HOBBY LOSSES – Racehorse farm operated for profit

HOBBY LOSSES.  The taxpayers, husband and wife, owned a  successful and profitable concrete business. The taxpayers also participated in a racehorse breeding, training and racing activity for over 29 years. Initially, the taxpayers purchased all horses with their trainer with each owning one-half of each horse. Although the taxpayers and trainer actively raced, purchased and […]

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PARTNERSHIPS – Family members did not form farm partnership

DEFINITION. The defendants were a husband and wife and their son. The parents owned and operated a farming and cattle operation and obtained loans from the plaintiff bank. The son also owned and operated a farming and cattle operation and obtained separate loans from the plaintiff bank.  All of the loans were secured by security […]

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BANKRUPTCY – Discharge denied because of willful and malicious conversion

DISCHARGE. The debtor was a dairy farmer who obtained several loans through the Farm Service Agency (FSA) to continue operation of the farm. The loans were secured by dairy cows, farm land, crops and farm equipment and the security interest was perfected by the FSA. Each loan agreement required written consent of the FSA for […]

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ADVERSE POSSESSION – Hostile use requirement

HOSTILE USE. The parties owned two rural farms with a common boundary. In 1918, the current two properties were one parcel and were divided by a sale to two owners. The transfer deeds established an easement for both owners for one half of a driveway which ran along the boundary line. The defendant’s easement extended […]

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NUISANCE – Right-to Farm Act

RIGHT-TO-FARM. The defendant owed a three acre rural property which had been a quarry but was used by the defendant to mulch raw materials, including tree stumps, yard waste, and logs transported to the property. The plaintiff township sought an injunction against the mulching operation as violating the township ordinance which required a minimum of […]

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SECURED TRANSACTIONS – Identification of collateral

IDENTIFICATION OF COLLATERAL. The debtor purchased by installment sale 58 dairy cows from the defendant. The defendant filed a security agreement granting a security interest in the cows and filed a financing statement which identified the cows by barn name and ear tags. The defendant had registered the cows with the Holstein Association. The registration […]

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BANKRUPTCY – Preferential transfer or normal course of business payment

PREFERENTIAL TRANSFERS. The debtor operated a commercial cattle feedlot. The debtor had secured loans from a bank and owed other creditors. The bank loan was treated as a line of credit which allowed the debtor to pay down the amount owed and make drafts on the account on a continuing basis.  Over the year before […]

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BANKRUPTCY – Offset of farm program payments

OFFSET. The debtor filed for Chapter 12 in November 2010 and the claims against the debtor included farm loans from the FSA. The debtor was entitled to payments under the Direct and Countercyclical Program (DCP) after signing up in May 2012 to participate for 2012. The FSA sought an offset of the 2012 DCP payments […]

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ANIMALS – Assumption of risk in equine activities.

HORSES. The plaintiff was injured while participating in a trail ride as part of a horse camp run by the defendant. The plaintiff was riding a horse that the plaintiff’s father and the defendant knew had a tendency to go faster than the other horses. The plaintiff testified that the plaintiff had made repeated requests […]

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PRODUCTS LIABILITY – Herbicides

HERBICIDES. The plaintiff owned a vineyard next to the defendant’s farm. The defendants were the owners of the land and   the tenant who raised grass sod on the farm. The tenant sprayed the sod with a herbicide, 2, 4-D, and the plaintiff alleged that the spray drifted on to 30 rows of grape vines, […]

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PROPERTY – Pivot irrigation system was part of real estate.

FIXTURES The debtor purchased farm land through a loan from the Farm Credit Services (FCS) and FCS received a first deed of trust on the property. The seller of the parcel financed the remaining balance and took a second deed of trust as security for its interest, secured by the real estate and “hereditaments and […]

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NUISANCE: Indiana right-to-farm applied to change from crops to hogs

RIGHT-TO-FARM. The defendant purchased a bean and corn crop farm in 2005 and in 2006 added a hog livestock confinement operation which was permitted by the state to operate a 2800 head sow unit on the property. The plaintiffs were neighboring property owners who purchased their properties prior to the addition of the hog operation […]

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Chapter 12 Bankruptcy – Dismissal of Case

DISMISSAL. The debtors were a family-owned LLC and one of the members of that family. The debtors operated a dairy  farm.  Both debtors filed for Chapter 12 and the cases were jointly administered. In negotiations with creditors, the debtors reached a stipulated agreement as to plan payments, farm operation and remedies in the case of […]

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Agritourism- Skydiving

AGRITOURISM. The plaintiffs owned and operated a large farm and sought permission from the county planning department to operate a skydiving business on the property as agritourism. The permission was denied because the department decided that the skydiving business violated the large scale agricultural district zoning designation for the property. The county cited the plaintiffs […]

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Form 706 Extension – Special Use Valuation

SPECIAL USE VALUATION. The decedent’s estate executor filed the Form 706 late and included a request for a 12-month extension of time to make the special use valuation election. However, the executor failed to comply with all the requirements of Treas. Reg. § 301.9100-2. Treas. Reg. § 301.9100-2(a)(2)(vii) provides an automatic 12-month extension of time […]

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Chapter 12 Plan – Domestic Support Obligation

PLAN.  The Chapter 12 debtor’s plan treated a domestic court obligation to the debtor’s former wife as an allowed secured claim rather than as a domestic support obligation that must be repaid before the plan could be confirmed. In a post-divorce settlement agreement entered into prior to the filing for bankruptcy, the former spouse had […]

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Prop. Regulations – Disregarded Entitites

PARTNERSHIPS DISREGARDED ENTITIES.  The IRS has issued proposed regulations that clarify the employment tax treatment of partners in a partnership that owns a disregarded entity. The regulations also affect partners in a partnership that owns a disregarded entity. Treas. Reg. § 301.7701-2(c)(2)(i) states that, except as otherwise provided, a business entity that has a single […]

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Small Partnership Exception Repealed – call for reinstatement

To: Sen. Charles Grassley; Sen. Joni Ernst; Rep. Rod Blum; Rep. David Loebsack; Rep. David Young; Rep. Steve King Dear Senators and Representatives: Rarely, have I been driven to correspond with our Senators and Representatives in Congress. But a recent development has made that necessary. A highly important provision, enacted in 1982 as part of […]

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Bankruptcy – Tax offset violated automatic stay

AUTOMATIC STAY. The debtor filed for Chapter 7 in September 2014 and listed anticipated tax refunds for 2011 and 2012 as part of the bankruptcy estate, a portion of which was designated as exempt under Va. Code § 34-4 as a homestead exemption. The bankruptcy schedules also listed an amount owed to the USDA for […]

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Federal Gift Tax

GIFTS. The taxpayer owned two family farm limited partnerships and transferred interests in the partnerships to a daughter. The taxpayer filed a Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, which identified the gifts by the Employer Identification Number (EIN) of each partnership and an abbreviated name, although the EIN of one partnership […]

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Bankruptcy – Chapter 12

DISMISSAL. The debtor was a family general partnership which filed for Chapter 12. The debtor operated a Christmas tree farm and trucking business. The debtor filed three amended plans and the creditor objected to the third amended plan arguing that it was not filed in good faith, that it failed to pay the present value […]

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Estate Tax

BASIS OF ESTATE PROPERTY.  The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 requires that the fair-market value that sets the basis for any property acquired from a decedent be consistent for the value of that property for estate-tax purposes. Effective for property with respect to which an estate tax return is […]

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