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Judge: not all farm expenses are tax deductible

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A probate court incorrectly allowed an estate to deduct three farm-related expenses from its inheritance tax return, but affirmed the deduction of the remaining nine in question, the Indiana Tax Court ruled Tuesday.

Curtis Daugherty inherited his uncle’s farm following the uncle’s death. He was also the personal representative of the uncle’s estate. The farm was in disrepair and he made many repairs and improvements to it. In filing the inheritance tax return, the estate claimed numerous deductions, including farming-related expenses. The probate court accepted the return as filed.

The Indiana Department of State Revenue asked the probate court for a rehearing on the filing because it believed some of the farm-related deductions were improper. The estate filed a counterclaim to deduct 10 more farm-related expenses and alleged that the regulation the department relied on to preclude the deductions was invalid. The probate court upheld its earlier ruling and also found the estate’s counterclaim was untimely.

In Indiana Dept. of Revenue v. Estate of Bernard A. Daugherty, No. 49T10-0909-TA-49, Tax Judge Thomas Fisher affirmed the denial of the estate’s motion to dismiss the department’s claim. The department alleged the farming-related deductions were improper pursuant to 45 IAC 4.1-3-11. The estate claimed that regulation is invalid. The probate court, in applying the same rules of construction that apply to statutes, held the regulation was presumed to be valid until the estate demonstrated otherwise. Since the estate argued the burden of proof was on the department to prove the statute wasn’t invalid, the estate didn’t show the statute was invalid.

Judge Fisher also affirmed that the probate court lacked subject matter jurisdiction over the estate’s counterclaim to add 10 more farming-related deductions. He rejected the estate’s argument that because its compulsory counterclaim was timely filed, Indiana Trial Rule 13 extended the 120-day statute of limitations for filing its own petition for rehearing. Because the estate sought affirmative relief with a counterclaim filed 128 days after the probate court’s initial determination, there was no error in finding the counterclaim was time-barred.

The probate court incorrectly allowed all 12 farming-related deductions. The deductions for clay drainage tiles, electrical repairs, grain bin repairs, and pole barn repairs were proper, as those expenditures were incurred during the course of administering the estate and were done to preserve, maintain, and repair the assets of the farm. The expenses related to the fertilizer bill, a pre-existing debt, were also deductible.

However, Curtis’ three expenditures for wheat spray weren’t deductible because he incurred those expenses while operating the farming business, wrote the judge. He remanded for the calculation of the proper amount of inheritance tax and interest due from the estate.
 

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  1. Indianapolis employers harassment among minorities AFRICAN Americans needs to be discussed the metro Indianapolis area is horrible when it comes to harassing African American employees especially in the local healthcare facilities. Racially profiling in the workplace is an major issue. Please make it better because I'm many civil rights leaders would come here and justify that Indiana is a state the WORKS only applies to Caucasian Americans especially in Hamilton county. Indiana targets African Americans in the workplace so when governor pence is trying to convince people to vote for him this would be awesome publicity for the Presidency Elections.

  2. Wishing Mary Willis only God's best, and superhuman strength, as she attempts to right a ship that too often strays far off course. May she never suffer this personal affect, as some do who attempt to change a broken system: https://www.youtube.com/watch?v=QojajMsd2nE

  3. Indiana's seatbelt law is not punishable as a crime. It is an infraction. Apparently some of our Circuit judges have deemed settled law inapplicable if it fails to fit their litmus test of political correctness. Extrapolating to redefine terms of behavior in a violation of immigration law to the entire body of criminal law leaves a smorgasbord of opportunity for judicial mischief.

  4. I wonder if $10 diversions for failure to wear seat belts are considered moral turpitude in federal immigration law like they are under Indiana law? Anyone know?

  5. What a fine article, thank you! I can testify firsthand and by detailed legal reports (at end of this note) as to the dire consequences of rejecting this truth from the fine article above: "The inclusion and expansion of this right [to jury] in Indiana’s Constitution is a clear reflection of our state’s intention to emphasize the importance of every Hoosier’s right to make their case in front of a jury of their peers." Over $20? Every Hoosier? Well then how about when your very vocation is on the line? How about instead of a jury of peers, one faces a bevy of political appointees, mini-czars, who care less about due process of the law than the real czars did? Instead of trial by jury, trial by ideological ordeal run by Orwellian agents? Well that is built into more than a few administrative law committees of the Ind S.Ct., and it is now being weaponized, as is revealed in articles posted at this ezine, to root out post moderns heresies like refusal to stand and pledge allegiance to all things politically correct. My career was burned at the stake for not so saluting, but I think I was just one of the early logs. Due, at least in part, to the removal of the jury from bar admission and bar discipline cases, many more fires will soon be lit. Perhaps one awaits you, dear heretic? Oh, at that Ind. article 12 plank about a remedy at law for every damage done ... ah, well, the founders evidently meant only for those damages done not by the government itself, rabid statists that they were. (Yes, that was sarcasm.) My written reports available here: Denied petition for cert (this time around): http://tinyurl.com/zdmawmw Denied petition for cert (from the 2009 denial and five year banishment): http://tinyurl.com/zcypybh Related, not written by me: Amicus brief: http://tinyurl.com/hvh7qgp

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