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

What Is HeinOnline?

HeinOnline is a subscription-based resource containing nearly 2,700 academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline with pricing starting as low as $29.95

Access to this content requires a subscription. Please visit the following page to request a quote or trial:

Already a HeinOnline Subscriber?