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Commentary and Analysis Regarding Colorado Law

"I love it when a plan comes together." -Col. John "Hannibal" Smith (the A-Team)

Ziggis Coffee Drive Thru 002

One of the most rewarding aspects of my job is watching a client's carefully laid plans take shape.  Ziggi's Coffee began with a husband and wife team pulling espresso shots behind the counter of their Longmont coffee shop.  They are now in growth mode and are opening their tenth Colorado location, with more to come.  It has been an honor to partner with them on this journey.  Check out this article about their new Greeley location, but more importantly, check out their coffee!  https://bit.ly/2y8h7Kr #coffee

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Parocha v. Parocha

Eve Canfield

Eve Canfield is a board member of Safe Shelter of St. Vrain Valley.  She wrote an amicus brief on behalf of five nonprofit organizations in support of a victim of domestic violence that left her home state and came to Colorado with their child, in Parocha v. Parocha, No. 17SC406. The amicus brief contributed to the Supreme Court’s Opinion on May 21, 2018, which established a major advancement in the protections available for victims of domestic violence and their families. 

A permanent protection order was granted by county court, but the District Court reversed, stating there were insufficient contacts to establish jurisdiction over the non-resident husband.  The Supreme Court considered whether and when a civil protection order is available to a victim of alleged domestic abuse who comes to Colorado seeking refuge from a non-resident partner.

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Sale or Purchase of Business Assets Don’t Forget the Government’s “Share”

TLB blog photo

The sale or purchase of a business involves The sale or purchase of a business involves many decisions which create tax impacts for the parties involved, both at the time of closing and in the future. While the media reports focus on multi-billion-dollar mergers and acquisitions, most business transfers involve far less in the amount of money involved, but each sale or purchase represents a large investment of money, time, and emotion in the business by both the seller and buyer. In every transaction, the taxing authorities, either as a result of the completion of the sale of a business, or in the future as the business continues to operate, will receive taxes from the seller or buyer.

Businesses can be sold in a number of ways, including the sale of stock or limited liability company membership interests, however most purchasers do not want to assume the potential risk of past tax or operating liabilities of the business entity, or the purchaser does not want to inherit the tax basis of the business entity in the various assets which have been partially or fully depreciated.  Accordingly, for the bulk of business transfers, the seller and purchaser will structure the business sale as an asset sale and purchase.

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72 Hits

What's New at Northern Water?

Northern Water

The Northern Colorado Water Conservancy District influences many water use issues in Northeastern Colorado, including Boulder, Larimer and Weld Counties.  Northern Water is a public agency which is well-known for the construction and operation of the Colorado-Big Thompson Project. The C-BT Project collects West Slope water and delivers it to portions of eight Northeastern Colorado counties, providing supplemental water to more than 640,000 acres of irrigated farm and ranch land and about 960,000 people. The following are some news items involving Northern Water which affect many of our clients:

Eric Wilkinson retired after serving Northern Water as its General Manager from 1994-2018. Northern Water selected Brad Wind as its new General Manager.Following its Spring Water Users meeting, Northern Water Strong increased its 2018 quota allocation for the Colorado-Big Thompson Project to 80 percent citing strong regional water storage coupled with below-average precipitation. The May 1st report from NRCS corroborates this decision, showing the median percent of normal snowpack and streamflow forecasts for Boulder Creek at 81% and for St. Vrain Creek at 60%. In March, Northern Water conducted a sealed bid for 75 terminated C-BT units. Three parties were successful – one at $30,101/unit (50 units); one at $29,500/unit (2 units); and the one at $29,253/unit (23 units). Based upon monthly reported transfers, the C-BT market price appears to be approximately $28,500/unit.Also, in March, Northern Water auctioned off 15,000 acre-feet of C-BT water under its Regional Pool Program. Eight bidders were successful, with the high bid at $165.00/AF and the minimum successful bid at $126.00/AF. Bidders sought 38,985 AF of C-BT during this auction. To provide some perspective on the high demand for C-BT water, the 2017 Regional Pool auction for 12,300 acre-feet of C-BT yielded six successful bidders, with the high bid at $101.00/AF and the minimum successful bid at $81.00/AF.At its May meeting, Northern Water opened two separate rulemakings, each which has been continued to the June 14th meeting. The first rulemaking action proposes modifications to the existing Regional Pool Program rules to ensure more efficient use of C-BT water, including:Allowing an Account Entity who contributed water to the same Regional Pool to lease water from that Regional Pool (currently prohibited);Eliminating the current restriction that a Regional Pool lessee must use all water from its Regional Pool account by the end of the water year in order to lease water from the Regional Pool in the subsequent year; andGiving the Board discretion to define a volumetric limit any single bidder may lease from the Regional Pool.The second rulemaking action proposes modifications to the existing C-BT tracking and accounting rules, to ensure maximum lawful use of C-BT water, including:Imposing upon Account Entities (those with authority to order C‐BT from Northern Water), additional accounting requirements for the diversion, exchange, or storage of C‐BT water and for Utilities that supply C‐BT Project water for municipal/industrial uses;  Requiring agricultural users, as well as municipal/industrial users, to maintain and submit accounting for the storage and subsequent use of untreated C‐BT water if that water is stored for longer than 72 hours in a reservoir with a decreed storage right;Requiring entities to keep daily accounting of C‐BT Project water stored, estimated losses due to evaporation and seepage from storage, and beneficial use of releases from storage; andRequiring Utilities that treat and supply C‐BT Project water for municipal/industrial uses to begin collecting daily information to be submitted monthly concerning the amount of treated C‐BT Project water provided to customers.More information on each rulemaking can be found at http://www.northernwater.org/sf/allottee-information/allottee-documents.
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Do You Feel Well-Protected?

Jeffers Steve 011

Many  landowners and small businesses use wells that provide a vital water supply for their property.  Some wells are used for watering livestock, for drinking water inside homes, for irrigation of lawns and gardens, or for drinking and sanitary purposes inside a shop or other business.  People often take for granted their right to use their well, and don’t realize that use may be threatened.  Finding out you don’t have the proper permit or decree after your well goes dry from a nearby construction project, or after the state orders you to shut down the well, may be inconvenient, expensive, and difficult to fix. 

In Colorado, water rights outside the Designated Basins are administered based on “first in time is first in right”, with many of the first rights dating back to the 1860's.  In order to establish the priority of your water right and protect it from new uses, you must have a court decree.  No diversion is allowed from a well unless the owner also has a valid permit from the Division of Water Resources (DWR). If you own a small well that is important to your home or business, you should make sure you have a valid well permit and your use falls within the permit limits.  If you don’t have a well permit, or if your use is out of compliance, the State may shut down your well.  For questions about administration of wells or questions about your individual well permit, you can call DWR’s groundwater information desk.  However, before talking with them, you may want to consult with an experienced water attorney.

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Employment Trends Now

Catherine Tallerico

As we move into the second quarter of 2018, a few workplace trends to watch for are below:

1) Sexual Harassment.  The #MeToo movement demonstrates that workplace harassment remains a persistent problem.  Thirty-six percent of all Colorado charges filed with the Equal Employment Opportunity Commissions (EEOC) last year related to sexual harassment. Workplace harassment affects all workers and causes a drag on performance.  It’s time to take a hard look at sexual harassment policies, complaint and investigation procedures, and training programs. Best practices to ensure a safe and productive workplace include:

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81 Hits

Pass Through to Savings- a new deduction in the "Tax Cuts and Jobs Act"

Anton Dworak

There is a significant new tax deduction taking effect in 2018 under the new tax law, the Tax Cuts and Jobs Act (the Act). It should provide a substantial tax benefit to individuals with “qualified business income” from a partnership, S corporation, LLC, or sole proprietorship. This income is sometimes referred to as “pass-through” income.

The deduction is generally equal to 20% of your “qualified business income” (QBI) from a partnership, S corporation, or sole proprietorship, defined as the net amount of items of income, gain, deduction, and loss with respect to your trade or business. The business must be conducted within the U.S. to qualify, and specified investment-related items are not included, e.g., capital gains or losses, dividends, and interest income (unless the interest is properly allocable to the business). The trade or business of being an employee does not qualify. Also, QBI does not include reasonable compensation received from an S corporation, or a guaranteed payment received from a partnership for services provided to a partnership's business.

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Back from Russia

RNL

Dick Lyons (third from left) was one of 40 U.S. observers who joined 400 other international observers for the March 18 Russian presidential election.  After two days of training and briefing in Moscow by the O.S.C.E., Dick and his international  team from Armenia and Finland were flown further east to observe polling, counting, and tabulation procedures in rural areas outside of Perm, Russia near the Ural Mountains where they endured three days of bitter cold, wind, and snow.  The adverse weather did not deter the turnout!

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129 Hits

Water for Daffodils and Dreams

Madoline Wallace Gross

When daffodils pop up, so do the “for sale” signs on the ranch and mountain properties.  Whether you are buying your forever property or your just-for-now property, be sure to conduct water rights due diligence.   Water rights are complicated, and you need to protect your investment with the following steps.

Initially, ponder “What do I want to do with the property?”  Do you want a sprawling mansion or a quaint cabin?  Do you want a luscious lawn and a fish pond?  Have you always wanted horses and chickens? 

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111 Hits

Lyons Gaddis is a proud sponsor for Team Left Hand Bike MS

Team Left Hand Bike MS

June 23-24, 2018

http://ow.ly/f46i30iOMpq

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Firm News Archive

2018 BOCO Paralegals Valentine cards 004
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RNL award optimized
Thomas Beckmann
Valentine's Day ProjectThe Paralegal Section of the Boulder County Bar participated in sending out hand written valentines to Boulder County seniors living in nursing homes.  We would like to thank Ginny Hout, Kyna Glover, and Jessica Grover for sending out 80 valentines our behalf of Lyons Gaddis.

50 year Boulder Bar Members                                                                                                                                                                                                   Wally H. Grant was recognized as one of three bar members in attendance at the BCBA lunch meeting with CBA president and Supreme Court Justice Marquez that have practiced law for 50 years.  Congratulations Wally!

SPECIAL DISTRICT ASSOCIATION OF COLORADO CONFERENCE 2017 (SDA)Richard Lyons, II, Adele Reester, Cathy Tallerico, and John Chmil will be speaking at SDA this year. Ms. Reester is on a panel to discuss: Consolidation of Fire Services: A study in Collaboration. Mr. Lyons and Mr. Chmil will be speaking on the legal challenges special districts face when setting fees and offering advice on how special districts can avoid its fees being invalidated as unconstitutional exactions. 

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152 Hits

Oil and Gas Notifications in Colorado Real Estate Contracts

Suzan Fritchel

Colorado real estate practitioners have seen the addition of oil and gas notification provisions in the real estate approved forms for the purchase and sale of real property.  In bold face type, the buyer is warned that the surface estate may be owned separately from the underlying mineral estate and that the purchase of the surface may not include the minerals.  The buyer is further advised so that there may be a surface use agreement in place, that there may be oil and gas activity on the property or on adjacent property and that it is advisable to seek out additional information from the COGCC.  As of January 1, 2016, these disclosures were mandated by statute to be part of all residential purchase and sale contracts, i.e., not only in those approved by the Colorado Real Estate Commission.  For recommended language, see:  http://codes.findlaw.com/co/title-38-property-real-and-personal/co-rev-st-sect-38-35-7-108.html

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Individual Tax Cuts

Anton Dworak

TCJA – take it away!   Highlights and lowlights of the new tax act.

The recently enacted Tax Cuts and Jobs Act (TCJA) is a sweeping tax package. Here's a look at some of the more important elements of the new law that have an impact on individuals. Unless otherwise noted, the changes are effective for tax years beginning in 2018 through 2025.

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179 Hits

Use it or Lose it

Godbehere Kara small

“Use it or lose it” is often colloquially used to describe the prior appropriation doctrine for water rights in Colorado.  Nowhere is that phrase more accurate than when it comes to the decennial abandonment list.  CRS § 37-92-401(1)(a) requires the Division Engineer to maintain a tabulation of water rights and priorities in their Water Division, but also to “prepare decennially, no later than July 1, 1990, and each tenth anniversary thereafter, a separate abandonment list comprising all absolute water rights that he or she has determined to have been abandoned in whole or in part and that previously have not been adjudged to have been abandoned.”  The next issuance of this decennial abandonment list will happen in 2020, and there are some important considerations of which water users should be aware before that list is issued.

Water rights can be abandoned in whole or in part.  The Division Engineers office may physically inspect diversion structures and/or diversion records, if kept, to determine if water rights have actively been used over the past ten years.  They may be placed on the abandonment list if they haven’t been used at all, but also if they have only been used in amounts less than the decreed amount. In addition to non-use, the water right owner must intend to abandon the right.  See CRS § 37-92-103(2), also Beaver Park Water, Inc. v. City of Victor, 649 P.2d 300 (Colo. 1982). This is a very important element to note in the abandonment process, as the burden is on the water right owner to show they did not have an intent to abandon, if they wish to have their water rights removed from the list. Pursuant to CRS § 37-92-103(5)(a), any water right owner who wishes to protest inclusion of their water rights on the abandonment list must file a protest no later than “June 30, 1992, or the respective tenth anniversary thereafter” (so for the upcoming 2020 abandonment list, no later than June 30, 2022).  The forms for protesting inclusion of water rights on the abandonment list can be found here: https://www.courts.state.co.us/Forms/Forms_List.cfm?Form_Type_ID=10. 

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Did 2017 Tax Code Changes Eliminate 1031 Exchanges of Ditch Stock?

1031 exhange

Since the passage of the 2007 Farm Bill, buyers and sellers of certain water rights have enjoyed the ability to use tax deferred exchanges under Section 1031 of the Internal Revenue Code.  Recent changes to the tax code, however, deleted any reference to mutual ditch or irrigation company stock from the definintion of qualifying “like kind property.”  None the less, the IRS will still allow exchanges involving ditch stock provided that your state’s laws consider such stock as real property.

Following the passage of the 2007 Farm Bill, Internal Revenue Code §1031(i) specifically provided that mutual ditch or irrigation company stock could be used for a tax deferred like kind exchange for real property used in a trade or business or held for investment purposes. As a result, the gain from the sale of eligible mutual ditch company stock could be deferred if the other requirements of §1031 were met.  Eligible stock was defined as any stock in a mutual ditch, reservoir, or irrigation company, as described in Code § 501(c)(12)(A). That section required at least 85% of the revenue into the company be from member assessments.

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256 Hits

Is it your ethics, or your office management?

Tim O Neil 01

For most attorneys, their law school training readied them to counsel clients, draft legal documents, and litigate disputes; it may not have prepared them as well for the practical reality of running a business. At some point in our careers, however, most of us have to come to grips with the nuts and bolts of managing a law practice, especially those of us who are sole practitioners or members of small firms. While running your own business may not have been what drove you to the profession, being thoughtful and skillful about how you manage your law office is critical not only to your financial success, but the ethics of your practice.

The Colorado Rules of Professional Conduct, which govern the ethical and professional conduct of lawyers in the state, may not specify exactly how one must run their law office (although, with respect to certain matters, like what bank accounts to have for your business, they do), many times lawyers find themselves answering to the Office of Attorney Regulation Counsel (OARC) regarding issues that arise from what are primarily office management problems. A lawyer who is remiss in viewing their office management practices through the lens of professional responsibility under the Rules might be unwittingly setting an ethical trap for herself in the future. The time demands of attending to client needs must be balanced with time demands of managing your practice.

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170 Hits

The Harvey Weinstein Syndrome - Every Company's Needed Response

20171226 Blog

The allegations of abuse have been staggering. The numbers of abused victims are astounding. Are these problems limited to the film and television industries?

Ask any working woman, and the answer to that question is no. Although this is the 21st Century, sexual harassment is still prevalent in many of our work places.

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262 Hits

Planes, Trains and Automobiles (and Dirt) . . . all eligible for a tax deferred 1031 exchange (maybe)

Planes Trains and Automobiles

This photo, which I think is a marketing promo of a happy tax payer and his 1031 Exchange Accommodator, lists three types of property that might lose 1031 exchange protection under the tax bill making its way through the Senate and House chambers this week.  As noted in Retail Real Estate Law, the recent Senate-House compromise removed personal property from like-kind treatment under Section 1031 of the Internal Revenue Code.  So, today, you could complete a 1031 exchange with your plane, your train or even your automobile (provided that you adhere to the strict requirements established in Section 1031 and its associated regulations) but that may not be the case following approval of the revisions to the Tax Code in the coming weeks. 

For most of us, real estate is the like-kind property with which we deal on a regular basis.  That appears to be unaffected by the current tax bill.  Whether or not we lose the ability to exchange personal property, it seems that a refresher on 1031 exchanges is in order. 

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397 Hits

May He Rest in Peace; now give me his football tickets!

Cameron Grant

Frank Lumpkin Jr. loved Georgia football.  As the story goes, one Saturday (over 50 years ago) Mr. Lumpkin walked through downtown Columbus, Georgia with his infant son.  He came upon an Auburn fan and the two ultimately came to blows, with Lumpkin clutching his son’s bassinet in his left hand while he swung at the Auburn fan with his right.

Mr. Lumpkin looked out for his two loves that day – his son and his Georgia Bulldogs.  Unfortunately, he later forgot to take care of his kids when he failed to mention his Georgia football season tickets in his will.  Now, his son, Frank Lumpkin, III, and his daughter, Julia Lumpkin, are embroiled in litigation over their parents’ estate, with ownership of the Georgia tickets as a major sticking point. 

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Water Butts

Eve Canfield
Water Butt

According to http://www.treehugger.com, the UK calls rain barrels “water butts”. I was suspicious, but when I “Googled” water butts, a whole list of sites for rain barrels came up, so yes, rain barrels are really called water butts in the UK. The reason for this article is that until recently, rain barrels were illegal in Colorado. In Wisconsin where I grew up, my grandmother had rain barrels and used the water for flower boxes and also to wash her hair. She said it made her hair soft and slowed down the process of going gray. As I remember her now, she could have been right.

The Colorado Division of Water Resources website tells us that the State of Colorado claims the right to all rain that falls within the state. That is why rain barrels were illegal in Colorado until August 10, 2016. Practically speaking, there was concern that the collection of rain water would have an adverse effect on owners of senior water rights by taking too much water out of the natural water cycle. In 2009, there was Senate Bill 09-080, which allowed the use of rain barrels in limited circumstances, but it wasn’t until this year that the use of rain barrels or “rooftop precipitation collection” systems were made legal for most of homeowners in Colorado.

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