3.2 Written Assignment (Due Tuesday, 11:59 p.m. CST) (50 points):

This written assignment requirement is for an examination of the issues below, submitted in APA format, using 12 point font.  (Suggested minimum content in order to satisfy requirements of the assignment has ranged from three to seven pages.) Cover page, abstract and reference pages are also required. A total of two external scholarly sources must be cited in support of your position. Please post your assignment as a .doc file attachment by clicking on the Assignment 3.2 title on the assignments page.



Your friend Bill comes to you for advice. He is owner, in fee simple absolute, of a quarter section farm in Page County, Iowa. (A quarter section is 160 acres.) He wishes to sell this property in order to make other investments with a greater income potential so he can put his three kids through college. Two things are bothering him, though. His neighbor, Paul, farms two other quarter sections, one on each side of Bills property. For the past twelve years, Paul has created a shortcut through Bills land at planting and harvest time. This saves Paul a drive of about a mile each time he services both of his properties. Bill wants to know whether that will present a problem at the time of sale. Think about whether Paul has an claim to the property, using the laws within your own jurisdiction, and then make a recommendation to Bill based upon your findings.



In addition, assume that you have advised Bill to sell the entire parcel to Whipstich Realty Co. for development as mixed use development. When assisting Bill with his options, you ask him to consider using the Section 1031 exchange allowed by the Internal Revenue Code to avoid paying any taxes on the gain on the property. This will require online research, or a call to your friendly local realtor, accountant or attorney for assistance. Once you have determined the eligibility of the property for this type of tax treatment, decide whether you would recommend Bill take advantage of that opportunity or whether he should simply bite the bullet and pay the capital gain taxes at the time of sale. You may make whatever assumptions you need to make about the value of the farm based upon your understanding of the current market value of similar property in your state.


Required Reading
Chapter 29, Beatty & Samuleson, Introduction to Business Law (4th Edition, Cengage Learning Press) 2012.

Will upload chapters in a few.