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1 Tex. A&M J. Prop. L. 171 (2012-2014)
Benefits Blown Away: Farmers and Ranchers, Wind Energy Leases, and the Estate Tax

handle is hein.journals/txamrpl1 and id is 176 raw text is: BENEFITS BLOWN AWAY: FARMERS AND RANCHERS, WIND ENERGY LEASES, AND THE ESTATE TAX Jordan Veurink' TABLE OF CONTENTS 1. INTRODUCTION ........... .............................. 172 II. WIND LEASES AND EFFECTS ON PROPERTY VALUE .... 174 III. THE FEDERAL ESTATE TAX ............................ 179 IV. IRC SECTION 2032A.............................. 181 A. Introduction to Section 2032A. .................. 181 B. Qualified Use.... ........................ 182 C. Qualified Real Property . ..................... 186 D. Material Participation .. ...................... 187 E. Calculating Special Use Valuation ................ 189 F. Limitations on Special Use Valuation ............. 191 G. Cessations of Qualified Use and Dispositions of Qualified Real Property ........................ 192 V. POTENTIAL ESTATE TAX ISSUES THAT MAY ARISE WITH WIND LEASES ..................................... 194 A. Landowners Executing Wind Leases before Death .. 194 1. Estates Pushed into Estate Tax Liability........ 194 2. Limitation on Ability to Elect Section 2032A .. 195 B. Execution of Wind Leases after Death by Qualified Heirs of Estate ............................... 197 VI. INEQUITABLE RESULTS AND STATUTORY RECOMMENDATIONS .................................... 198 VII. CONCLUSION ............................................ 202 SUMMARY With the ever-increasing desire to produce and use energy from renewable sources, electricity-producing wind turbines have sprung up throughout the country. Since the companies that erect these turbines rarely own the land the turbines are built upon, land must typically be leased from landowners-often farmers and ranchers that own a large amount of open, unobstructed prop- erty. These normally long-termed leases, however, may hamper the estate plans of such landowners. A court has recently ruled that the right to pay- ments under leases where the lessor has the right to receive lease payments and right to own the property in fee after the term of the lease are includable in a f J.D., Texas Wesleyan Law School, 2012; B.A., University of Sioux Falls, 2009. The author would like to thank Terry Leach, Attorney at Law, for introducing me to this interesting topic, Professors Terri Helge and Lee Schwemer for their helpful in- sight and advice, Professor Mark Burge for his extensive comments, and to Kelsey for her support. 171

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