holding that CRP payments had a direct nexus to the taxpayers’ trade or business of farming
How later courts described this case
- holding that CRP payments had a direct nexus to the taxpayers’ trade or business of farming
- noting that Congress qualified the use of the term “rent” with respect to CRP payments by providing that the CRP payments would be made “in the form of rental payments”
- interpreting an undefined term in the Internal Revenue Code in accord with its ordinary meaning
Written by the judges who cited it.
The opinion
NATHANIEL R. JONES, Circuit Judge,
dissenting.
Because I believe that the substantial and wide-ranging limitations imposed on the Wuebkers’ use of their land by the CRP signals that the USDA did “use” the land as contemplated by ordinary definitions of “rent,” I respectfully DISSENT from Part II.C. of the majority opinion.
The Internal Revenue Code does not define “rentals from real estate” for the purposes of § 1402(a)(1), and we therefore look to ordinary definitions of “rent” to ascertain the statute’s meaning. See Smith v. United States, 508 U.S. 223, 228 , 113 S.Ct. 2050 , 124 L.Ed.2d 138 (1993) (“When a word is not defined by statute, we normally construe it in accord with its ordinary or natural meaning.”). As the majority notes, “[r]ent normally connotes ‘[consideration paid for use or occupation of property.’ ” Ante at 904; see Aujero v. CD A Todco, Inc., 756 F.2d 1374 , 1376 (9th Cir.1985) (quoting Black’s Law Dictionary 1166 (5th ed.1979)); see also Black’s Law Dictionary (Westlaw 1999). While the USDA did not possess or occupy the Wuebkers’ property in the traditional sense that gives rise to a tenant-landlord relationship, see Restatement (Second) of Property § 1.2 (1977) (“A landlord-tenant relationship exists only if the landlord transfers the right to possession of the leased property.”), the CRP certainly placed a number of restrictions on the way in which the Wuebkers could use their land.
As the Tax Court found, the Wuebkers were prohibited from allowing any “grazing, harvesting, or other commercial use of the crop from the cropland,” see J.A. at 35, and were required to implement the numerous requirements of the conservation plan. The USDA also retained a limited right to access the land to ascertain CRP compliance. By prohibiting all commercial farming, the USDA greatly reduced the range of uses to which the Wuebkers could put their property. The sundry dictates of the conservation plan, requiring the Wuebkers inter alia to seed and fertilize the acreage in accordance with USDA dictates, further constricted the land’s utility. In my view, the USDA therefore exercised sufficient control of the CRP land that it can properly be viewed as “us[ing]” the land. For this reason, characterization of the CRP payment as a “rental[ ]” payment is entirely consistent with ordinary definitions of the term. Accordingly, I respectfully DISSENT from Part II.C. of the majority opinion, but join the opinion in all other respects.