S-25-0776 South Dakota Trust Company, LLC, as Trustee of the Young Grandchildren’s Irrevocable Trust 1 (Appellant) v. Nebraska Department of Revenue and James Kamm, in his Official Capacity as Nebraska Tax Commissioner (Appellees)
Appeal from the District Court for Lancaster County, Judge Kevin R. McManaman
Attorneys: John M. Walker, Daniel J. Waters, David A. Changstrom, and Cathy S. Trent-Vilim (Lamson Dugan & Murray LLP for Appellant) and Lincoln J. Korrell, L. Jay Bartel, and Cody Barnett (Nebraska Attorney General’s Office for Appellees)
Civil: Capital gains and taxes
Proceedings Below: As trustee, Appellant sought Nebraska’s special capital gains tax deduction regarding the sale of corporate stock. The Nebraska Department of Revenue denied the requested deduction and assessed a tax deficiency on the trust. Appellant protested to the Nebraska Tax Commissioner, who denied the protest. On petition for further review to the district court, it affirmed the determinations of the Nebraska Department of Revenue and the Nebraska Tax Commissioner. The Nebraska Supreme Court ordered this case to be transferred from the docket of the Nebraska Court of Appeals to its docket.
Issues: Appellant assigns the following errors: 1) The district court erred by finding that the Trust was not entitled to exercise the special capital gains election of Neb. Rev. Stat. § 77-2715.09; 2) The district court erred in its finding that Appellant needed to demonstrate that the Trust acquired “control” over the Union Pacific stock to exercise the special capital gains election of Neb. Rev. Stat. § 77-2715.09; 3) The district court erred in its finding that Appellant did not in fact acquire “control” over the transferred Union Pacific stock necessary to exercise the special capital gains election of Neb. Rev. Stat. § 77-2715.09; 4) The district court erred by exceeding the scope of its review under Neb. Rev. Stat. § 84-917(5)(a), as discussed in Gridiron Mgmt. Grp., LLC v. Travelers Indem. Co., 286 Neb. 901, 911, 839 N.W.2d 324, 332 (2013), because the district court did not affirm Appellees’ correct reason for the action based on correct facts, but rather the district court changed the rationale for the imposition of the tax; 5) The district court erred by finding that Appellee’s decision did not violate the Due Process Clause of the United States Constitution’s Fourteenth Amendment and the Commerce Clause of the United States Constitution’s Article I; and 6) The district court erred by finding that Appellees can tax the Trust because it earned income that derived from the state of Nebraska.
On cross-appeal, Appellees assign the following errors: 1) The district court erred in determining that the term “transferred” under Neb. Rev. Stat. § 77-2715.09(2)(c) includes an “indirect transfer;” and 2) The district court erred in determining that a trust that never owns or possesses a stock could nevertheless be a transferee of such stock under Neb. Rev. Stat. § 77-2715.09(2)(c).