997). Conversely, a state law that discriminates between in-state and out-of-state competitors is permissible if it does not harm the national economy. H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525 (1949).
California Proposition 12 Litigation
In 2018, California voters passed Proposition 12. Proposition 12 bans the sale of whole pork meat (no matter where produced) from animals confined in a manner inconsistent with California’s regulatory standards. Proposition 12 established minimum requirements on farmers to provide more space for egg-laying hens, breeding pigs, and calves raised for veal. Specifically, the law requires that covered animals be housed in confinement systems that comply with specific standards for freedom of movement, cage-free design and minimum floor space. The law identifies covered animals to include veal calves, breeding pigs and egg-laying hens. The implementing regulations prohibit a farm owner or operator from knowingly causing any covered animal to be confined in a cruel manner, as specified, and prohibits a business owner or operator from knowingly engaging in the sale within the state of shell eggs, liquid eggs, whole pork meat or whole veal meat, as defined, from animals housed in a “cruel manner.” In addition to general requirements that prohibit animals from being confined in a manner that prevents lying down, standing up, fully extending limbs or turning around freely, the measure added detailed confinement space standards for farms subject to the law. The alleged reason for the law was to protect the health and safety of California consumers and decrease the risk of foodborne illness and the negative fiscal impact on California.
In late 2019, several national farm organizations challenged Proposition 12 and sought a declaratory judgment that the law was unconstitutional under the dormant Commerce Clause. The plaintiffs also sought a permanent injunction preventing Proposition 12 from taking effect. The plaintiffs claimed that Proposition 12 impermissibly regulated out-of-state conduct by compelling non-California producers to change their operations to meet California’s standards. The plaintiffs also alleged that Proposition 12 imposed excessive burdens on interstate commerce without advancing any legitimate local interest by significantly increasing operation costs without any connection to human health or foodborne illness. The trial court dismissed the plaintiffs’ complaint. National Pork Producers Council, et al. v. Ross, No. 3:19-cv-02324-W-AHG (S.D. Cal. Apr. 27, 2020).
On appeal, the plaintiffs focused their argument on the allegation that Proposition 12 has an impermissible extraterritorial effect of regulating prices in other states and, as such, is per se unconstitutional. This was a tactical mistake for the plaintiffs. The appellate court noted that existing Supreme Court precedent on the extraterritorial principle applied only to state laws that are “price control or price affirmation statutes.” National Pork Producers Council, et al. v. Ross, No. 20-55631, 2021 U.S. App. LEXIS 22337 (9th Cir. Jul. 28, 2021). Thus, the extraterritorial principle does not apply to a state law that does not dictate the price of a product and does not tie the price of its in-state products to out-of-state prices. Because Proposition 12 was neither a price control nor a price-affirmation statute (it didn’t dictate the price of pork products or tie the price of pork products sold in California to out-of-state prices) the law didn’t have the extraterritorial effect of regulating prices in other states.
The appellate court likewise rejected the plaintiffs’ claim that Proposition 12 has an impermissible indirect “practical effect” on how pork is produced and sold outside California. Id. Upstream effects (e.g., higher production costs in other states) the appellate court concluded, do not violate the dormant Commerce Clause. The appellate court pointed out that a state law is not impermissibly extraterritorial unless it regulates conduct that is wholly out of state. Id. Because Proposition 12 applied to California and non-California pork production the higher cost of production was not an impermissible effect on interstate commerce.
The appellate court also concluded that inconsistent regulation from state-to-state was permissible because the plaintiffs had failed to show a compelling need for national uniformity in regulation at the state level. Id. In addition, the appellate court noted that the plaintiffs had not alleged that Proposition 12 had a discriminatory effect on interstate commerce.
Simply put, the appellate court rejected the plaintiffs’ challenge to Proposition 12 because a law that increases compliance costs (projected at a 9.2 percent increase in production costs that would e passed on to consumers) is not a substantial burden on interstate commerce in violation of the dormant Commerce Clause.
As noted above, the U.S. Supreme court decided to review the Ninth Circuit’s opinion. Unfortunately, the Supreme Court has been careless in applying the anti-discrimination test, and in many cases, neither of the two requirements--interstate competition or harm to the national economy--is ever mentioned. See, e.g., Hughes v. Oklahoma, 441 U.S. 322 (1979). The reason interstate competition goes unstated is obvious – in most cases the in-state and out-of-state actors compete in the same market. But, the reason that the second requirement, harm to the national economy, goes unstated is because the Court simply assumes the issue away. The Supreme Court’s decision in 2023 is a highly anticipated one for agriculture and the dormant Commerce Clause analysis and application in general.
No. 1 – The “Major Questions” Doctrine
West Virginia, et al. v. Environmental Protection Agency, et al., 142 S. Ct. 2587 (2022)
Clearly, the biggest development of 2022 that has the potential to significantly impact agriculture and the economy in general is the Supreme Court’s opinion involving the Environmental Protection Agency’s (EPA’s) regulatory authority under the Clean Air Act (CAA). The Court invoked the “major question” doctrine to pair back unelected bureaucratic agency authority and return policy-making power to citizens through their elected representatives. The future impact of the Court’s decision is clear. When federal regulations amount to setting nationwide policy and when state regulations do the same at the state level, the regulatory bodies may be successfully challenged in court.
The case involved the U.S. Supreme Court’s review of the EPA’s authority to regulate greenhouse gas emissions from existing power plants under the CAA. The case arose from the EPA’s regulatory development of the Clean Power Plan (CPP) in 2015 which, in turn, stemmed from then-President Obama’s 2008 promise to establish policy that would bankrupt the coal industry. The EPA claimed it had authority to regulate CO2 emissions from coal and natural-gas-fired power plants under Section 111 of the CAA. Under that provision, the EPA determines emission limits. But EPA took the position that Section 111 empowered it to shift energy generation at the plants to “renewable” energy sources such as wind and solar. Under the CPP, existing power plants could meet the emission limits by either reducing electricity production or by shifting to “cleaner” sources of electricity generation. The EPA admitted that no existing coal plant could satisfy the new emission standards without a wholesale movement away from coal, and that the CPP would impose billions in compliance costs, raise retail electricity prices, require the retirement of dozens of coal plants and eliminate tens of thousands of jobs. In other words, the CPP would keep President Obama’s 2008 promise by bypassing the Congress through the utilization of regulatory rules set by unelected, unaccountable bureaucrats.
The U.S. Supreme Court stayed the CPP in 2016 preventing it from taking effect. The EPA under the Trump Administration repealed the CPP on the basis that the Congress had not clearly delegated regulatory authority “of this breadth to regulate a fundamental sector of the economy.” The EPA then replaced the CPP with the Affordable Clean Energy (ACE) rule. Under the ACE rule, the focus was on regulating power plant equipment to require upgrades when necessary to improve operating practices. Numerous states and private parties challenged the EPA’s replacement of the CPP with the ACE. The D.C. Circuit Court vacated the EPA’s repeal of the CPP, finding that the CPP was within the EPA’s purview under Section 7411 of the CAA – the part of the CAA that sets standards of performance for new sources of air pollution. American Lung Association v. Environmental Protection Agency, 985 F.3d 914 (D.C. Cir. 2021). The Circuit Court also vacated the ACE and purported to resurrect the CPP. In the fall of 2021, the U.S. Supreme Court agreed to hear the case.
The Supreme Court reversed, framing the issue as whether the EPA had the regulatory authority under Section 111 of the CAA to restructure the mix of electricity generation in the U.S. to transition from 38 percent coal to 27 percent coal by 2030. The Supreme Court said EPA did not, noting that the case presented one of those “major questions” because under the CPP the EPA would tremendously expand its regulatory authority by enacting a regulatory program that the Congress had declined to enact. While the EPA could establish emission limits, the Supreme Court held that the EPA could not force a shift in the power grid from one type of energy source to another. The Supreme Court noted that the EPA admitted that did not have technical expertise in electricity transmission, distribution or storage. Simply put, the Supreme Court said that devising the “best system of emission reduction” was not within EPA’s regulatory power.
Clearly, the Congress did not delegate administrative agencies the authority to establish energy policy for the entire country. While the Supreme Court has never precisely defined the boundaries and scope of the major question doctrine, when the regulation is more in line with what should be legislative policymaking, it will be struck down. The Supreme Court’s decision is also broad enough to have long-lasting consequences for rulemaking by all federal agencies including the USDA/FSA. The decision could also impact the Treasury Department’s promulgation of tax regulations.
The Supreme Court’s decision returns power to the Congress that it has ceded over the years to administrative agencies and the Executive branch concerning matters of “vast economic and political significance.” But it’s also likely that the Executive branch and the unelected bureaucrats of the administrative state will likely attempt to push the envelope and force the courts to push back. It’s rare that the Executive branch and administrative agencies voluntarily return power to elected representatives as was done in numerous instances from 2017 through 2020.
Conclusion
Agricultural law and tax issues were many and varied in 2022. In 2023, the U.S. Supreme Court will issue opinions in the California Proposition 12 case and the Sackett case involving the scope of the federal government’s jurisdiction over wetlands. Also, there has been a major development in the Tax Court involving tax issues associated with deferred grain contracts that has resulted in a settlement with IRS, the terms of which cannot be disclosed at this time. If 2022 showed a trend with USDA it is that the USDA will continue several “hardline” positions against farmers – a narrow definition of farm income; broad regulatory control over wet areas in fields; and ceding regulatory authority to the EPA and the COE. The U.S. Supreme Court is also anticipated to issue on opinion with potentially significant implications for Medicaid planning.
Of course, the expanding war against Russia being fought in Ukraine will continue to dominate ag markets throughout 2023. At home, the general economic data is not good and that will have implications in 2023 for farmers and ranchers. On January 26, the U.S Bureau of Economic Analysis issued a report (https://www.bea.gov/) showing that the U.S. economy grew by 2.9 percent in the fourth quarter of 2022 and 2.1 percent for all of 2022. But, the report also showed that economic growth in the economy is slowing. Business investment grew by a mere 1.4 percent in the fourth quarter of 2022, consisting almost entirely of inventory growth. That will mean that businesses will be forced to sell off inventories at discounts, which will lower business profits and be a drag on economic growth in 2023. Nonresidential investment was down 26.7 percent due to the increase in home prices, increased interest rates and a drop in real income. On that last point, real disposable income dropped $1 trillion in 2022, the largest drop since 1932 - the low point of the Great Depression. Personal savings also dropped by $1.6 trillion in 2022. This is a "ticking timebomb" that is not sustainable because it means that consumers are depleting cash reserves. This indicates that spending will continue to slow in 2023 and further stymie economic growth - about two-thirds of GDP is based on consumer spending. Relatedly, the Dow was down 8.8 percent for 2022, the worst year since 2008. 2022 also saw a reduction in the pace of international trade. Imports dropped more than exports which increases GDP, giving the illusion that the economy is better off.
Certainly, 2023 will be another very busy year for rural practitioners and those dealing with legal and tax issues for farmers and ranchers.
January 27, 2023 in Civil Liabilities, Environmental Law, Income Tax, Regulatory Law, Water Law | Permalink | Comments (0)
Thursday, October 6, 2022
More Ag Law Developments – Potpourri of Topics
Overview
The courts have continued to issue decisions of relevance to farmers, ranchers and rural landowners. In today’s post, I take a look at some of them from around the country. From property rights to income tax to bankruptcy to herbicide crop damage and landowners disputing over drainage – it’s covered below.
Court Says Public Has Right to Use Private Riverbeds
Adobe Whitewater Club of N.M. v. N.M. State Game Comm'n., No. S-1-SC-38195, 2022 N.M. LEXIS 34 (N.M. Sup. Ct. Sept. 1, 2022)
The plaintiffs, various environmental and recreation groups, sued the New Mexico State Gaming Commission (Commission), claiming a regulation of the Commission violated the public’s right to use parts of New Mexico’s rivers. In 2017, the Commission, promulgated a regulation that outlined a process for landowners to obtain a certificate allowing them to close public access to segments of public water flowing over private property. The plaintiffs challenged the regulation as unconstitutional. Article XVI, Section 2 of the New Mexico state constitution states, “the unappropriated water of every natural stream, perennial or torrential, within the state of New Mexico, is hereby declared to belong to the public.” The issue was whether the public’s right to use the public waters included the right to use the privately owned waterbeds. The New Mexico Supreme Court determined that riverbeds were considered navigable waterways and were subject to the “public trust doctrine.” The private landowners along the riverbed intervened in the lawsuit and claimed the public would be considered trespassers on their land and they could exclude the trespassers. The Court disagreed, finding that the public has the right to use private land when reasonably necessary to gain access to or enjoy public rivers. The Court stated, “A determination of navigability only goes to who has title to the bed below the public water, not to the scope of the public use.” As such the court concluded that the public had access to such rivers to float, wade, fish and engage in other recreational activities that would have a minimal impact on the rights of private property owners. In addition, the Court held that such waters are and always have been public. Accordingly, the Court invalidated the Commission’s regulation.
Retained Ownership of Minable Surface Negates Conservation Easement Deduction.
C.C.A. 202236010 (Sept. 9, 2022)
The Chief Counsel’s office of IRS has taken the position that a conservation easement donation is invalid if the donor owns both the surface estate of the land burdened by the easement as well as a qualified mineral interest that has never been separated from the surface estate, and the deed retains any possibility of surface mining to extract subsurface minerals. In that instance, the conservation easement doesn’t satisfy I.R.C. §170(h). The IRS said the result would be the same even if the donee would have to approve the surface-mining method because the donated easement would not be donated exclusively for conservation purposes in accordance with I.R.C. §170(h)(5). The IRS pointed out that Treas. Reg. §1.170A-14(g)(4) states that a donated easement does not protect conservation purposes in perpetuity if any method of mining that is inconsistent with the particular conservation purposes of the contribution is permitted at any time. But, the IRS pointed out that a deduction is allowed if the mining method at issue has a limited, localized impact on the real estate and does not destroy significant conservation interests in a manner that can’t be remedied. Surface mining, however, is specifically prohibited where the ownership of the surface estate and the mineral interest has never been separated. On the specific facts involved, the IRS determined that the donated easement would not be treated at being made exclusively for conservation purposes because the donee could approve surface mining of the donor’s subsurface minerals.
Family Farms Not Part of Bankruptcy Estate.
Ries v. Archer (In re Archer), Nos. 17-20045-RLJ-7, 19-02001, 2022 Bankr. LEXIS 2250 (Bankr. N.D. Tex. Aug. 12, 2022)
A chapter 7 trustee sought a declaration that certain farm ground was a part of the bankrupt estate. The debtors, a married couple, had eight children, who all but one became medical doctors. The debtors had funded their children’s education throughout their lives with funds derived from the family farm. They owned 14 sections of land in Moore County, Texas, (northwest Texas) comprising what was referred to as the “Moore County Farm.” Although, the deed from 1988 for the land listed the defendant’s children’s IRA as the grantee-buyer of the land, the children did not have IRAs at the time or played any part in purchasing the land. The children were not given any right to manage or operate the Moore County Farm so long as the debtors were mentally competent. Beginning in 1998, the USDA and CRP program began making payments to some of the defendant’s children and in 2007 farmers who rented land from the Moore County Farm began to pay some of the children. The children began to open accounts and lines of credit associated with the expenses of the Moore County Farm. From 2005 to 2017, the debtors instructed some of their children to apply as “New Producers” to the Federal Crop Insurance Program. Through this program they were provided with favorable crop insurance as “managers” of a farm, but none of the children had managerial control. Ultimately, the children were charged with and convicted of insurance fraud. Along with the 1988 deed, the debtors executed a warranty deed for the Moore County Farm to some of the children in 2006 and later transferred the farm to the children’s IRAs. In 2008, one of the defendant’s children purchased 670 acres in Randall County, referred to as the “Randall County Farm”. The debtors ultimately had primary authority and control of the farming operations of the Randall County Farm along with the Moore County Farm and had full control over the finances and accounting of the farms. The children did pay for some of the expenses on the Randall County Farm, but overall, the debtors operated the two farms as one entity. There were no further legal issues until 2011 when one of the debtors’ cows was hit by a motorist who sustained serious injuries because of the accident and filed suit. The court awarded the man $8.95 million in damages to be paid by the debtors. The debtors then filed Chapter 7 bankruptcy. The bankruptcy court noted that the children had shared significant responsibilities over the Moore County Farm with their father and that their father wanted to pass the property to his children through the deeds. The court concluded that just because the debtors continued to run the farm did not mean they did not want to ultimately gift the land to the children. The bankruptcy trustee argued this was another scam set up by the family, but the court was not convinced given the common desire of parents to devise property to their children. The evidence showed that the debtors’ intent was for the children to own the farms and operate them for enjoyment. Based on these considerations, the court concluded that the Moore County Farm was not part of the bankruptcy estate. The trustee claimed that the Randall County Farm should have been a part of the estate. Because one of the children who purchased the land negotiated a conservation plan with the USDA, received CRP payments, and paid for the farm expenses, the child was the true owner of the Randall County Farm and could not be considered part of the bankruptcy estate.
FIFRA Doesn’t Preempt State-Based Warranty Claims
Kissan Berry Farm v. Whatcom Farmers Cooperative, et al., No. 82774-0-I, 2022 Wash. App. LEXIS 1766 (Wash. Ct. App. Sept. 6, 2022)
The plaintiffs, five state of Washington red raspberry farms, claimed that the use of herbicide Callisto in 2012 killed their berry plants causing more than $2.5 million in lost production for 2012 and two following crop years. Callisto’s use was recommended by an agronomist working on behalf of. the defendant. Callisto’s maker, Syngenta was also named in the suit. Callisto’s label stated that it was safe for use on red raspberries. The label also indicated that usage could result in some crop damage and that compensation for crop damage was limited to the price of the herbicide. The plaintiffs asserted that Syngenta and the agronomist had made various warranties that Callisto was safe for use on red raspberries. Syngenta’s position that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) preempted the farmers’ claims. The trial court agreed on the basis that the plaintiffs’ claims would have required Syngenta to change the product label due to state law. The appellate court reversed based on Bates v. Dow Agrosciences LLC, 544 U.S. 431 (2005). Under Bates, state law cannot require a change to a federally approved label, but state-based claims for breach of warranty are not preempted. the Supreme Court found that a pesticide manufacturer who is found liable for state law breach of express warranty claims is not then induced to change their federally registered pesticide label.
Comparative Fault for Unmaintained Waterway
Watters v. Medinger, No. 21-1076, 2022 Iowa App. LEXIS 667 (Iowa Ct. App. Aug. 31, 2022)
The parties had been in various legal spats involving farmland for over a decade. The plaintiff owned farmland adjacent to the defendant that contained waterways. The plaintiff sued the defendant claiming the defendant altered his land in various ways causing extreme degradation and erosion along the plaintiff’s waterways. The trial court determined that the plaintiff was contributorily negligent for failing to maintain or mow around the waterways, which allowed for ragweed to grow. The ragweed destroyed the grass along the waterway, which meant the water would flood quicker than it would have if grass could absorb some of the moisture. The trial court found that the defendant’s construction of a new cattle shed and addition of drain tiles did cause damage to the plaintiff’s property, but the at that time the plaintiff had already stopped properly maintaining the waterway. The trial court awarded the plaintiff $2,000 in damages to repair the damage caused by the erosion. The plaintiff appealed claiming that the damage award was insufficient. The appellate court reviewed the plaintiff’s argument that the jury instruction was improper regarding comparative fault. The plaintiff tried to argue that he could not repair any part of the erosion until the drainage issues were solved. The appellate court held the plaintiff failed to address the failure to maintain the waterway before the draining issues arose. A farm tenant testified that the plaintiff’s property was already in “tough shape” before the defendant made any changes to his property. The appellate court held the comparative fault instruction was proper, because there was “a causal connection between the plaintiff’s fault and the claimed damages.” Further, the appellate court held the award of damages was sufficient because the jury settled on an amount within the range of evidence based on expert testimony. Just because the amount was at the low end of the range did not mean the amount was insufficient. The appellate court affirmed the trial court’s decision to deny the plaintiff’s motion for a new trial.
Conclusion
Agricultural law and taxation is a very dynamic discipline. There is never a dull moment -more fodder for my radio shows and TV interviews, and content for my books and seminars.
October 6, 2022 in Bankruptcy, Civil Liabilities, Environmental Law, Income Tax, Real Property, Water Law | Permalink | Comments (0)
Sunday, September 11, 2022
September 30 Ag Law Summit in Omaha (and Online)
Overview
On September 30, Washburn Law School with cooperating partner Creighton Law School will conduct the second annual Ag Law Summit. The Summit will be held on the Creighton University campus in Omaha, Nebraska. Last September Washburn Law School conducted it’s first “Ag Law Summit” and held it at Mahoney State Park in Nebraska. This year the Summit returns in collaboration with Creighton University School of Law. The Summit will be held at Creighton University on September 30 and will also be broadcast live online.
The Summit will cover various topics of relevance to agricultural producers and the tax and legal counsel that represent them.
The 2022 Ag Law Summit – it’s the topic of today’s post.
Agenda
Developments in agricultural law and taxation. I will start off the day with a session surveying the major recent ag law and tax developments. This one-hour session will update attendees on the big issues facing ag clients and provide insight concerning the issues that look to be on the horizon in the legal and tax world. There have been several major developments involving agricultural that have come through the U.S Supreme Court in recent months. I will discuss those decisions and the implications for the future. Several of them involve administrative law and could have a substantial impact on the ability of the federal government to micro-manage agricultural activities. I will also get into the big tax developments of the past year, including the tax provisions included in the recent legislation that declares inflation to be reduced!
Death of a farm business owner. After my session, Prof. Ed Morse of Creighton Law School will examine the tax issues that arise when a farm business owner dies. Income tax basis and the impact of various entity structures will be the focus of this session along with the issues that arise upon transitioning ownership to the next generation and various tax elections. The handling of tax attributes after death will be covered as will some non-tax planning matters when an LLC owner dies. There are also entity-specific issues that arise when a business owner dies, and Prof. Morse will address those on an entity-by-entity basis. The transition issue for farmers and ranchers is an important one for many. This session will be a good one in laying out the major tax and non-tax considerations that need to be laid out up front to help the family achieve its goals post-death.
Governing documents for farm and ranch business entities. After a morning break Dan Waters with Lamson Dugan & Murray in Omaha will take us up to lunch with a technical session on the drafting of critical documents for farm and ranch entities. What should be included in the operative agreements? What is the proper wording? What provisions should be included and what should be avoided? This session picks up on Prof. Morse’s presentation and adds in the drafting elements that are key to a successful business succession plan for the farm/ranch operation.
Fence law issues. After a provided lunch, Colten Venteicher who practices in Gothenburg, NE, will address the issues of fence line issues when ag land changes hands. This is an issue that seems to come up over and over again in agriculture. The problems are numerous and varied. This session provides a survey of applicable law and rules and practical advice for helping clients resolve existing disputes and avoid future ones.
Farm economics. Following the afternoon break, a presentation on the current economy and economic situation facing ag producers, ag businesses and consumers will be presented by Darrell Holaday. Darrell is an ag economist and his firm, Advanced Market Concepts, provides marketing plans for ag producers. What are the economic projections for the balance of 2022 and into 2023 that bear on tax and estate planning for farmers and ranchers? How will the war in Ukraine continue to impact agriculture in the U.S.? This will be a key session, especially with the enactment of legislation that will add fuel to the current inflationary fire – unless of course, the tax increases in the legislation slow the economy enough to offset the additional spending.
Ethics. I return to close out the day with a session of ethics focused on asset protection planning. There’s a right way and a wrong way to do asset protection planning. This session guides the practitioner through the proper approach to asset protection planning, client identification, and the pitfalls if the “stop signs” are missed.
Online. The Summit will be broadcast live online and will be interactive to allow you the ability to participate remotely.
Reception
For those attending in person, a reception will follow in the Harper Center Ballroom on the Creighton Campus.
Conclusion
If your tax or legal practice involves ag clients, the Ag Law Summit is for you. As noted, you can also attend online if you can’t be there in person. If you are a student currently in law school or thinking about it, or are a student in accounting, you will find this seminar beneficial.
I hope to see you in Omaha on September 30 or see that you are with us online.
You can learn more about the Summit and get registered at the following link: https://www.washburnlaw.edu/employers/cle/aglawsummit.html
September 11, 2022 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Monday, September 5, 2022
Bibliography – January through June of 2022
Overview
Periodically I post an article containing the links to all of my blog articles that have been recently published. Today’s article is a bibliography of my articles from the beginning of 2022 through June. Hopefully this will aid your research of agricultural law and tax topics.
A bibliography of articles for the first half of 2022 – it’s the content of today’s post.
Bankruptcy
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 8 and 7
Other Important Developments in Agricultural Law and Taxation
Recent Court Cases of Importance to Agricultural Producers and Rural Landowners
Business Planning
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Should An IDGT Be Part of Your Estate Plan?
Farm Wealth Transfer and Business Succession – The GRAT
Captive Insurance – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-one.html
Captive Insurance – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-two.html
Captive Insurance – Part Three
https://lawprofessors.typepad.com/agriculturallaw/2022/04/captive-insurance-part-three.html
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Intergenerational Transfer of the Farm/Ranch Business – The Buy-Sell Agreement
IRS Audit Issue – S Corporation Reasonable Compensation
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Wisconsin Seminar and…ERP (not Wyatt) and ELRP
S Corporation Dissolution – Part 1
https://lawprofessors.typepad.com/agriculturallaw/2022/06/s-corporation-dissolution-part-1.html
S Corporation Dissolution – Part Two; Divisive Reorganization Alternative
Farm/Ranch Tax, Estate and Business Planning Conference August 1-2 – Durango, Colorado (and Online)
Durango Conference and Recent Developments in the Courts
Civil Liabilities
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 8 and 7
Agritourism
https://lawprofessors.typepad.com/agriculturallaw/2022/03/agritourism.html
Animal Ag Facilities and the Constitution
When Is an Agricultural Activity a Nuisance?
Ag Law-Related Updates: Dog Food Scam; Oil and Gas Issues
Durango Conference and Recent Developments in the Courts
Dicamba Spray-Drift Issues and the Bader Farms Litigation
Tax Deal Struck? – and Recent Ag-Related Cases
Contracts
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 6 and 5
What to Consider Before Buying Farmland
Elements of a Hunting Use Agreement
https://lawprofessors.typepad.com/agriculturallaw/2022/02/elements-of-a-hunting-use-agreement.html
Ag Law (and Medicaid Planning) Court Developments of Interest
Cooperatives
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Criminal Liabilities
Animal Ag Facilities and the Constitution
Is Your Farm or Ranch Protected From a Warrantless Search?
Durango Conference and Recent Developments in the Courts
Environmental Law
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 6 and 5
“Top Tan” Agricultural Law and Tax Developments of 2021 – Numbers 2 and 1
The “Almost Top Ten” (Part 3) – New Regulatory Definition of “Habitat” under the ESA
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Constitutional Limit on Government Agency Power – The “Major Questions” Doctrine
Estate Planning
Other Important Developments in Agricultural Law and Taxation
Other Important Developments in Agricultural Law and Taxation (Part 2)
The “Almost Top Ten” (Part 4) – Tax Developments
The “Almost Top 10” of 2021 (Part 7) [Medicaid Recovery and Tax Deadlines]
Nebraska Revises Inheritance Tax; and Substantiating Expenses
https://lawprofessors.typepad.com/agriculturallaw/2022/02/recent-developments-in-ag-law-and-tax.html
Tax Consequences When Farmland is Partitioned and Sold
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Should An IDGT Be Part of Your Estate Plan?
Farm Wealth Transfer and Business Succession – The GRAT
Family Settlement Agreement – Is it a Good Idea?
Registration Open for Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Captive Insurance – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-one.html
Captive Insurance – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-two.html
Captive Insurance Part Three
https://lawprofessors.typepad.com/agriculturallaw/2022/04/captive-insurance-part-three.html
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Proposed Estate Tax Rules Would Protect Against Decrease in Estate Tax Exemption
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Ag Law (and Medicaid Planning) Court Developments of Interest
Joint Tenancy and Income Tax Basis At Death
More Ag Law Court Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/06/more-ag-law-court-developments.html
Farm/Ranch Tax, Estate and Business Planning Conference August 1-2 – Durango, Colorado (and Online)
IRS Modifies Portability Election Rule
Income Tax
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 10 and 9
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 8 and 7
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 2 and 1
The “Almost Top Ten” (Part 4) – Tax Developments
The “Almost Top 10” of 2021 (Part 7) [Medicaid Recovery and Tax Deadlines]
Purchase and Sale Allocations Involving CRP Contracts
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
What’s the Character of the Gain From the Sale of Farm or Ranch Land?
Proper Tax Reporting of Breeding Fees for Farmers
Nebraska Revises Inheritance Tax; and Substantiating Expenses
https://lawprofessors.typepad.com/agriculturallaw/2022/02/recent-developments-in-ag-law-and-tax.html
Tax Consequences When Farmland is Partitioned and Sold
Expense Method Depreciation and Leasing- A Potential Trap
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
income Tax Deferral of Crop Insurance Proceeds
What if Tax Rates Rise?
https://lawprofessors.typepad.com/agriculturallaw/2022/03/what-if-tax-rates-rise.html
Registration Open for Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Captive Insurance – Part One
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-one.html
Captive Insurance – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2022/03/captive-insurance-part-two.html
Captive Insurance – Part Three
https://lawprofessors.typepad.com/agriculturallaw/2022/04/captive-insurance-part-three.html
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
IRS Audit Issue – S Corporation Reasonable Compensation
Missed Tax Deadline & Equitable Tolling
https://lawprofessors.typepad.com/agriculturallaw/2022/04/missed-tax-deadline-equitable-tolling.html
Summer 2022 Farm Income Tax/Estate and Business Planning Conferences
Joint Tenancy and Income Tax Basis At Death
Tax Court Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2022/05/tax-court-caselaw-update.html
Deducting Soil and Water Conservation Expenses
Correcting Depreciation Errors (Including Bonus Elections and Computations)
When Can Business Deductions First Be Claimed?
Recent Court Decisions Involving Taxes and Real Estate
Wisconsin Seminar and…ERP (not Wyatt) and ELRP
Tax Issues with Customer Loyalty Reward Programs
S Corporation Dissolution – Part 1
https://lawprofessors.typepad.com/agriculturallaw/2022/06/s-corporation-dissolution-part-1.html
S Corporation Dissolution – Part Two; Divisive Reorganization Alternative
Farm/Ranch Tax, Estate and Business Planning Conference August 1-2 – Durango, Colorado (and Online)
What is the Character of Land Sale Gain?
Deductible Start-Up Costs and Web-Based Businesses
Using Farm Income Averaging to Deal with Economic Uncertainty and Resulting Income Fluctuations
Tax Deal Struck? – and Recent Ag-Related Cases
Insurance
Tax Deal Struck? – and Recent Ag-Related Cases
Real Property
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 4 and 3
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
What to Consider Before Buying Farmland
Elements of a Hunting Use Agreement
https://lawprofessors.typepad.com/agriculturallaw/2022/02/elements-of-a-hunting-use-agreement.html
Animal Ag Facilities and the Constitution
Recent Court Decisions Involving Taxes and Real Estate
Recent Court Cases of Importance to Agricultural Producers and Rural Landowners
More Ag Law Court Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/06/more-ag-law-court-developments.html
Ag Law-Related Updates: Dog Food Scam; Oil and Gas Issues
Tax Deal Struck? – and Recent Ag-Related Cases
Regulatory Law
The “Almost Top 10” of 2021 (Part 5)
https://lawprofessors.typepad.com/agriculturallaw/2022/01/the-almost-top-10-of-2021-part-5.html
The “Almost Top 10” of 2021 (Part 6)
https://lawprofessors.typepad.com/agriculturallaw/2022/02/the-almost-top-10-of-2021-part-6.html
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2022/02/ag-law-and-tax-potpourri.html
Animal Ag Facilities and the Constitution
Pork Production Regulations; Fake Meat; and Tax Proposals on the Road to Nowhere
Farm Economic Issues and Implications
https://lawprofessors.typepad.com/agriculturallaw/2022/04/farm-economic-issues-and-implications.html
Ag Law (and Medicaid Planning) Court Developments of Interest
Wisconsin Seminar and…ERP (not Wyatt) and ELRP
More Ag Law Court Developments
https://lawprofessors.typepad.com/agriculturallaw/2022/06/more-ag-law-court-developments.html
Ag Law-Related Updates: Dog Food Scam; Oil and Gas Issues
Constitutional Limit on Government Agency Power – The “Major Questions” Doctrine
The Complexities of Crop Insurance
https://lawprofessors.typepad.com/agriculturallaw/2022/07/the-complexities-of-crop-insurance.html
Secured Transactions
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 6 and 5
Water Law
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 4 and 3
Durango Conference and Recent Developments in the Courts
September 5, 2022 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Saturday, August 20, 2022
Ag Law Summit
Overview
Last September Washburn Law School conducted it’s first “Ag Law Summit” and held it at Mahoney State Park in Nebraska. This year the Summit returns in collaboration with Creighton University School of Law. The Summit will be held at Creighton University on September 30, and will also be broadcast live online.
The Summit will cover various topics of relevance to agricultural producers and the tax and legal counsel that represent them.
The 2022 Ag Law Summit – it’s the topic of today’s post.
Agenda
Survey of ag law and tax. I will start off the day with a session surveying the major recent ag law and tax developments. This one-hour session will update attendees on the big issues facing ag clients and provide insight concerning the issues that look to be on the horizon in the legal and tax world.
Tax issues upon death of a farmer. After my session, Prof. Ed Morse of Creighton Law School will examine the tax issues that arise when a farm business owner dies. Income tax basis and the impact of various entity structures will be the focus of this session along with the issues that arise upon transitioning ownership to the next generation and various tax elections.
Farm succession planning drafting language. After a morning break Dan Waters, and estate planning attorney in Omaha, NE, will take us up to lunch with a technical session on the drafting of critical documents for farm and ranch entities. What should be included in the operative agreements? What is the proper wording? What provisions should be included and what should be avoided? This session picks up on Prof. Morse’s presentation and adds in the drafting elements that are key to a successful business succession plan for the farm/ranch operation.
Fences and boundaries. After a provided lunch, Colten Venteicher who practices in Gothenburg, NE, will address the issues of fence line issues when ag land changes hands. This is an issue that seems to come up over and over again in agriculture. The problems are numerous and varied. This session provides a survey of applicable law and rules and practical advice for helping clients resolve existing disputes and avoid future ones.
The current farm economy and future projections. Following the afternoon break, a presentation on the current economy and economic situation facing ag producers, ag businesses and consumers will be presented by Darrell Holaday. Darrell is an economist and his firm, Advanced Market Concepts, provides marketing plans for ag producers. What are the economic projections for the balance of 2022 and into 2023 that bear on tax and estate planning for farmers and ranchers? This will be a key session, especially with the enactment of legislation that will add fuel to the current inflationary fire – unless of course, the tax increases in the legislation slow the economy enough to offset the additional spending.
Ethics. I return to close out the day with a session of ethics focused on asset protection planning. There’s a right way and a wrong way to do asset protection planning. This session guides the practitioner through the proper approach to asset protection planning, client identification, and the pitfalls if the “stop signs” are missed.
Reception
For those attending in person, a reception will follow in the Harper Center Ballroom on the Creighton Campus.
Conclusion
If your tax or legal practice involves ag clients, the Ag Law Summit is for you. As noted, you can also attend online if you can’t be there in person. If you are a student currently in law school or thinking about it, or are a student in accounting, you will find this seminar beneficial.
I hope to see you in Omaha on September 30 or see that you are with us online.
You can learn more about the Summit and get registered at the following link: https://www.washburnlaw.edu/employers/cle/aglawsummit.html
August 20, 2022 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Wednesday, July 13, 2022
Durango Conference and Recent Developments in the Courts
Overview
On August 1 and 2, Washburn Law School will be hosting a two-day conference on income tax as well as estate and business planning. Of course, the event emphasizes the application of tax and legal principles to ag producers and rural landowners, but many of the concepts are of general application. One of the featured sessions at the Durango conference will focus on water rights and how those impact income tax and estate planning for farmers, ranchers and rural landowners. Of course, throughout the two days we will be covering many issues that apply to clients in a host of possible situations.
In today’s post, I focus on the Durango water rights session and a few court developments.
Appropriation Water Rights - Tax and Estate Planning Issues (Durango Conference)
This panel session begins with Andy Morehead, an accountant from Eaton, CO, explaining why we are talking about appropriation water rights in tax and estate planning. The importance of the topic relates to the value of water rights. Andy will talk about his experience concerning sales and other projects where water rights significantly increased the wealth of individuals, families or entities.
In Colorado, almost 4,000 wells have been shut in by the State Engineer in the past two decades to maintain streamflow and satisfy downstream priority claims. A similar number have had their pumping rights limited in some way. Given the rapid development occurring in northeast Colorado and the need for water for the new subdivisions along the front range, there will be major political ramifications if any further reductions are made. The economic impact is already being felt. A unit (one acre foot) of Colorado Big Thompson storage water now sells for about $65,000. Approximately 15 years ago, the same volume of water sold for $6,000. This enhanced value has a significant impact on estates, as does any land with associated water rights.
Following Andy’s opening discussion, John Howe, an attorney in Grand Junction, CO, will follow. His practice focuses on real estate matters including the leasing of water rights. John will explain the nature of an appropriation water right, and will also discuss surface rights, tributary and non-tributary groundwater. John will also address nuances in the adjudication system and the chief engineer’s agency. Of particular interest to tax practitioners is whether a right to use water is an ownership interest in real property or a right to use water that is personal property. John will discuss the real/personal property determination. Of course, the focus will be on Colorado, but John may also comment on the real/personal property distinction in adjoining states. He will also share his experiences with business and succession planning title issues involving water rights and focus on a few of the most common title mistakes made with water right dispositions related to estate planning, divorce, financing and foreclosure, and entity dissolution or division.
Mike Ramsey, a long-time water law practitioner in Garden City, Kansas, will follow John’s discussion by addressing approaches to the valuation of water rights and depletion issues. Mike will also discuss I.R.C. §1031 exchanges involving disposition of water rights that are interests on real property and other estate tax planning issues associated with water right ownership.
The Durango conference is going to be a good one that you will want to be a part of, either in-person or online. For further details about the two-day event click here: https://www.washburnlaw.edu/employers/cle/farmandranchtaxaugust.html
Recent Court Developments
Defendant Properly Sentenced for Falsely Obtaining PPP and EIDL Loans
United States v. Stout, No. 21-1938, 2022 U.S. App. LEXIS 16627 (8th Cir. Jun. 16, 2022)
The defendant was sentenced to 12 months and 1 day in prison followed by 3 years of supervised release and $74,600 in restitution for misrepresenting (along with his wife and his sister) that they owned multiple businesses in order to obtain forgivable Paycheck Protection Program (PPP) loans as well as non-forgivable loans under the Economic Injury Disaster Loan program. The defendant admitted being the ringleader of the scheme. The court determined the “intended-loss,” the monetary harm the defendant purposely sought to inflict, was $116,525.56. The amount was calculated using pre-sentence investigation reports. The defendant claimed that his sentence should be reduced on the basis that the trial court should have limited the loss only to the PPP loans.
The defendant claimed there was no evidence he did not intend to repay the non-forgivable loans, and relied on a 1999 case involving a rancher that misrepresented the number of cattle he owned in order to obtain a loan. But the rancher in that case took multiple remedial actions to repay the falsely obtained loans such as selling his ranch and equipment, starting a new business, and financing his debt. The appellate court determined that the previous case was not like the defendant’s situation. The defendant provided no evidence that he would do anything to repay the loans and had no businesses that would allow him to repay the loans. The appellate court also concluded that the trial court did not err in considering the defendant’s past fraudulent actions of pawning stolen work computers as a reflection of the defendant’s character. As a result, the appellate court upheld the trial court’s sentencing determination.
Shareholders Liable for Corporate Tax under “Midco” Transaction.
Sloan v. Comr., T.C. Memo. 2022-6, on rem. from, 896 F.3d 1083 (9th Cir. 2018), rev’g., T.C. Memo. 2016-115, cert. den., 139 S. Ct. 1348 (2019)
A “Midco” transaction designed to avoid the tax on built-in-gain (BIG) inherent in the appreciation of assets held in a C corporation. Under a “Midco” transaction the seller engages in a stock sale while the buyer engages in an asset purchase through use of an intermediary company. The sale of stock avoids triggering the BIG tax and the purchaser gets a purchase price income tax basis in the assets. The IRS, however, often takes the position that the parties engaged in a Midco transaction have tax liability exposure under I.R.C. §6901as a transferee for unpaid taxes and interest on the basis that the selling shareholder. The IRS could also impose penalties on the transferee parties. The basic issue is whether the selling shareholder knew or should have known that the intermediary company would incur a tax liability that it had no ability to pay.
In this case, the petitioners were transferees of C corporate assets via a typical “Midco” transaction where an intermediary company was affiliated with a promoter. The intermediary company was merely a “shell” company organized offshore that buy the shares of the target company. The cash of the petitioner’s C corporation (target corporation) flowed through the intermediary to the selling shareholders. After acquiring the target’s embedded tax liability, the shell company engaged in a transaction purporting to offset the target's realized gains and eliminate the corporate-level tax. The promoter and the target's shareholders then agreed to split the dollar value of the corporate tax that had purportedly been avoided with the promoter keeping as its fee a negotiated percentage of the avoided tax amount. The target's shareholders kept the balance of the avoided corporate tax as a premium above the target's true net asset value (i.e., assets net of accrued tax liability).
After the transaction there were no assets left in the target corporation and the IRS issued notices of liability to the petitioners as transferees. In the original Tax Court case, the Tax Court ruled that the petitioners were not liable as transferees on the theory that they and their advisers did not have actual or constructive knowledge of the results of the transaction. On appeal, the appellate court reversed, concluding that the petitioners were at the very least on constructive notice that the entire scheme had no purpose other than tax avoidance. The appellate court also concluded the transfer was a constructively fraudulent transfer under Arizona law. The U.S. Supreme Court declined to hear the case. On remand, the Tax Court entered a decision consistent with the IRS’ computations. Those computations included accuracy-related penalties and IRS recovery of pre-notice interest.
Iowa Law Providing Limited Nuisance Immunity to CAFOs Upheld
Garrison v. New Fashion Pork LLP, No. 21-0652, 2022 Iowa Sup. LEXIS 86 (Iowa Sup. Ct. Jun. 30, 2022)
The plaintiff claimed that the defendant’s neighboring confined animal feeding operation (CAFO) violated both the Clean Water Act and the Resource Conservation Recovery Act due to manure runoff that caused excessive nitrate levels in the plaintiff’s water sources. The federal court dismissed the suit on summary judgment for lack of expert testimony to establish the plaintiff’s claim, finding that the alleged violations where wholly past violations, and that water test results showed no ongoing violation of either statute, but rather a slight decrease in nitrate levels since the start of the defendant’s confined animal feeding operation (CAFO). The federal court also declined supplemental jurisdiction over the plaintiff’s state law claims. The plaintiff then sued the defendant in state court for nuisance, trespass and violation of state drainage law. The defendant moved for summary judgment based on statutory immunity of Iowa Code § 657.11 and the plaintiff’s lack of evidence or expert testimony.
Iowa Code §657.11 provides limited nuisance immunity to a CAFO. Immunity is granted if the CAFO is following all applicable regulations and is using accepted management practices. The plaintiff, relying on Gacke v. Pork XTRA, L.L.C., 684 N.W. 2d 168 (Iowa 2004) claimed that Iowa Code §657.11 as applied to him was unconstitutional under Iowa’s inalienable rights clause. Under Gacke, for a court to determine whether Iowa Code §657.11(2) is unconstitutional a plaintiff must show they (1) “receive[d] no particular benefit from the nuisance immunity granted to their neighbors other than that inuring to the public in general[,]”; (2) “sustain[ed] significant hardship[,]”; and (3) “resided on their property long before any animal operation was commenced” on neighboring land and “had spent considerable sums of money in improvements to their property prior to construction of the defendant’s facilities.” All three elements must be established.
The trial court, noting that the plaintiff’s own CAFO (raising of 500 ewes, and at times over 1,000 ewes and lambs, on his property for over 40 years, along with a six-foot tall manure pile) had benefited from immunity, rejected the plaintiff’s constitutional challenge for failure to satisfy Gacke’s three-part test in Gacke. The trial court then granted the defendant’s summary judgment motion based on the plaintiff’s failure to provide any expert testimony or other evidence to support any exception to the statutory immunity defense or to prove causation or damages.
On further review, the Iowa Supreme Court affirmed, overruled the three-part test of Gacke and applied rational basis review to reject the plaintiff’s constitutional challenge to Iowa Code §657.11. The court noted that Iowa Code §657.11A did not eliminate nuisance claims against CAFOs, but rather established reasonable limitations on recovery rights. The Iowa Supreme Court concluded that the plaintiff failed to preserve error on his takings claim under article I, section 18 of the Iowa Constitution and failed to generate a question of fact precluding summary judgment on statutory nuisance immunity or causation for his trespass and drainage claims. Specifically, the Iowa Supreme Court noted that without accompanying expert testimony, the plaintiff water tests showed neither an increase in nitrate levels nor a spike in nitrate levels that would correlate with manure spreading. The Supreme Court further noted that even assuming an increase in nitrate levels, the plaintiff lacked expert testimony to attribute or correlate any increase in nitrate levels in the stream to the defendants’ actions. Thus, without expert witness testimony that tied the defendant’s alleged misapplication or over-application of manure to the nitrate levels in the plaintiff’s stream, the plaintiff could not, as a matter of law, satisfy his burden of proving that any trespass or drainage violation proximately caused his damages. The Iowa Supreme Court did not address the plaintiff’s constitutional challenge to the damages limitations in Iowa Code §657.11A(3).
Note: The Iowa Supreme Court’s opinion didn’t explain how the attorneys for the plaintiff failed to preserve error on the plaintiff’s takings claim and failed to provide expert witness testimony on the tort claims for trespass and drainage issues. However, the Iowa Supreme Court clearly focused on those deficiencies in its opinion.
Conclusion
Agricultural law and taxation is a dynamic area of the law focusing on the legal rules surrounding food production, water rights and allocation, and the production and usage of energy. Of course, taxation is wrapped around all of those issues, as are estate, business and succession planning. All of these issues will be addressed at the upcoming conference in Durango, CO on Aug. 1 and 2. While it’s not the same as being there in person the online attendance platform allows you to participate from your own location.
I am looking forward to seeing you there, or online.
July 13, 2022 in Business Planning, Civil Liabilities, Criminal Liabilities, Water Law | Permalink | Comments (0)
Sunday, May 22, 2022
2021 Bibliography
Overview
In the past, I have posted bibliographies of my articles by year to help readers researching the various ag tax and ag law topics that I write about. The blog articles are piling up, with more 750 available for you to read and use for your research for clients (and yourself). The citations contained in the articles are linked so that you can go directly to the source. I trust that you find that feature helpful to save you time (and money) in representing clients.
Today, I provide you with the bibliography of my 2021 articles (by topic) as well as the links to the prior blogs containing past years. Many thanks to my research assistant, Kennedy Mayo, for pulling this together for me.
Prior Years
Here are the links to the bibliographies from prior years:
Ag Law and Taxation 2020 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/01/ag-law-and-taxation-2020-bibliography.html
Ag Law and Taxation – 2019 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/02/ag-law-and-taxation-2019-bibliography.html
Ag Law and Taxation – 2018 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/03/ag-law-and-taxation-2018-bibliography.html
Ag Law and Taxation – 2017 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/04/ag-law-and-taxation-2017-bibliography.html
Ag Law and Taxation – 2016 Bibliography
https://lawprofessors.typepad.com/agriculturallaw/2021/04/ag-law-and-taxation-2016-bibliography.html
2021 Bibliography
Below are the links to my 2021 articles, by category:
BANKRUPTCY
The “Almost Tope Ten” Ag Law and Ag Tax Developments of 2020
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
What’s an “Asset” For Purposes of a Debtor’s Insolvency Computation?
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Is a Tax Refund Exempt in Bankruptcy?
https://lawprofessors.typepad.com/agriculturallaw/2021/06/is-a-tax-refund-exempt-in-bankruptcy.html
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/06/ag-law-and-tax-potpourri.html
Montana Conference and Ag Law Summit (Nebraska)
Farm Bankruptcy – “Stripping,” “Claw-Back” and the Tax Collecting Authorities (Update)
BUSINESS PLANNING
For Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
C Corporate Tax Planning; Management Fees and Reasonable Compensation – A Roadmap of What Not to Do
Will the Estate Tax Valuation Regulations Return?
June National Farm Tax and Estate/Business Planning Conference
August National Farm Tax and Estate/Business Planning Conference
C Corporation Compensation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/03/c-corporation-compensation-issues.html
Planning for Changes to the Federal Estate and Gift Tax System
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The “Mis” STEP Act – What it Means To Your Estate and Income Tax Plan
Intergenerational Transfer of Family Businesses with Split-Dollar Life Insurance
Ohio Conference -June 7-8 (Ag Economics) What’s Going On in the Ag Economy?
Montana Conference and Ag Law Summit (Nebraska)
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/08/farm-valuation-issues.html
Ag Law Summit
https://lawprofessors.typepad.com/agriculturallaw/2021/08/ag-law-summit.html
The Illiquidity Problem of Farm and Ranch Estates
When Does a Partnership Exist?
https://lawprofessors.typepad.com/agriculturallaw/2021/09/when-does-a-partnership-exist.html
Gifting Assets Pre-Death – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/09/gifting-assets-pre-death-part-one.html
Gifting Assets Pre-Death (Entity Interests) – Part Two
Gifting Pre-Death (Partnership Interests) – Part Three
The Future of Ag Tax Policy – Where Is It Headed?
Estate Planning to Protect Assets From Creditors – Dancing On the Line Between Legitimacy and Fraud
Fall 2021 Seminars
https://lawprofessors.typepad.com/agriculturallaw/2021/09/fall-2021-seminars.html
Corporate-Owned Life Insurance – Impact on Corporate Value and Shareholder’s Estate
Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2021/10/caselaw-update.html
S Corporations – Reasonable Compensation; Non-Wage Distributions and a Legislative Proposal
2022 Summer Conferences – Save the Date
https://lawprofessors.typepad.com/agriculturallaw/2021/12/2022-summer-conferences-save-the-date.html
CIVIL LIABILITIES
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Three
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Three
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Prescribed Burning Legal Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/02/prescribed-burning-legal-issues.html
Damaged and/or Destroyed Trees and Crops – How is the Loss Measured?
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Mailboxes and Farm Equipment
https://lawprofessors.typepad.com/agriculturallaw/2021/07/mailboxes-and-farm-equipment.html
Statutory Immunity From Liability Associated With Horse-Related Activities
CONTRACTS
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Three
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Deed Reformation – Correcting Mistakes After the Fact
Considerations When Buying Farmland
https://lawprofessors.typepad.com/agriculturallaw/2021/11/considerations-when-buying-farmland.html
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
The Potential Peril Associated With Deferred Payment Contracts
COOPERATIVES
Continuing Education Events and Summer Conferences
Final Ag/Horticultural Cooperative QBI Regulations Issued
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
CRIMINAL LIABILITIES
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Estate Planning to Protect Assets From Creditors – Dancing On the Line Between Legitimacy and Fraud
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
ENVIRONMENTAL LAW
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
Court and IRS Happenings in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2021/03/court-happenings-in-ag-law-and-tax.html
Valuing Ag Real Estate With Environmental Concerns
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/06/ag-law-and-tax-potpourri.html
No Expansion of Public Trust Doctrine in Iowa – Big Implications for Agriculture
Key “Takings” Decision from SCOTUS Involving Ag Businesses
Montana Conference and Ag Law Summit (Nebraska)
Navigable Waters Protection Rule – What’s Going on with WOTUS?
ESTATE PLANNING
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Two
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
What Now? – Part Two
https://lawprofessors.typepad.com/agriculturallaw/2021/02/what-now-part-two.html
Will the Estate Tax Valuation Regulations Return?
June National Farm and Tax and Estate/Business Planning Conference
August National Farm Tax and Estate/Business Planning Conference
Farmland in an Estate – Special Use Valuation and the 25 Percent Test
The Revocable Living Trust – Is it For You?
Summer Conferences – NASBA Certification! (and Some Really Big Estate Planning Issues – Including Basis)
Court Developments of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/04/court-developments-of-interest.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Planning for Changes to the Federal Estate and Gift Tax System
The “Mis” STEP Act – What it Means To Your Estate and Income Tax Plan
The Revocable Trust – What Happens When the Grantor Dies?
Intergenerational Transfer of Family Businesses with Split-Dollar Life Insurance
Ohio Conference –June 7-8 (Ag Economics) What’s Going On in the Ag Economy?
Reimbursement Claims in Estates; Drainage District Assessments
Montana Conference and Ag Law Summit (Nebraska)
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/08/farm-valuation-issues.html
Ag Law Summit
https://lawprofessors.typepad.com/agriculturallaw/2021/08/ag-law-summit.html
The Illiquidity Problem of Farm and Ranch Estates
Planning to Avoid Elder Abuse
https://lawprofessors.typepad.com/agriculturallaw/2021/08/planning-to-avoid-elder-abuse.html
Gifting Assets Pre-Death – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/09/gifting-assets-pre-death-part-one.html
Gifting Assets Pre-Death (Entity Interests) – Part Two
The Future of Ag Tax Policy – Where Is It Headed?
Estate Planning to Protect Assets From Creditors – Dancing On the Line Between Legitimacy and Fraud
Tax Happenings – Present Status of Proposed Legislation (and What You Might Do About It)
Corporate-Owned Life Insurance – Impact on Corporate Value and Shareholder’s Estate
Tax (and Estate Planning) Happenings
https://lawprofessors.typepad.com/agriculturallaw/2021/11/tax-and-estate-planning-happenings.html
Selected Tax Provisions of House Bill No. 5376 – and Economic Implications
2022 Summer Conferences – Save the Date
https://lawprofessors.typepad.com/agriculturallaw/2021/12/2022-summer-conferences-save-the-date.html
INCOME TAX
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Two
The “Top Ten” Agricultural Law and Ag Tax Developments of 2020 – Part One
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Four
Final Ag/Horticultural Cooperative QBI Regulations Issued
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
Deducting Start-Up Costs – When Does the Business Activity Begin?
What Now? – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/02/what-now-part-one.html
C Corporate Tax Planning; Management Fees and Reasonable Compensation – A Roadmap of What Not to Do
Where’s the Line Between Start-Up Expenses, the Conduct of a Trade or Business and Profit Motive?
June National Farm Tax and Estate/Business Planning Conference
Selling Farm Business Assets – Special Tax Treatment (Part One)
Tax Update Webinar
https://lawprofessors.typepad.com/agriculturallaw/2021/03/tax-update-webinar.html
Selling Farm Business Assets – Special Tax Treatment (Part Two)
Selling Farm Business Assets – Special Tax Treatment (Part Three)
August National Farm Tax and Estate/Business Planning Conference
Court and IRS Happenings in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2021/03/court-happenings-in-ag-law-and-tax.html
C Corporation Compensation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/03/c-corporation-compensation-issues.html
Tax Considerations When Leasing Farmland
Federal Farm Programs and the AGI Computation
Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/04/tax-potpourri.html
What’s an “Asset” For Purposes of a Debtor’s Insolvency Computation?
Summer Conferences – NASBA Certification! (and Some Really Big Estate Planning Issues – Including Basis)
Court Developments of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/04/court-developments-of-interest.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The “Mis” STEP Act – What it Means To Your Estate and Income Tax Plan
The Revocable Trust – What Happens When the Grantor Dies?
Ohio Conference -June 7-8 (Ag Economics) What’s Going On in the Ag Economy?
What’s the “Beef” With Conservation Easements?
Is a Tax Refund Exempt in Bankruptcy?
https://lawprofessors.typepad.com/agriculturallaw/2021/06/is-a-tax-refund-exempt-in-bankruptcy.html
Tax Court Happenings
https://lawprofessors.typepad.com/agriculturallaw/2021/06/tax-court-happenings.html
IRS Guidance On Farms NOLs
https://lawprofessors.typepad.com/agriculturallaw/2021/07/irs-guidance-on-farm-nols.html
Montana Conference and Ag Law Summit (Nebraska)
Tax Developments in the Courts – The “Tax Home”; Sale of the Home; and Gambling Deductions
Recovering Costs in Tax Litigation
https://lawprofessors.typepad.com/agriculturallaw/2021/07/recovering-costs-in-tax-litigation.html
Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/08/tax-potpourri.html
Weather-Related Sales of Livestock
https://lawprofessors.typepad.com/agriculturallaw/2021/08/weather-related-sales-of-livestock.html
Ag Law Summit
https://lawprofessors.typepad.com/agriculturallaw/2021/08/ag-law-summit.html
Livestock Confinement Buildings and S.E. Tax
When Does a Partnership Exist?
https://lawprofessors.typepad.com/agriculturallaw/2021/09/when-does-a-partnership-exist.html
Recent Tax Developments in the Courts
https://lawprofessors.typepad.com/agriculturallaw/2021/09/recent-tax-developments-in-the-courts.html
Gifting Assets Pre-Death – Part One
https://lawprofessors.typepad.com/agriculturallaw/2021/09/gifting-assets-pre-death-part-one.html
Gifting Pre-Death (Partnership Interests) – Part Three
The Future of Ag Tax Policy – Where Is It Headed?
Tax Happenings – Present Statute of Proposed Legislation (and What You Might Do About It)
Fall 2021 Seminars
https://lawprofessors.typepad.com/agriculturallaw/2021/09/fall-2021-seminars.html
Extended Livestock Replacement Period Applies in Areas of Extended Drought – IRS Updated Drought Areas
Farm Bankruptcy – “Stripping,” “Claw-Back” and the Tax Collecting Authorities (Update)
Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2021/10/caselaw-update.html
Tax Issues Associated With Easements
https://lawprofessors.typepad.com/agriculturallaw/2021/10/tax-issues-associated-with-easements.html
S Corporations – Reasonable Compensation; Non-Wage Distributions and a Legislative Proposal
Tax Reporting of Sale Transactions By Farmers
The Tax Rules Involving Prepaid Farm Expenses
Self Employment Taxation of CRP Rents – Part One
Self-Employment Taxation of CRP Rents – Part Two
Self-Employment Taxation of CRP Rents – Part Three
Recent IRS Guidance, Tax Legislation and Tax Ethics Seminar/Webinar
Tax (and Estate Planning) Happenings
https://lawprofessors.typepad.com/agriculturallaw/2021/11/tax-and-estate-planning-happenings.html
Selected Tax Provisions of House Bill No. 5376 – and Economic Implications
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
The Potential Peril Associated With Deferred Payment Contracts
Inland Hurricane – 2021 Version; Is There Any Tax Benefit to Demolishing Farm Buildings and Structures?
2022 Summer Conferences – Save the Date
https://lawprofessors.typepad.com/agriculturallaw/2021/12/2022-summer-conferences-save-the-date.html
The Home Sale Exclusion Rule – How Does it Work When Land is Also Sold?
Gifting Ag Commodities To Children
https://lawprofessors.typepad.com/agriculturallaw/2021/12/gifting-ag-commodities-to-children.html
Livestock Indemnity Payments – What Are They? What Are the Tax Reporting Options?
Commodity Credit Corporation Loans and Elections
INSURANCE
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
REAL PROPERTY
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Three
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Prescribed Burning Legal Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/02/prescribed-burning-legal-issues.html
Ag Zoning Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/02/ag-zoning-potpourri.html
Court and IRS Happenings in Ag Law and Tax
https://lawprofessors.typepad.com/agriculturallaw/2021/03/court-happenings-in-ag-law-and-tax.html
Is That Old Fence Really the Boundary
https://lawprofessors.typepad.com/agriculturallaw/2021/04/is-that-old-fence-really-the-boundary.html
Court Developments of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/04/court-developments-of-interest.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Deed Reformation – Correcting Mistakes After the Fact
Valuing Ag Real Estate With Environmental Concerns
Ag Law and Tax Potpourri
https://lawprofessors.typepad.com/agriculturallaw/2021/06/ag-law-and-tax-potpourri.html
Montana Conference and Ag Law Summit (Nebraska)
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/08/farm-valuation-issues.html
Considerations When Buying Farmland
https://lawprofessors.typepad.com/agriculturallaw/2021/11/considerations-when-buying-farmland.html
The Home Sale Exclusion Rule – How Does it Work When Land is Also Sold?
REGULATORY LAW
The “Almost Top Ten” Ag Law and Ag Tax Developments of 2020 – Part Two
The “Top Ten” Agricultural Law and Ag Tax Developments of 2020 – Part One
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Two
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Four
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Recent Happenings in Ag Law and Ag Tax
Prescribed Burning Legal Issues
https://lawprofessors.typepad.com/agriculturallaw/2021/02/prescribed-burning-legal-issues.html
Packers and Stockyards Act Amended – Additional Protection for Unpaid Cash Sellers of Livestock
Federal Farm Programs and the AGI Computation
Regulation of Agriculture – Food Products, Slaughterhouse Line Speeds and CAFOS
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The FLSA and Ag’s Exemption From Paying Overtime Wages
The “Dormant” Commerce Clause and Agriculture
Trouble with ARPA
https://lawprofessors.typepad.com/agriculturallaw/2021/06/trouble-with-arpa.html
No Expansion of Public Trust Doctrine in Iowa – Big Implications for Agriculture
Key “Takings Decision from SCOTUS Involving Ag Businesses
Reimbursement Claims in Estates; Drainage District Assessments
Mailboxes and Farm Equipment
https://lawprofessors.typepad.com/agriculturallaw/2021/07/mailboxes-and-farm-equipment.html
Montana Conference and Ag Law Summit (Nebraska)
California’s Regulation of U.S. Agriculture
Checkoffs and Government Speech – The Merry-Go-Round Revolves Again
Is There a Constitutional Way To Protect Animal Ag Facilities
Caselaw Update
https://lawprofessors.typepad.com/agriculturallaw/2021/10/caselaw-update.html
Recent Court Decisions of Interest
https://lawprofessors.typepad.com/agriculturallaw/2021/12/recent-court-decisions-of-interest.html
Livestock Indemnity Payments – What Are They? What Are the Tax Reporting Options?
SECURED TRANSACTIONS
Continuing Education Events and Summer Conferences
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
Cross-Collateralization Clauses – Tough Lessons For Lenders
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
The “EIDL Trap” For Farm Borrowers
https://lawprofessors.typepad.com/agriculturallaw/2021/07/the-eidl-trap-for-farm-borrowers.html
The Potential Peril Associated With Deferred Payment Contracts
WATER LAW
Continuing Education Events and Summer Conferences
The “Top Ten” Agricultural Law and Tax Developments of 2020 – Part Three
Agricultural Law Online!
https://lawprofessors.typepad.com/agriculturallaw/2021/01/agricultural-law-online.html
The Agricultural Law and Tax Report
https://lawprofessors.typepad.com/agriculturallaw/2021/05/the-agricultural-law-and-tax-report.html
Montana Conference and Ag Law Summit (Nebraska)
May 22, 2022 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Monday, January 10, 2022
“Top Ten” Agricultural Law and Tax Developments of 2021 – Numbers 4 and 3
Overview
As I pointed out in the previous articles in this series, agricultural law and agricultural tax law intersect with everyday life of farmers and ranchers in many ways. Some of those areas of intersection are good, but some are quite troubling. In any event, it points to the need for being educated and having good legal and tax counsel that is well-trained in the special rules that apply to agriculture.
This is the fourth installment in my list of the “Top Ten” agricultural law and tax developments of 2021. The list is comprised of what are, in my view, the most important developments in agricultural law (which includes taxation that impacts farmers and ranchers) to the sector as a whole. The developments primarily are focused on the impact to production agriculture, but the issues involved will also have effects that spillover to rural landowners and agribusinesses as well as consumers of agricultural products.
The Fourth and Third most important agricultural law and tax developments of 2021 – it’s the topic of today’s post.
4. U.S. Supreme Court Says Equitable Apportionment Doctrine Applies to Underground Water. In Mississippi v. Tennessee, 211 L. Ed. 2d 230 (U.S. 2021) the facts of this case revealed that the city of Memphis, Tennessee gets its drinking water from the Middle Claiborne Aquifer. The aquifer lies beneath eight states, and wells extract water from the aquifer by pumping it to the surface which lowers the water pressure around each well’s location (“cones of depression”). Memphis has more than 160 wells that pump about 120 million gallons of water daily from the aquifer. The pumping caused a cone of depression in the part of Mississippi across the state line closest to the wells. Mississippi sued Memphis in 2005 claiming that the pumping wrongfully appropriated Mississippi’s groundwater. The trial court dismissed the case because the State of Tennessee wasn’t joined as an indispensable party.
The appellate court affirmed and also held that interstate aquifers are similar to interstate rivers and, as such, are subject to the doctrine of equitable apportionment which allows the U.S. Supreme Court to allocate rights in disputes involving interstate waters when one state sues another unless a statute, compact or other apportionment controls. Equitable apportionment provides that each state has an equality of right to use the waters at issue. As such, Tennessee was an indispensable party that couldn’t simply be added because the lawsuit was really between states. That meant that the lawsuit should have been filed with the U.S. Supreme Court. Mississippi sought U.S. Supreme Court review, which was denied.
Note: Under the Constitution and the Judiciary Act, jurisdiction over interstate controversies is original and exclusive to the Supreme Court.
In 2014, Mississippi sought approval to file a complaint with the U.S. Supreme Court claiming that the pumping had depleted Mississippi’s groundwater by altering the historic flow of the underground water which required Mississippi to drill deeper wells and use more electricity to get the water to the surface. Mississippi also claimed that it had absolute ownership of the groundwater in its state, even the water that crossed the border by flowing underground into Mississippi. As such, Tennessee’s pumping of groundwater was a tortious taking of its property. Mississippi claimed that equitable apportionment did not apply in the case, and sought $615 million in damages and injunctive as well as declaratory relief. The Supreme Court granted Mississippi’s request to file the complaint and appointed a Special Master to manage the case.
In late 2020, the Special Master recommended dismissal of the complaint with leave to amend. Against Mississippi's technical argument that the aquifer was distinct from the water it contained, the Special Master found that the aquifer is an interstate water resource and a single hydrological unit. The Special master also found that Tennessee’s pumping affected groundwater beneath Mississippi, disrupting the flow between Tennessee and Mississippi. Equitable apportionment was determined to be the only available remedy, but because the complaint did not seek equitable apportionment, the Special Master recommended the Supreme Court dismiss the complaint with leave to file an amended complaint to seek equitable apportionment.
In a case of first impression, the Supreme Court dismissed the case, but without leave to amend. However, the Court did rule on the application of equitable apportionment to the aquifer. The Court noted that it had, in prior cases, applied the doctrine to interstate rivers and streams and to disputes over interstate river basins. Such cases include interstate compact cases where the pumping of hydrologically connected groundwater reduced surface flows into downstream states.
The Court determined, with little thorough legal analysis, that the water in the aquifer was sufficiently similar to the water in the other cases where it had applied the doctrine. The Court also rejected Mississippi’s absolute ownership argument noting that such argument would allow an upstream state to completely cut-off the flow to a downstream state. Such a result would be contrary to the equitable apportionment doctrine. Because the Court determined that the aquifer was subject to equitable apportionment, the Court adopted the Special Master’s recommendation to dismiss the complaint.
Note: Because Mississippi had not sought leave to amend, the case was dismissed without leave to amend. However, in future cases, the Court said it would apply the doctrine of equitable apportionment to interstate aquifers where the aquifer involves multiple states with water flowing between the states and the actions of one state affects the portion of the aquifer below another state and there is no overriding statute, compact or other water sharing agreement between the states.
Implications for agriculture. The application of the equitable apportionment doctrine apportions the benefits of the water use between or among the competing states. The doctrine does not apportion the water itself. That is an important point as applied to agriculture. Ag uses of water, compared to non-ag uses of water, generally involves the use of a greater volume of water with perceived lower economic value. For example, in the case, the use of water from the aquifer by Memphis for drinking water and other municipal uses would have a higher economic value than the use for agricultural purposes in Mississippi This, indeed, could be the reason that Mississippi did not argue for application of the equitable apportionment doctrine. In addition, the Court, in a 1907 case, made clear that the geographical/hydrological origin of the interstate river has no significance on the apportionment. The Court also restated this in the early 1980s. That made Mississippi’s trespass and conversion theory quite weak. Unfortunately, the Court didn’t provide any guidance on how states might consider equitable apportionment of groundwater when it is the only water supply source, and how the apportionment might affect hydrologically connected (and isolated) surface supplies.
Note: For an excellent article discussing other points of the case and interstate groundwater issues in general, see Griggs, “Interstate Litigation, State Reaction, and Federalism in the Age of Groundwater,” Rocky Mountain Mineral Law Foundation, proceedings of 65th annual Rocky Mountain Mineral Law Institute (2019).
3. Supreme Court Says Government Cannot Force Private Property Owners to Allow Trespassing. In Cedar Point Nursery, et al. v. Hassid, et al., No. 20-107, 2021 U.S. LEXIS 3394 (U.S. Sup. Ct. Jun. 23, 2021), the lead plaintiff was a large strawberry growing operation in California, employing over 400 seasonal workers and about 100 full-time workers. A California labor regulation, based on the California Agricultural Labor Relations Act of 1975 that gives ag employees a right to self-organize, grants labor organizations a “right to take access” to an ag employer’s property in order to solicit support for unionization. Cal Code Regs., tit. 8, §20900(e)(1)(C). Under the regulation, an ag employer must allow union organizers onto their property for up to three hours daily, 120 days per year. In the fall of 2015, at 5 a.m., members of the United Farm Workers entered the plaintiff’s property without any prior notice being given. They entered the plaintiff’s trim shed where hundreds of workers were preparing strawberry plants. The organizers used bullhorns to stir up the workers and encourage them to join in a protest. Other workers left the worksite. The plaintiff filed charges against the union for taking access without notice. In return, the union claimed that the plaintiff had committed an unfair labor practice similar to the claim it had made during the summer of 2015 against a California grower and shipper of table grapes and citrus.
The ag businesses believed that the union would try to enter their properties again in the future, and sued claiming that the access regulation was an unconstitutional per se physical taking of an easement that was given, without compensation, to union organizers. The trial court held that the regulation did not amount to a per se physical taking because it did not “allow the public to access their property in a permanent and continuous manner for whatever reason.” Instead, the trial court held that the regulation was a non-physical taking to be evaluated under a muti-factor balancing test that the U.S. Supreme Court had set forth in the past.
The appellate court affirmed, identifying the various types of non-physical takings and determining that the balancing test applied. The U.S. Supreme Court agreed to hear the case and reversed.
The Supreme Court determined that an actual physical appropriation of private property was involved. It was a per se governmental taking. The Court noted that the regulation didn’t merely restrict the use of private property, it appropriated it for the use and enjoyment of third parties. One aspect of property ownership is the right to exclude others, and the Court determined that the ability of the union to take access of a part of an ag operation’s private property took that right away. In addition, the right of access, even though temporary, still constitutes a taking. There was no benefit of the loss of a property right flowing back to the ag businesses.
Note: The distinction between an outright physical and a non-physical (regulatory) taking is not always clear. But, the Court’s decision in Cedar Point Nursery is a clear indication that the loss of the right to exclude others, even on a temporary basis, when no benefit inures to the property owner, is a fundamental property right that will be classified and protected as a physical taking with no balancing test required. Applied more broadly, the Court’s decision is a major victory for farmers and ranchers and other private property owners.
Conclusion
The next installment in this series will detail what I view as the two biggest developments in agricultural law and agricultural taxation in 2021. Can you guess what they might be?
January 10, 2022 in Real Property, Water Law | Permalink | Comments (0)
Thursday, July 15, 2021
Montana Conference and Ag Law Summit (Nebraska)
Overview
The second of the two national conferences on Farm/Ranch Income Tax and Farm/Ranch Estate and Business Planning is coming up on August 2 and 3 in Missoula, Montana. A month later, on September 3, I will be conducting an “Ag Law Summit” at Mahoney State Park located between Omaha and Lincoln, NE.
Upcoming conferences on agricultural taxation, estate and business planning, and agricultural law – it’s the topic of today’s post.
Montana
The second of my two 2021 summer conferences on agricultural taxation and estate/business planning will be held in beautiful Missoula, Montana. Day 1 on August 2 is devoted to farm income taxation, with sessions involving an update of farm income tax developments; lingering PPP and ERC issues (as well as an issue that has recently arisen with respect to EIDLs); NOLs (including the most recent IRS Rev. Proc. and its implications); timber farming; oil and gas taxation; handling business interest; QBID/DPAD planning; FSA tax and planning issues; and the prospects for tax legislation and implications. There will also be a presentation on Day 1 by IRS Criminal Investigation Division on how tax practitioners can protect against cyber criminals and other theft schemes.
On Day 2, the focus turns to estate and business planning with an update of relevant court and IRS developments; a presentation on the farm economy and what it means for ag clients and their businesses; special use valuation; corporate reorganizations; the use of entities in farm succession planning; property law issues associated with transferring the farm/ranch to the next generation; and an ethics session focusing on end-of life decisions.
If you have ag clients that you do tax or estate/business planning work for, this is a “must attend” conference – either in-person or online.
For more information about the Montana conference and how to register, click here: https://www.washburnlaw.edu/employers/cle/farmandranchtaxaugust.html
Nebraska
On September 3, I will be holding an “Ag Law Summit” at Mahoney St. Park, near Ashland, NE. The Park is about mid-way between Omaha and Lincoln, NE on the adjacent to the Platte River and just north of I-80. The Summit will be at the Lodge at the Park. On-site attendance is limited to 100. However, the conference will also be broadcast live over the web for those that would prefer to or need to attend online.
I will be joined at the Summit by Prof. Ed Morse of Creighton Law School who, along with Colten Venteicher of the Bacon, Vinton, et al., firm in Gothenburg, NE, will open up their “Ag Entreprenuer’s Toolkit” to discuss the common business and tax issues associated with LLCs. Also on the program will be Dan Waters of the Lamson, et al. firm in Omaha. Dan will address how to successfully transition the farming business to the next generation of owners in the family.
Katie Zulkoski and Jeffrey Jarecki will provide a survey of state laws impacting agriculture in Nebraska and key federal legislation (such as the “30 x 30” matter being discussed). The I will address special use valuation – a technique that will increase in popularity if the federal estate tax exemption declines from its present level. I will also provide an update on tax legislation (income and transfer taxes) and what it could mean for clients.
The luncheon speaker for the day is Janet Bailey. Janet has been deeply involved in Kansas agriculture for many years and will discuss how to create and maintain a vibrant rural practice.
If you have a rural practice, I encourage you to attend. It will be worth your time.
For more information about the conference, click here: https://www.washburnlaw.edu/employers/cle/aglawsummit.html
Conclusion
The Montana and Nebraska conferences are great opportunities to glean some valuable information for your practices. As noted, both conferences will also be broadcast live over the web if you can’t attend in person.
July 15, 2021 in Bankruptcy, Business Planning, Environmental Law, Estate Planning, Income Tax, Real Property, Regulatory Law, Water Law | Permalink | Comments (0)
Saturday, May 1, 2021
The Agricultural Law and Tax Report
May 1, 2021 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Monday, April 19, 2021
Ag Law and Taxation - 2016 Bibliography
Overview
Today's post is a bibliography of my ag law and tax blog articles of 2016. Earlier this year I have provided bibliographies for you of my blog articles for 2020, 2019, 2018 and 2017. This now completes the bibliographies since I began the blog in July of 2016. At the end of 2021, I will post a lengthy blog article of all of the articles published through that timeframe.
The 2016 bibliography of articles – it’s the subject matter of today’s post.
BUSINESS PLANNING
Treasury Attacks Estate and Entity Planning Techniques With Proposed Valuation Regulations
Using an LLC to Reduce S.E Tax and the NIIT
IRS Audit Issue – S Corporation Reasonable Compensation
Rents Are Passive, But They Can Be Recharacterized - And Grouped (Sometimes)
Tribute To Orville Bloethe
https://lawprofessors.typepad.com/agriculturallaw/2016/12/tribute-to-orville-bloethe.html
CIVIL LIABILITIES
Registration of a Pesticide Doesn't Mean It Might Not Be Misbranded
Death of Livestock In Blizzard Was a Covered Loss by “Drowning”
FIFRA Pre-Emption of Pesticide Damage Claims
Agritourism Acts, Zoning Issues and Landowner Liability
The “Agriculture” Exemption From The Requirement To Pay Overtime Wages
The Scope and Effect of Equine Liability Acts
What’s a Rural Landowner’s Responsibility Concerning Crops, Trees and Vegetation Near an Intersection?
CONTRACTS
Some Thoughts on Production Contracts
https://lawprofessors.typepad.com/agriculturallaw/2016/10/some-thoughts-on-production-contracts.html
CRIMINAL LIABILITIES
Prison Sentences Upheld For Egg Company Executives Even Though Government Conceded They Had No Knowledge of Salmonella Contamination.
ENVIRONMENTAL LAW
Registration of a Pesticide Doesn't Mean It Might Not Be Misbranded
FIFRA Pre-Emption of Pesticide Damage Claims
Air Emissions, CWA and CERCLA
https://lawprofessors.typepad.com/agriculturallaw/2016/08/air-emissions-cwa-and-cercla.html
Are Seeds Coated With Insecticides Exempt From FIFRA Regulation?
ESTATE PLANNING
The Situs of a Trust Can Make a Tax Difference
Treasury Attacks Estate and Entity Planning Techniques With Proposed Valuation Regulations
Common Estate Planning Mistakes of Farmers
Staying on the Farm With the Help of In-Home Care
Including Property in the Gross Estate to Get a Basis Step-Up
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2016/10/farm-valuation-issues.html
The Future of the Federal Estate Tax and Implications for Estate Planning
Tribute To Orville Bloethe
https://lawprofessors.typepad.com/agriculturallaw/2016/12/tribute-to-orville-bloethe.html
INCOME TAX
House Ways and Means Committee Has A Blueprint For Tax Proposals - Implications For Agriculture
In Attempt To Deny Oil and Gas-Related Deductions, IRS Reads Language Into the Code That Isn’t There – Tax Court Not Biting
IRS Does Double-Back Layout on Self-Employment Tax
S.E. Tax on Passive Investment Income; Election Out of Subchapter K Doesn’t Change Entity’s Nature; and IRS Can Change Its Mind
Handling Depreciation on Asset Trades
https://lawprofessors.typepad.com/agriculturallaw/2016/08/handling-depreciation-on-asset-trades.html
Claiming “Bonus” Depreciation on Plants
https://lawprofessors.typepad.com/agriculturallaw/2016/08/claiming-bonus-depreciation-on-plants.html
Proper Reporting of Crop Insurance Proceeds
Permanent Conservation Easement Donation Opportunities and Perils
Sales By Farmers/Rural Landowners Generate Common Questions
Expense Method Depreciation - Great Tax Planning Opportunities On Amended Returns
The DPAD and Agriculture
https://lawprofessors.typepad.com/agriculturallaw/2016/10/the-dpad-and-agriculture.html
Donating Food Inventory to a Qualified Charity - New Opportunity for Farmers
Farm Valuation Issues
https://lawprofessors.typepad.com/agriculturallaw/2016/10/farm-valuation-issues.html
Treatment of Farming Casualty and Theft Losses
More on Handling Farm Losses
https://lawprofessors.typepad.com/agriculturallaw/2016/11/more-on-handling-farm-losses.html
Selected Tax Issues For Rural Landowners Associated With Easement Payments
Are You A Farmer? It Depends!
https://lawprofessors.typepad.com/agriculturallaw/2016/11/are-you-a-farmer-it-depends.html
Rents Are Passive, But They Can Be Recharacterized - And Grouped (Sometimes)
It’s Fall and Time to “Hoop it Up”!
https://lawprofessors.typepad.com/agriculturallaw/2016/11/its-fall-and-time-to-hoop-it-up.html
Utilizing the Home Sale Exclusion When Selling the Farm
Farmland Acquisition – Allocation of Value to Depreciable Items
Tribute To Orville Bloethe
https://lawprofessors.typepad.com/agriculturallaw/2016/12/tribute-to-orville-bloethe.html
IRS Continues (Unsuccessfully) Attack on Cash Accounting By Farmers
The Uniform Capitalization Rules and Agriculture
The Non-Corporate Lessor Rule – A Potential Trap In Expense Method Depreciation
REAL PROPERTY
Texas Mineral Estates, Groundwater Rights, Surface Usage and the “Accommodation Doctrine”
So You Want To Buy Farmland? Things to Consider
What’s the Character of the Gain From the Sale of Farm or Ranch Land?
Utilizing the Home Sale Exclusion When Selling the Farm
REGULATORY LAW
New Food Safety Rules Soon to Apply to Farmers and Others In the Food Production Chain
New Regulations on Marketing of Livestock and Poultry
The Future of Ag Policy Under Trump
https://lawprofessors.typepad.com/agriculturallaw/2016/11/the-future-of-ag-policy-under-trump.html
Verifying Employment – New Form I-9; The Requirements and Potential Problem Areas
SECURED TRANSACTIONS
Feedlot Has Superior Rights to Cattle Sale Proceeds
WATER LAW
Watercourses and Boundary Lines
https://lawprofessors.typepad.com/agriculturallaw/2016/11/watercourses-and-boundary-lines.html
April 19, 2021 in Business Planning, Civil Liabilities, Contracts, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
