ILNews

Judge: not all farm expenses are tax deductible

Back to TopCommentsE-mailPrintBookmark and Share

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.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Are you financially squeezed? Do you seek funds to pay off credits and debts Do you seek finance to set up your own business? Are you in need of private or business loans for various purposes? Do you seek loans to carry out large projects Do you seek funding for various other processes? If you have any of the above problems, we can be of assistance to you but I want you to understand that we give out our loans at an interest rate of 3% . Interested Persons should contact me with this below details . LOAN APPLICATION FORM First name: Date of birth (yyyy-mm-dd): Loan Amount Needed: Duration: Occupation: Phone: Country: My contact email :jasonwillfinanceloanss@hotmail.com Note:that all mail must be sent to: jasonwillfinanceloanss@hotmail.com Thanks and God Bless . Jason Will

  2. Can I get this form on line,if not where can I obtain one. I am eligible.

  3. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  4. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  5. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

ADVERTISEMENT