Justia Tax Law Opinion Summaries

In this case regarding the determination of the tax court valuing Minnesota Energy Resources Corporation’s (MERC) natural gas pipeline distribution system for the years 2008 through 2012, the Supreme Court affirmed the decision of the tax court on remand, holding that the tax court followed the Court’s instructions on remand and properly applied the Court’s clarified standard to MERC’s claim of external obsolescence. On remand, the tax court found that MERC failed to demonstrate that external obsolescence affected the value of its property. The Supreme Court affirmed, holding (1) the tax court correctly evaluated whether MERC’s evidence of external obsolescence was credible, reliable, and relevant; and (2) the tax court’s decision was justified by the evidence and in conformity with law. View "Minnesota Energy Resources Corp. v. Commissioner of Revenue" on Justia Law

At issue on certiorari was what evidence a tax court may rely upon in deciding whether the taxpayer has overcome the presumptive validity of the county’s assessment.Here, Taxpayer contested the County’s assessment of the fair market value of Taxpayer’s parking ramp. The tax court denied the County’s motion to dismiss, basing its decision on evidence presented in the County’s case. The Supreme Court affirmed, holding (1) the tax court erred in considering the County’s evidence to decide the motion to dismiss because the relevant law permits only the Taxpayer’s evidence to be considered; but (2) the tax court did not abuse its discretion by holding, in the alternative, that Taxpayer’s evidence overcame the presumptive validity of the assessment. View "Court Park Co. v. County of Hennepin" on Justia Law

The Supreme Court affirmed the tax court’s denial of relief to Ronald and Dee Johnson, who filed this action challenging the property taxes that Hennepin County assessed against their property. The tax court granted the County’s motion to dismiss the petition for tax years 2007 through 2012 because those claims were not filed in compliance with Minn. Stat. 278.01-.02 and dismissed the Johnson’s constitutional claims for lack of jurisdiction. The tax court then granted judgment in favor of the County on the Johnsons’ remaining claims challenging the assessment for the 2013 tax year. Thereafter, the tax court denied the Johnsons’ five post-trial motions. The Supreme Court affirmed, holding that the evidence in the record adequately supported each of the tax court’s decisions at issue. View "Johnson v. County of Hennepin" on Justia Law

Minnesota’s water’s edge rule, Minn. Stat. 290.17(4)(f), does not prohibit the inclusion in “net income” the income of a foreign entity that elects under federal tax law to be disregarded as a separate entity.At issue in this appeal from the tax court was whether the consequences of an election made under federal tax law by a foreign entity owned by Ashland Inc., a domestic unitary business, must be recognized in determining Ashland’s Minnesota tax liability. The Commissioner of Revenue concluded that the income and apportionment factors of the foreign entity were improperly included in Ashland’s combined return and so excluded them in calculating Ashland’s Minnesota tax liability. The tax court granted Ashland’s motion for summary judgment, concluding that the consequences of the federal election were properly included in the determination of Ashland’s net income on its Minnesota tax returns. The Supreme Court affirmed, holding that the tax court did not err in its conclusion. View "Ashland Inc. & Affiliates v. Commissioner of Revenue" on Justia Law

This tax dispute arose out of a failed real estate investment that resulted in significant tax consequences for Germaine Harmon, the widow of one of the original investors. Harmon challenged the Commissioner of Revenue’s assessment of her 2010 Minnesota income-tax liability, which the Commissioner based on a Schedule K-1 filed by the partnership in charge of the foreclosed real estate investment. The Supreme Court affirmed the tax court’s grant of summary judgment in favor of the Commissioner, holding that the tax court did not err by determining that Harmon failed to overcome the presumption of validity of the Commissioner’s assessment of taxes. View "Harmon v. Commissioner of Revenue" on Justia Law

In 1999, Yik Lo created H.K.D. Lo, Inc. Yik and his wife, Yau Lo, operated several restaurants through H.K.D., the last of which they sold in 2005. In approximately 2004, Yik and Yau’s son, Kee Lo, opened a restaurant called Jun Bo that Kee operated through H.K.D. In 2011, Yik and Yau formally dissolved H.K.D. In 2012, the Commissioner of Revenue assessed Yik personally liable for sales taxes owed by H.K.D. in the amount of $91,019. Yik appealed. The tax court concluded that Yik was not personally liable for H.K.D.’s unpaid tax debt because Yik was not a person who had “control of, supervision of, or responsibility for” filing H.K.D.’s tax returns or paying H.K.D.’s taxes. The Supreme Court reversed, holding that because Yik funded H.K.D., signed checks on its behalf, had a fifty percent stake in the company, and delegated day-to-day control of the business to someone else, Yik had control over H.K.D.’s tax obligations, despite the fact that Kee demanded and exercised authority over Jun Bo’s daily operations. View "Lo v. Commissioner of Revenue" on Justia Law

At dispute in this case was the taxable value of Macy’s Retail Holdings, Inc.’s downtown Minneapolis property. Macy’s challenged the Minneapolis Assessor’s valuation of the property for the 2008, 2009, and 2010 tax years. After a trial, the tax court valued the property at figures lower than the assessor’s original valuation of the property for each of the years in question but not to the extent urged by the testimony and appraisal report of Macy’s expert witness. The Supreme Judicial Court affirmed, holding that the tax court (1) did not clearly err in its determination of the property’s highest and best use and in its consideration of comparable-sales data; (2) did not abuse its discretion when it declined to strike portions of the appraisal report and testimony of the County’s expert witness as a sanction for a discovery violation; and (3) did not clearly err in disregarding the sale of a nearby commercial property when it evaluated the comparable-sales data provided by the parties. View "Macy’s Retail Holdings, Inc. v. County of Hennepin" on Justia Law

The Mandels owned a home that, in 2011, was damaged by rainwater. Based on an post-casualty appraisal, the Mandels deducted $82,247 from their income reflected on their 2011 federal tax return. This deduction also affected the Mandels’ Minnesota taxable income. Following an audit, the Commissioner of Revenue disallowed much of the Mandels’ casualty-loss deduction by reducing the allowable tax deduction to the amount of the cost of the repairs the Mandels actually made to their home. The Mandels appealed. The tax court granted summary judgment in favor of the Commissioner. The Supreme Court affirmed, holding that the tax court did not err in determining that the Mandels’ post-casualty appraisal was not “competent” and did not err in granting the Commissioner’s motion for summary judgment. View "Mandel v. Commissioner of Revenue" on Justia Law

Menard, Inc. challenged Clay County’s assessment of the market value of Menard’s home improvement retail store as of January 2, 2011 through January 2, 2014. A trial ensued before the tax court, after which the court adopted market valuations below the County’s assessment values but above Menard’s expert appraiser’s valuation. Both Menard and the County appealed. The Supreme Court affirmed the tax court’s value determinations, holding that the tax court did not err in weighting the sales comparison approach and the cost approach for the valuation years at issue and did not fail adequately to explain its reasoning for that decision. View "Menard, Inc. v. County of Clay" on Justia Law

Hennepin County assessed real estate taxes on two properties owned by STRIB IV, LLC. STRIB IV applied to the County to classify the properties under Minnesota’s Green Acres statute, but the County denied the application. The tax court affirmed. The Supreme Court affirmed the tax court’s order, holding that STRIB IV’s subject properties did not qualify for Green Acres classification, as the Green Acres statute does not include properties owned by single-member LLCs such as STRIB IV, and the result required by the Green Acres statute’s plain language is not absurd. View "STRIB IV, LLC v. County of Hennepin" on Justia Law