from the Iowa District Court for Polk County, Michael D.
Gardiner Nance appeals from an adverse judgment on judicial
review of the department of revenue's denial of her
request for a partial refund on an inheritance tax payment.
M. Repp and F. Richard Lyford of Dickinson, Mackaman, Tyler
& Hagen, P.C., Des Moines, for appellant.
J. Miller, Attorney General, Donald D. Stanley Jr., Special
Assistant Attorney General, and Hristo Chaprazov, Assistant
Attorney General, for appellee.
Danilson, C.J., and Potterfield and Bower, JJ.
DANILSON, Chief Judge.
Gardiner Nance unsuccessfully sought judicial review from the
Iowa Department of Revenue's (the Department) denial of
her request for a partial refund of an inheritance tax
payment. On appeal, she contends the distribution of a
decedent's assets pursuant to a Family Settlement
Agreement (FSA) should govern the imposition of inheritance
taxes if the FSA was made in good faith and not for the
purpose of avoiding taxes. Because we conclude the Department
and the district court misapplied the law, we reverse and
remand to the district court for remand to the Department for
further proceedings consistent with this opinion.
Scope and Standard of Review.
review of this appeal from a judicial-review decision is
governed by Iowa Code section 17A.19(10) (2016). Brakke
v. Iowa Dep't of Nat. Res., 897 N.W.2d 522, 530
(Iowa 2017). We, like the district court, function in an
appellate capacity to correct any errors of law on the part
of the agency. See id. If we reach the same
conclusions as the district court, we affirm; otherwise, we
reverse. Iowa Ag Constr. Co. v. Iowa State Bd. of Tax
Review, 723 N.W.2d 167, 172 (Iowa 2006). Our review here
is limited to deciding whether the Department's
application of the relevant law to the facts of this
contested case was irrational, illogical, or wholly
unjustifiable. See Iowa Code § 17A.19(10)(m);
Iowa Ag. Constr., 723 N.W.2d at 174.
2003, Lester Gardiner Sr. and Mildred Gardiner executed a
transfer-on-death (TOD) agreement for their brokerage
accounts. They named their son, Lester Jr., as the
beneficiary, and Lester Jr.'s wife, Beverly, as the
died in 2004, Lester Jr. died in 2007, and Lester Sr. died in
2009. Lester Sr.'s three grandchildren (Beverly's
stepchildren) were the beneficiaries and executors of Lester
2009, the Estate of Lester Sr. (by the grandchildren) filed
an action against Beverly to challenge the validity of the
TOD agreement, claiming Lester Sr. had not been competent to
execute it. During the pendency of that action, the
estate filed an inheritance tax return and remitted $18, 988
to the Department based on the TOD designation for the assets
of the brokerage accounts. This Dallas County lawsuit was
resolved as a result of mediation which resulted in the
execution of a FSA in July 2010, providing the assets of the
brokerage accounts would be divided equally between the
estate and Beverly.
versus Department of Revenue.