IN RE TINSLEY

ld be the Debtor and Ms. Doss and they, as a family unit, are using two properties. Thus, the court must decide, in light of the dual usage, if it is legally justifiable to treat the Kaufman Property as the family unit's homestead. Although the court heard testimony that Ms. Doss and the Debtor spend all of their evenings sleeping at the Kemp Property, the Debtor has only argued that the Kaufman Property is exempt and not the Kemp Property. Accordingly, the court is not determining whether both the Kemp Property and the Kaufman Property, as two non-contiguous tracts of land, are somehow both the Debtor's and Ms. Doss' homestead. (i.) The "Dual Residence Scenario."

See Debtor's Replies to Objections Filed by the Substitute Trustee and by Agriland PCA Contesting Debtor's Homestead Exemption [DE # 19]. The court would note that the Kemp Property is Ms. Doss' separately owned property (acquired before marriage), and is technically not part of the Debtor's bankruptcy estate. 11 U.S.C. § 541(a) (2010).

One can envision such an argument and, indeed, the Debtor hinted at such an argument by citing Judge Rhoades' opinion In re Palmer, 391 B.R. 386 (Bankr. E.D. Tex. 2008) in closing arguments. However, the Debtor neither pleaded both properties to collectively be a non-contiguous rural homestead, nor put on evidence for the court to consider such a theory. Among other things, the court was presented no evidence as to whether the Kemp Property is also in a rural area nor evidence that there is a nexus between the noncontiguous tracts such that the noncontiguous tract supports the residence. See Painewebber Inc. v. Murray (In re Murray), 260 B.R. 815, 830 (E.D. Tex. 2001).

Certain other courts — besides this one — have been confronted with determining whether a debtor's overt acts of usage and intent supported a claim for a homestead exemption when dual properties or residences were within the family unit. Judge Leif M. Clark in Mitchell dealt with this issue in determining whether a debtor could exempt a piece of property when there was evidence that he was actually spending significant time on another piece of property. The court thinks it is pertinent to briefly discuss the facts of that case and certain others that deal with a "dual residence scenario."

In Mitchell, the debtor, Albert Vaughan Mitchell ("Mr. Mitchell"), owned land that had been in his family for almost 80 years (the "Hillsboro Property"). Id. at 373. Mr. Mitchell's parents still lived on the land, but had sold it to their son in 1979 on the eve of foreclosure by the first lienholder, evidently to save the farm. Id. Mr. Mitchell made payments on the farm and went there frequently on the weekends and sometimes during the week in the summertime. Id. In November 1986, Mr. Mitchell remarried and took up residence with his new wife and two children at her home ( i.e., her separate property) in Garland, Texas near Dallas (the "Garland Property"). Id. During the summer, they would take the children down to the Hillsboro Property for a week at a time. Id. Moreover, during the school year, Mr. Mitchell and his wife would go to the Hillsboro Property on the weekends. Id.

After Mr. Mitchell filed for bankruptcy in March 1987, he claimed the Hillsboro Property as exempt on his schedules, which was subsequently objected to by one of Mr. Mitchell's creditors. Id. at 381. Mr. Mitchell argued that the family's use of both properties rendered both the Garland Property and the Hillsboro Property susceptible to homestead characterization, and that, therefore, he was entitled to designate which property he wanted to claim as exempt. Id. Specifically, Mr. Mitchell and his wife testified with great conviction that they preferred living in the country and, as soon as their children graduated from school, they would move to the Hillsboro Property permanently. Specifically, Mr. Mitchell argued that his case fell within the ambit of those Texas cases which hold that a court may (or, in fact, was required to) honor a debtor's subjective intent, when more than one property was actually used as a residence, under circumstances sufficiently ambiguous so that determining which property was the debtor's homestead was impossible merely from observing how it was used. Id. at 381-82. See also Wooten v. Jones, 286 S.W. 680, 687 (Tex. Civ. App. — Austin 1926, writ dism'd).

(ii.) Ambiguity Regarding Usage of Dual Properties.

In determining whether this "dual residence doctrine" was applicable, the bankruptcy court looked to see whether the physical facts surrounding the debtor's use of the two properties in question was so ambiguous that one could not tell from mere observation which of the two properties was, in fact, the debtor's homestead. Mitchell, 80 B.R. at 382. If there was no ambiguity, the designation was immaterial. Id. (citing Panhandle Constr. Co. v. Cont'l Sav. Loan Ass'n, 110 S.W.2d 632, 634-35 (Tex. Civ. App. — 1937, writ dism'd)). The court noted that an "ambiguity" as to usage is very fact intensive. Thus, in order to aid its analysis, the bankruptcy court in Mitchell looked to two cases where an ambiguity was demonstrated. Mitchell, 80 B.R. at 382.

The first case that Mitchell examined was Am. State Bank Trust Co. v. Johnston, 58 S.W.2d 880, 881 (Tex. Civ. App — San Antonio 1933). In Johnston, the Johnstons moved onto ranch property that had been in the family for many years and dug wells, built a house, tilled the land, and had three children. Id. Ten years later, they purchased two lots in the city of Mercedes, which was about two miles away from the ranch property and also built a house on it. Id. They lived in Mercedes during the school term, and through every school year after that. Id. While Mr. Johnston spent most of his time on the ranch property engaged in family farming and stock raising, Mrs. Johnston and the children spent the weekends, in good weather, and the time between school terms at the ranch property. Id. Based upon these facts, the Texas Civil Court of Appeals found it obvious that an ambiguity existed and that the Johnstons could claim and enforce their homestead exemption upon either property. Id. at 882.

The second case the Mitchell court examined was Carstens v. Landrum, 17 S.W.2d 803, 805 (Tex. 1929). In Carstens, a father (Mr. Landrum) sent his wife and children to San Antonio for schooling and to earn extra income, while he and his older children continued to work the farm. Id. at 803-04. Though most of the furniture and household effects were moved to San Antonio, where Mr. Landrum's wife was living with the younger children in a rented facility, Mr. Landrum continued to live on the farm, renting out part of it and farming part of it. Id. Mr. Landrum's married son also lived on the farm and helped him work the farm. Id. However, shortly after taking out a loan on the farm, the family moved to a house in San Antonio that they had purchased with the proceeds of the loan. Id. They then returned to the farm for a period of three years before returning again to San Antonio. Id. The Commission of Appeals of Texas ultimately found, and the Texas Supreme Court agreed, that under the circumstances, the occupancy of the farm by Mr. Landrum and his son "was palpably ambiguous in respect of the homestead exemption." Id. at 383.

Comparing the facts surrounding Mr. Mitchell's situation with the facts of Landrum and Johnston, the bankruptcy court in Mitchell was unable to find any ambiguity present. Mitchell, 80 B.R. at 383. The bankruptcy court stated that regardless of where Mitchell might have lived before he got married, there was little doubt where he resided once he married his wife. Id. Specifically, their children attended school in Garland, he kept his work clothes in Garland, both he and his wife worked in the Dallas area, and neither Mr. Mitchell nor his wife were farmers. Id. Additionally, the bankruptcy court found it important that the Hillsboro Property was already home to Mr. Mitchell's parents and was "not left over from his single days." Id. Thus, Mr. Mitchell was not entitled to exempt the Hillsboro Property as his homestead.

(iii.) There is "Ambiguity" in the Case at Bar With Respect to the Debtor's Overt Acts and His Homestead.

Applying the concepts enunciated in Mitchell to these facts, the court finds that there is, indeed, an ambiguity present, as far as whether the Kemp Property or the Kaufman Property is the Debtor's and Ms. Doss's homestead. Although it is an extremely close call, the court believes that there are several important facts that are present in this case that differentiate it from a case like Mitchell.

First, and perhaps most importantly, the Debtor testified that he spends almost every day at the Kaufman Property taking care of the property and running his farming business (albeit not an extremely profitable business at the moment). In fact, the only thing the Debtor did at the Kemp Property was sleep. There was also no evidence presented showing that he had abandoned the property. In fact, the Debtor testified that he and Ms. Doss were planning on moving to the Kaufman Property once they were able to complete some renovations and his son's children are older. Moreover, the Debtor and Ms. Doss have no children residing at the Kemp Property (which would be a meaningful factor), while the Debtor, of course, does have an adult son and grandchildren at the Kaufman Property. The Debtor testified with credibility that he considers the Kaufman Property his "principal residence." While his new bride is eight miles down the road, the Debtor's horses, boots, tools, livelihood the past 17 years, and now extended family are at the Kaufman Property 365 days a year. The court thinks that all of this is enough evidence to at least rise to the level of creating an "ambiguity" as to which property is really the Debtor's homestead. Accordingly, the court believes that it should defer to and honor the Debtor's subjective intent, as well as the Texas Constitution's liberal construction of the homestead statutes, and permit the Debtor to designate the Kaufman Property as his homestead. D. Is the Debtor's Homestead Exemption Capped Under Section 522(p)(1) of the Bankruptcy Code?

The court would also point out that, should the Debtor (or Ms. Doss for that matter) file another bankruptcy case in the future, this court's ruling could potentially act as an estoppel to either the Debtor or Ms. Doss claiming that the Kemp Property is somehow now their homestead, unless there was clear and convincing evidence that there was an abandonment of the Kaufman Property. As pointed out earlier, a married couple ( i.e., the family unit) may only have one homestead, and so as long as the Debtor continues to use and occupy the Kaufman Property, Ms. Doss will not be able to claim the Kemp Property as the family unit's homestead.

Having found that the Debtor is entitled to a homestead exemption for the Kaufman Property under Texas law, the court must now determine whether the homestead exemption should be capped under section 522(p)(1) of the Bankruptcy Code. Enacted as part of BAPCPA in 2005, section 522(p)(1) limits a debtor's homestead exemption under certain circumstances. Specifically, section 522(p)(1) provides that "a debtor may not exempt any amount of interest that was acquired by the debtor during the 1,215-day period preceding the date of the filing of the petition that exceeds in the aggregate $136,875 in value in . . . real or personal property that the debtor or dependant of the debtor claims as a homestead." See 11 U.S.C. § 522(p)(1)(D) (2010) (emphasis added). Congress added section 522(p) to the Bankruptcy Code in order to close the so-called "mansion loophole," through which "wealthy individuals could shield millions of dollars from creditors by filing bankruptcy after converting nonexempt assets into expensive and exempt homesteads in one of the handful of states that have unlimited homestead exemptions. . . ." See Greene v. Savage (In re Greene), 583 F.3d 614, 619 (9th Cir. 2009). Here, the Debtor argues that section 522(p)(1) does not apply because he has not yet "acquired" title to the Kaufman Property and has, thus, not acquired an interest in property under section 522(p)(1). In the alternative, the Debtor argues that even if section 522(p)(1) were to apply to his interest in the Kaufman Property, he is excluded from the "cap" on the homestead designation because he qualifies as a family farmer under section 522(p)(2)(A). The Trustee and AgriLand argue, on the contrary, that the Debtor "acquired" his interest in property upon the death of the Debtor's father, which was within the 1,215-day period preceding the Debtor's bankruptcy filing, and, thus, the Debtor's homestead exemption should be limited to $136,875. Additionally, the Trustee and AgriLand argue that the Debtor does not qualify as a family farmer because the Debtor is not "engaged in a farming operation" and moreover, the Kaufman Property is not his principal residence.

See the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Effective April 1, 2010, section 522(p)(1) of the Bankruptcy Code was amended to increase the exemption cap to $146,450. However, per section 104(c) of the Bankruptcy Code, "adjustments made . . . shall not apply with respect to cases commenced before the date of such adjustments." See 11 U.S.C. § 104(c) (2010). Here, the Debtor's bankruptcy case was commenced before April 1, 2010, so the $136,875 cap would apply to the Debtor's homestead exemption.

Section 522(p)(2)(A) of the Bankruptcy Code provides that "[t]he limitation under paragraph (1) shall not apply to an exemption claimed under subsection (b)(3)(A) by a family farmer for the principal residence of such farmer." See 11 U.S.C. § 522(p)(2)(A) (2010).

(i.) Did the Debtor "Acquire" an Interest in the Kaufman Property Within the 1,215-Day Period Preceding Bankruptcy?

The case of Wallace v. Rogers (In re Rogers), 513 F.3d 212 (5th Cir. 2008) is the prevailing Fifth Circuit authority on determining when a Debtor has "acquired" an interest in property that is subject to the cap set forth in section 522(p)(1). Moreover, Rogers is also very factually similar to this case because the debtor in Rogers had "acquired" the real property she was attempting to exempt as her homestead by inheritance. In Rogers, the debtor, Sarah K. Rogers ("Rogers"), inherited a 72.5 acre tract of real property known as 14849 Kelly Road, Forney, Texas (the "Forney Property") from her mother on January 17, 1994. Id. at 216. Subsequently, Rogers married George E. Rogers, and they purchased a 5.1 acre tract of real property known as 8644 South F.M. 549, Rockwall, Texas (the "Rockwall Property") and, ultimately, constructed a residence on the Rockwall Property and claimed it as their homestead. Id. In January 2004, Rogers separated from her husband, moved into a mobile home on the Forney Property, and claimed the Forney Property as her homestead. Id. On April 6, 2004, Rogers and her husband divorced and Rogers was ultimately allowed to retain the Forney Property as part of the divorce settlement. Id. After a creditor, Jack C. Wallace ("Wallace"), ultimately obtained a judgment in the amount of $316,180.95 against Rogers and her ex-husband, Rogers filed for bankruptcy on September 28, 2005. Id. Rogers claimed her homestead exemption on the Forney Property in the amount of $359,000. Id. Wallace timely objected to the debtor's claimed homestead exemption, arguing that section 522(p)(1) capped the debtor's homestead because Rogers "acquired" the Forney Property within the 1,215-day period preceding bankruptcy ( i.e., arguing that the debtor "acquired" the homestead when she first designated it as her homestead in 2004, not when she inherited it in 1994). Id.

Following the reasoning set forth in Venn v. Reinhard, 377 B.R. 315, 319 (Bankr. N.D. Fla. 2007), the Fifth Circuit found that the acquisition of an interest in property and the designation of homestead status are distinct concepts, in that homestead status attaches to protect property after it is acquired by the debtor. Rogers, 513 F.3d at 220. Moreover, for purposes of determining whether section 522(p)(1) applies, the court must decide whether the debtor acquired a vested economic interest in the homestead property during the 1,215-day period. Id. at 225. Designating property as a homestead does not, by itself, trigger section 522(p)(1), but simply gives "protected legal security" status to those vested economic interests in property that were acquired by the debtor earlier. Id. Thus, the Fifth Circuit found that because Rogers "acquired" title to the property when she inherited it from her mother in 1994 ( i.e., acquired a vested economic interest in the property), which was outside the statutory period, section 522(p)(1) was not applicable (even though Rogers did not choose to designate her property as her homestead until shortly before her 2005 bankruptcy) and, thus, Rogers was entitled to her entire homestead exemption on the Forney Property.

Unlike in Rogers, this case poses a slightly more complicated factual scenario, due to the fact that the Debtor has not yet acquired actual legal title to the Kaufman Property. Thus, the court must decide whether the Debtor has a vested economic interest in the Kaufman Property, and if so, when such vested economic interest arose.

It is well established that a will speaks of the testator's estate as of the time of the testator's death, and it is the estate of the testator then possessed that passes according to the terms of the will. Shriners' Hospital for Crippled Children of Texas v. Stahl, 610 S.W.2d 147, 150 (Tex. 1980). Moreover, title to an estate vests immediately in the beneficiaries (including devisees) at the very moment of the testator's death, though title to the estate is still subject to administration. See Texas Prob. Code Ann. § 37 (West 2009) ("when a person dies, leaving a lawful will, all of his estate devised or bequeathed by such will, and all powers of appointment granted in such will, shall vest immediately in the devisees or legatees of such powers . . ."); See also Harper v. Swoveland, 591 S.W.2d 629, 630 (Tex. Civ. App. — Dallas 1979, no writ). In this respect, a right to the property devised is conferred on a devisee as effectively as if the transfer had been in the form of a deed executed by the testator containing the same provisions. See Ferguson v. Ferguson, 111 S.W.3d 589, 596 (Tex. App. — Fort Worth 2003, pet. ref'd) (after a will is admitted to probate it becomes a "muniment of title until set aside in some lawful manner").

Thus, applying this statutory authority, the Debtor obtained a vested economic interest in the Kaufman Property on the day his father died (September 24, 2008). Since this date falls within the 1,215-day period preceding the Petition Date (September 20, 2009), section 522(p)(1) would apply, and the Debtor's homestead exemption in the Kaufman Property would be capped at $136,875 unless an exception applies in section 522(p)(2). (ii.) Is the Debtor Excepted From the Cap Under Section 522(p)(1) Because the Debtor Qualifies as a "Family Farmer" under Section 522(p)(2)(A)?

This court had grave doubts whether section 522(p) should apply at all in the context of a homestead "acquired" by devise in a will within 1,215 days of the debtor filing for bankruptcy (in contrast to a homestead acquired with nonexempt assets of a debtor or through other affirmative acts of a debtor). "Acquire" seems to connote something more active than passive (gift by will seeming passive). However, the Fifth Circuit assumed without much discussion in Rogers that section 522(p) would apply in the context of an acquisition by inheritance. Thus, section 522(p) should presumably be applied to any "acquisition," whether affirmative actions on the part of the debtor (or scheming) was involved or not. This is actually consistent with Black's Law Dictionary's definition of "acquire," defining it as "to gain by any means" and specifically including taking property by devise. Blacks's Law Dictionary 26 (9th ed. 2009).

Having determined that section 522(p)(1) does apply to the Debtor's homestead interest in the Kaufman Property, and that the Debtor's homestead exemption would be capped at $136,875, the court must now determine if the Debtor qualifies for an exception to the cap pursuant to section 522(p)(2)(A), which provides that section 522(p)(1) "shall not apply to an exemption claimed . . . by a family farmer for the principal residence of such farmer." See 11 U.S.C. § 522(p)(2)(A) (2010). Section 522(p) does not provide a definition of "family farmer" or "principal residence"; however, section 101 of the Bankruptcy Code provides guidance on how such terms should be interpreted.

First, section 101(13A) sets forth the definition of a "debtor's principal residence," which is said to mean "a residential structure, including incidental property, without regard to whether the structure is attached to real property." Although the definition itself states nothing about the residential structure being the principal residence of the debtor, such a limitation should be implied, as Congress would not have intended such nonsensical results. See 2 Collier on Bankruptcy ¶ 101.13(A), p. 88-89 (2010). See also In re Wilson, 347 B.R. 880, 885-86 (Bankr. E.D. Tenn. 2006) (finding that a debtor's "principal place of residence" is his or her home, the place where the debtor lives with his family, inclusive of any real property acquired therewith). Applying these standards, it appears that the Kaufman Property would qualify as the Debtor's principal residence. Here, we have evidence that the Debtor's furniture, tools, and virtually all of his personal property (except for some clothing and toiletries) remain on the Kaufman Property and that the Debtor works from and regularly spends almost every day at the Kaufman Property. Although the Debtor does spend his nights on the Kemp Property, the court believes there is enough evidence to show that the Kaufman Property is the Debtor's principal residence. Moreover, since the court has earlier found (in Section III.C of this opinion) that the Kaufman Property qualifies as the Debtor's homestead (per the Debtor's overt acts and subjective intent with regard to the dual residences in his marriage) it would seem that such property would also qualify as the Debtor's principal residence for purposes of Section 522(p)(2)(A).

Next, as to the definition of "family farmer," section 101(18) of the Bankruptcy Code provides that:

(18) The term "family farmer" means —

(A) individual or individual and spouse engaged in a farming operation whose aggregate debts do not exceed $3,544,525 and not less than 50% of whose aggregate noncontingent, liquidated debts (excluding a debt for the principal residence of such individual or such individual and spouse unless such debt arises out of a farming operation), on the date the case is filed, arise out of a farming operation owned or operated by such individual or such individual and spouse, and such individual or individual and spouse receive from such farming operation more than 50 percent of such individual's or such individual and spouse's gross income for —

(i) the taxable year proceeding; or

(ii) each of the 2d and 3d taxable years preceding; the taxable year in which the case concerning such individual or such individual and spouse was filed . . .

See 11 U.S.C. § 101(18) (2010) (emphasis added). Here, there are three issues the court must analyze in determining whether the Debtor qualifies as a "family farmer": (1) whether the Debtor is "engaged in a farming operation"; (2) whether the Debtor's aggregate debts do not exceed $3,544,525 and whether 50% or more of his noncontingent, liquidated debts (excluding any debt on the principal residence) arises out of farming operations; and (3) whether the Debtor or the Debtor and his spouse received more than 50% of his or their gross income from the farming operation for the taxable year preceding (2008) or each of the second (2007) and third (2006) taxable years preceding the filing of the bankruptcy case.

(1.) Is the Debtor Engaged in a Farming Operation?

Whether a debtor is engaging in a farming operation actually entails two separate questions: (1) whether the debtor's operation is of the type that constitutes a "farming operation"; and (2) whether the debtor is "engaged" in the farming operation. See Cottonport Bank v. Dichiara, 193 B.R. 798, 801 (W.D. La. 1996). With regard to what activities constitute a "farming operation," section 101(21) of the Bankruptcy Code provides that the term "farming operation" includes "farming, tillage of the soil, dairy farming, ranching, production or raising of crops, poultry, or livestock, and production of poultry or livestock products in an unmanufactured state." See 11 U.S.C. § 101(21) (2010). Courts have generally found that the list of activities enumerated in section 101(21) is merely illustrative and not exhaustive. Cottonport, 193 B.R. at 801. Furthermore, if something is not specifically noted within section 101(21), the most significant factors courts look to in determining whether a particular activity constitutes "farming operations" is whether the debtor is "exposed to the inherent risks and cyclical uncertainties traditionally associated with farming." Id. (citing In re McNeal, 848 F.2d 170, 171 (11th Cir. 1988)). Here, the Debtor testified at the Hearing that he considered himself both a "grazer" and rancher. Specifically, the Debtor ran cattle on the Kaufman Property and also grew and baled hay. However, the Debtor did not own any of the cattle that he grazed (i.e., the Debtor allowed other people to graze their cattle on his land). The Debtor made a profit on any weight gain of the cattle that occurred as a result of the grazing. Keeping in mind the factors listed above, it appears to the court that the Debtor is engaged in "farming operations" on the Kaufman Property. Not only is the Debtor engaged in activities specifically enumerated in section 101(21) (i.e., farming, ranching, and raising of livestock), but the Debtor's business is certainly associated with the inherent risks and cyclical uncertainty of farming operations such as the weather and the farming economy. For example, the Debtor testified that his farming operation was greatly impacted due to significant droughts that had occurred in the area. Accordingly, the court finds that the Debtor's business does constitute a "farming operation" for purposes of section 101(21) of the Bankruptcy Code.

Next, the court must consider whether the Debtor is actually "engaged" in the farming operation. In analyzing this particular issue, courts generally adopt a "totality of the circumstances approach." Cottonport, 193 B.R. at 802. See also In re French, 139 B.R. 476, 480 (Bankr. D.S.D. 1992); In re Paul, 83 B.R. 709, 713 (Bankr. D.N.D. 1988); Watford v. Fed. Land Bank of Columbia (In re Watford), 898 F.2d 1525, 1528 (11th Cir. 1990) (finding that the standard for determining if a debtor is "engaged" in farming is whether, in view of the totality of the circumstances, the debtor intends to continue to engage in "farming operations" even though he or she was not engaged in the physical activity at the time the petition was filed). But see Tart, 73 B.R. 78, 80 (Bankr. E.D.N.C. 1987) (finding that when debtors had sold all their real property except for their house prior to the filing of the chapter 12 petition and did not intend to continue farming operations, debtors were not "engaged" in farming). This court adopts the totality of the circumstances approach that courts have used when determining if a debtor is "engaged" in farming for purposes of section 101(18) of the Bankruptcy Code. The court also agrees with those courts that, when determining whether a debtor is "engaged" in farming, have looked to the intent of the Debtor who may have ceased operations as of the petition date, due to economic or personal factors.

The court believes that this inquiry better serves Congress' intent for a family farmer to be able to reorganize (mainly in the context of Chapter 12), even though the operation of such family farmer may have been drastically altered just prior to filing. See Watford, 898 F.2d at 1528. Moreover, since section 101(18) of the Bankruptcy Code (the definition of "family farmer") also provides for an income test, which can look at a debtor's financial situation as much as three years prior to filing, the court believes that there is certainly an argument that it should consider much more than a single snapshot of the debtor's farming operations at the precise time the petition was filed.

Here, the Debtor testified at the Hearing that he has been a rancher all of his life, and more particularly, had used the Kaufman Property since 1993. The Debtor admitted at the Hearing that as of the Petition Date, the Debtor no longer grew crops and did not operate a cattle business. He also admitted that at the time of bankruptcy, he also did not have any cattle or any farming equipment on the Kaufman Property. The Debtor also testified that he had a heart attack and open heart surgery in 2008, and due to complications with the surgery, the Debtor was temporarily unable to continue his farming operations. In fact, at the time the Bankruptcy Case was filed, the Debtor was only receiving social security income. However, the court would note that the Debtor testified that he has now resumed his cattle operations, particularly the grazing business on the Kaufman Property (which includes running cattle and growing hay) and plans on continuing his business in the future. Accordingly, the court believes that based upon the totality of the circumstances, as well as the Debtor's intent to continue his grazing and ranching business on the Kaufman Property, the Debtor is, for purposes of section 101(18) of the Bankruptcy Code, "engaged" in a farming operation.

See AgriLand Exhibit 13, pg. 20.

(2.) Do the Debtor's Aggregate Debts Not Exceed $3,544,525 and Do 50% or More of His Noncontingent, Liquidated Debts Arise Out of Farming Operations?

Per the Debtor's schedules filed on September 10, 2009, the Debtor's aggregate debts were $196,917.65. Thus, the Debtor is clearly under the $3,544,525 debt cap for purposes of determining if the Debtor qualifies as a "family farmer" under section 101(18) of the Bankruptcy Code. Moreover, at least $176,415.66 of this debt relates to farming operations ( i.e., the amount scheduled as owed to AgriLand). Thus, more than 50% of the Debtor's noncontingent, liquidated debts arise from farming operations.

(3.) Did the Debtor Receive More Than 50% of His Gross Income from the Farming Operation for the Taxable Year Preceding the Petition Date or Each of the Second and Third Taxable Years Preceding the Petition Date?

Finally, the court must determine if the Debtor (or the Debtor and his spouse) received more than 50% of his/their gross income from the Debtor's grazing and ranching business. Courts have generally referred to this inquiry as the "Income Test." Here, the Debtor provided the court with copies of his tax returns from 2006, 2007, and 2008. Note that these would be the only relevant tax years to consider, for purposes of Section 101(18) — since the Debtor filed bankruptcy during 2009. Note also that these tax returns all showed only the Debtor's (and not Ms. Doss's) income, since the Debtor did not marry Ms. Doss until late 2008, and they apparently filed separate income tax returns for at least that year. For each tax year, the Debtor also submitted as part of his tax returns a Schedule F, which is titled "Profit or Loss From Farming". For 2008, the Debtor reported "farm gross income" as $34,065. For 2008, the Debtor also received social security benefits of $10,752. Thus, for 2008, the Debtor had a total income of $44,817, with 76% coming for the Debtor's farming operations. Therefore, the Debtor has met the requisite income test for being a family farmer under section 101(18) of the Bankruptcy Code. The court would also note that in reviewing the tax returns for 2006 and 2007, the Debtor reported farm gross income of $114,096 and $55,166 respectively. As for other income, the Debtor received $1,021 in 2006 and $7,884 in 2007. This means that farming operations constituted 99% of the Debtor's gross income in 2006 and 88% in 2007. Again, it appears that for 2006 and 2007, the Debtor has also met the requisite income test for being a family farmer under section 101(18) of the Bankruptcy Code.

It is significant that the definition of "family farmer" used in section 101(18) of the Bankruptcy Code focuses on "gross" income of the Debtor for purposes of determining whether an individual qualifies, rather than focusing on net income/profit.

See Debtor's Exhibits 1, 2, and 3.

In summary, the Debtor has met all the various requirements for qualifying as a "family farmer" under section 101(18) of the Bankruptcy Code. Thus, since the Kaufman Property qualifies as the Debtor's principal residence and the Debtor qualifies as a "family farmer," the Debtor is subject to the family farmer exception in section 522(p)(2)(A) of the Bankruptcy Code, and the Debtor's homestead exemption will not be capped at $136,875. V. Conclusion

The court would conclude with the old saying that "home is where the heart is," and, although the Debtor may have spent his nights with his new bride at the Kemp Property, rather than the Kaufman Property, the facts and circumstances in this case certainly show that the Kaufman Property is the Debtor's true home and where his "heart" is. This case is certainly unique in that it implicates section 522(p)(1) for reasons not originally contemplated by Congress (i.e., this is hardly a case of letting a debtor get through a "mansion loophole," in that no non-exempt property was put in a large, luxurious mansion on the eve of bankruptcy). Fortunately, for this Debtor, even though he "acquired" property which he used as his homestead within 1,215 days of filing bankruptcy, Congress anticipated certain situations to which they did not want section 522(p)(1) to apply and drafted section 522(p)(2)(A).

Therefore, the court finds in favor of the Debtor and finds that the Kaufman Property not only qualifies as the Debtor's homestead, but also is not subject to the statutory cap under section 522(p)(1), due to the fact that the Debtor qualifies as a "family farmer" under section 522(p)(2)(A). Accordingly, the Trustee's and AgriLand's objections are both overruled.

IT IS SO ORDERED.

The following constitutes the ruling of the court and has the force and effect therein described.

Signed November 16, 2010.