Articles Posted in U.S. Court of Appeals for the Seventh Circuit

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Neita formerly owned and operated a dog-grooming business and rescue shelter. In 2012, he went to Chicago’s Department of Animal Care and Control to surrender a dog that had killed another dog and a dog that had become ill after whelping puppies. Travis, an Animal Control employee, called the police. Officers arrested and searched Neita, then searched his vehicle, and his business premises. Neita was charged with animal cruelty and 13 counts of violating an animal owner’s duties under Illinois law. He was found not guilty on all counts. After his acquittal, Neita suedTravis, the officers, and the city. The judge dismissed the federal claims, holding that Neita not adequately pled any constitutional violation and relinquished supplemental jurisdiction over the state-law claims. The Seventh Circuit reversed, finding the complaint’s allegations sufficient to state 42 U.S.C. 1983 claims for false arrest and illegal searches in violation of the Fourth Amendment. Neita alleged that he surrendered two dogs, neither of which showed signs of abuse or neglect, and was arrested without any evidence that he had mistreated either dog. If these allegations are true, no reasonable person would have cause to believe that Neita had abused or neglected an animal. View "Neita v. City of Chicago" on Justia Law

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Plaintiff, walking her brown labrador retriever, “Dog,” encountered a gray and white pit bull running loose, which lunged at Dog’s neck. The dogs began to fight. Neighbors unsuccessfully tried to separate them. Plaintiff dropped Dog’s leash so that Dog could defend himself. Officer Davis, driving to a burglary call, received a report that a pit bull was attacking another dog at a corner along his route. Davis pulled over and trained his spotlight on the dogs. Plaintiff, who was crying, identified herself and described Dog. Davis has a form of colorblindness that makes it difficult for him to distinguish certain colors, but had not informed his employer of his condition. Davis shot at what he thought was the aggressor. The dogs separated. Dog limped toward plaintiff, who cried that Davis had shot her dog. Davis then aimed at the pit bull and fired several times. The pit bull left the scene. Dog died as a result of the gunshot wound. From the time Davis had arrived until the time he fired his seventh shot, about two minutes elapsed. The Seventh Circuit affirmed a verdict in favor of Davis in a suit under 42 U.S.C. 1983, alleging unconstitutional seizure of Dog. The court upheld a conclusion that Davis had not committed discovery violations and the court’s rejection of plaintiffs’ proffered Fourth Amendment reasonableness analysis jury instruction. View "Saathoff v. Davis" on Justia Law

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In 2014 the Tax Court held that Roberts had deducted expenses from his horse‐racing enterprise on his federal income tax returns for 2005 and 2006 erroneously because the enterprise was a hobby rather than a business, 26 U.S.C. 183(a), (b)(2)..The court assessed tax deficiencies of $89,710 for 2005 and $116,475 for 2006, but ruled that his business had ceased to be a hobby, and had become a bona fide business, in 2007. The IRS has not challenged Roberts’ deductions since then and Roberts continues to operate his horse‐racing business. The Seventh Circuit reversed the Tax Court’s judgment upholding the deficiencies assessed for 2005 and 2006. A business is not transformed into a hobby “merely because the owner finds it pleasurable; suffering has never been made a prerequisite to deductibility.” The court noted instances demonstrating Roberts’ intent to make a profit. View "Roberts v. Comm'r of Internal Revenue" on Justia Law

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In 2014 the Tax Court held that Roberts had deducted expenses from his horse‐racing enterprise on his federal income tax returns for 2005 and 2006 erroneously because the enterprise was a hobby rather than a business, 26 U.S.C. 183(a), (b)(2)..The court assessed tax deficiencies of $89,710 for 2005 and $116,475 for 2006, but ruled that his business had ceased to be a hobby, and had become a bona fide business, in 2007. The IRS has not challenged Roberts’ deductions since then and Roberts continues to operate his horse‐racing business. The Seventh Circuit reversed the Tax Court’s judgment upholding the deficiencies assessed for 2005 and 2006. A business is not transformed into a hobby “merely because the owner finds it pleasurable; suffering has never been made a prerequisite to deductibility.” The court noted instances demonstrating Roberts’ intent to make a profit. View "Roberts v. Comm'r of Internal Revenue" on Justia Law

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Wilma Stuller and her late husband bred Tennessee Walking Horses. They incorporated the operation and claimed its substantial losses as deductions on their tax returns. The IRS determined that the horse-breeding was not an activity engaged in for profit, assessed taxes and penalties, and penalized them for failing to timely file their 2003 return. After paying, the Stullers and LSA, sued the government for a refund. The district court excluded the Stullers’ proposed expert. It determined that his expertise did not extend to the financial or business aspects of horse-breeding and he lacked a reliable methodology to opine on the Stullers’ intent. The court found that the corporation was not run as a for-profit business under 26 U.S.C. 183, and determined that the Stullers lacked reasonable cause for failing to timely file their 2003 tax return. The court also denied a request to amend the judgment and effectively refund taxes paid by the Stullers on rental income received from the corporation. The Seventh Circuit affirmed. The district court followed Daubert in excluding the expert and applied each factor of the regulations to the facts. Only the expectation of asset appreciation weighed in the Stullers’ favor; almost every other consideration pointed to horse-breeding as a hobby or personal pleasure. View "Estate of Stuller v. United States" on Justia Law