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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. Such things are no more elections than those in the late, unlamented Soviet Union.

  2. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  3. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  4. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  5. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

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