Labrie et. al. v. Vermont Dep’t of Taxes, No. 302-7-13 Wmcv (Wesley, J. May 9, 2014). 

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the 

accompanying data included in the Vermont trial court opinion database is not guaranteed.] 

Labrie et al vs. Vermont Department of Taxes 

ENTRY REGARDING MOTION

Count 1, Appeal - Tax (302-7-13 Wmcv) 

Title: Motion for Summary Judgment (Motion 2) 

Filer: Vermont Department of Taxes 

Attorney: Will S. Baker 

Filed Date: December 19, 2013 

Response filed on 02/05/2014 by Attorney William M. McCarty for Plaintiff Robert A. Labrie 

Response filed on 02/06/2014 by Attorney William M. McCarty for Plaintiff Robert A. Labrie 

 Signed Copy of Response by plff. 

Response filed on 02/14/2014 by Attorney Will S. Baker for Defendant Vermont Department of 

Taxes 

The motion is GRANTED. 

Opinion and Order 

Granting Summary Judgment to the Vermont Department of Taxes

 Robert and Dolores LaBrie appeal from a decision by the Vermont Department of Taxes 

(The Department). The LaBries own 280.5 acres in Townshend. They use the property to 

operate a business in which they breed, raise, and train Friesian horses. The business also hosts 

camps and demonstrations and provides riding lessons, cottage rentals, and horse-drawn 

carriage rides. The Department has enrolled the land in the Agricultural and Managed Forest 

Land Use Value Program (Current Use Program). The Department refused to enroll the buildings 

in the Current Use Program because the LaBries received more than half of their income from 

non-farming activities. The appeal centers on what activities qualify as farming. 

 The Department moved for summary judgment on December 19, 2013. The Department 

argued the LaBries are not entitled to have their buildings enrolled in the Current Use Program 

because, for each of the years the LaBries applied, they had more non-farm income than farm 

income. In making this determination, the Department did not include income related to 

lessons, training, camps, carriage rides, cottage rentals, and similar activities as farm income. 

The Department only included income from the sale of horses as farm income. The Department 

also considered income from investments as non-farm income. The LaBries opposed summary 

judgment on February 6, 2014. They argued all the horse-related income is farm income. The 

LaBries further argue the Department’s interpretation violates the policy behind the agricultural 

use exemptions. The Department responded to the opposition on February 14, 2014. The 

STATE OF VERMONT

SUPERIOR COURT CIVIL DIVISION

Windham Unit Docket No. 302-7-13 Wmcv
parties do not dispute that if the Court treats the income from lessons, rentals, and camps as 

farming income, then more than half of the LaBries’ income comes from farming. 

The Court grants summary judgment “if the movant shows that there is no genuine 

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 

V.R.C.P. 56(a). The Court makes all reasonable inferences and resolves all doubts in favor of the 

non-moving party. Lamay v. State, 2012 VT 49, ¶ 6, 191 Vt. 635. 

Under 32 V.S.A. § 3752(14), farm buildings may be enrolled in the Current Use Program 

if the applicant meets certain requirements. The buildings must be “actively used by a farmer as 

part of a farming operation, are owned by a farmer or leased to a farmer...” 32 V.S.A. § 

3742(14). A farmer is a person “who earns at least one-half of the farmer's annual gross income 

from the business of farming as that term is defined in Regulation 1.175-3 issued under the 

Internal Revenue Code of 1986.” 32 V.S.A. § 3742(7)(A). A farmer is a person who manages a 

farm for profit. 26 C.F.R. § 1.175–3. A person who engages in farming “for recreation or 

pleasure rather than a profit is not engaged in the business of farming.” Id. “[F]arm is used in its 

ordinary, accepted sense and includes stock, dairy, poultry, fish, fruit, and truck farms, and also 

plantations, ranches, ranges, and orchards.” Id. A person claiming an exemption bears the 

burden of proof that the person is entitled to the exemption. 32 V.S.A. § 3755(e). 

 Vermont cases do not define the meaning of farming. Nevertheless, two cases provide 

guidance on how the Court should interpret tax exemptions. Our Lady of Ephesus House of 

Prayer, Inc. v. Town of Jamaica considered whether a horse-barn was entitled to a tax 

exemption because it allowed clergy to use the property. See 2005 VT 16, ¶¶ 1, 4, 178 Vt. 35. 

The Court rejected the taxpayer’s argument. Id. ¶ 1. The Court noted, “in construing tax 

exemptions, the burden is on the person claiming the benefit of the exemption, and the 

exemption statute must be strictly construed against that person.” Id. ¶ 14 (internal citations 

omitted); see also Brownington Ctr. Church of Brownington, Vt., Inc. v. Irasburg, 2013 VT 99, ¶ 9 

(reiterating statutes offering tax exemptions must be strictly construed). 

In Mollica v. Division of Property Valuation and Review, the Vermont Supreme Court 

considered whether a cottage used on a Christmas tree-farm qualified for an agricultural use 

exemption. See 2008 VT 60, ¶¶ 1–2, 184 Vt. 83. The taxpayers engaged in tree farming most of 

the year, but used the cottage for other purposes in the off-season. Id. ¶ 2. The Department 

disallowed the cottage as “a development” under 32 V.S.A. § 3752(5). Following a de novo trial, 

the Superior Court rejected the Department’s characterization, and the Supreme Court 

affirmed. The Supreme Court found that the Department’s construction was strained, and 

failed to conform to explicitly stated legislative policies. Id.¶ 20 Although courts usually defer 

to decisions by administrative agencies that interpret statutes within their expertise, the 

Current Use Program is remedial in nature and does not require deference. Id. ¶¶ 9–10. Courts 

should therefore interpret the statute to maintain agricultural land. Id. ¶ 13. 

Cases from bankruptcy courts provide guidance on whether lessons and training 

qualifies as farming activities. See In re Poe, 62 Collier Bankr.Cas.2d 365 (Bankr. N.D.W.Va. 

2009). To file for chapter 12 bankruptcy, which applies to family farmers, a debtor must show 

half of the debtor’s income comes from a farming operation , the same test employed for 

buildings claimed to be part of a farming operation under the Current Use program. See id.; see 

also 11 U.S.C. § 101(18). In Poe, the debtor trained and boarded horses and raised cattle. 62 

Collier Bankr.Cas.2d 365. Bankruptcy courts split over whether training and boarding horses 
qualified as a farming activity and cited four cases applying different analyses. Id. The court 

concluded training and boarding horses was not a farming activity because it did not contain 

the types of risks, such as death of animal, that raising livestock typically involves. Id. Therefore, 

the Court denied the debtor’s filing. See id.; see also In re Jones, 66 Collier Bankr. Cas.2d 62 

(Bankr. D.Or. 2011) (refusing to include horse boarding fees as part of a debtor’s farming 

income). 

 In re McKillips also considered a similar issue. See 72 B.R. 565, 568–69 (Bankr. N.D.Ill. 

1987). In McKillips, the debtors filed for a chapter twelve bankruptcy for their horse breeding, 

training, and showing operation. Id. at 567. Horse showing and training do not fall within the 

traditional definition of farming or ranching. Id. at 567–68. Only breeding and selling horses fell 

within the definition of farming operation. See id. at 568–69. Profits from raising and training 

horses did not fall within the definition of farming operation because they are fee based and do 

not contain the same risks of weather and illness that farming entails. See id. The court rejected 

the debtor’s filing because less than half of the debtor’s income came from farming. Id. at 569. 

This Court is persuaded by the reasoning in the above-cited bankruptcy cases, applying 

an identical guideline for determining what activities qualify as farm income. In this case, the 

LaBries are not entitled to have their buildings enrolled in the Current Use Program because 

more than half of their income came from non-farming activities. Specifically, offering lessons, 

camps, cottage rentals, and carriage ride are not farming activities. Notwithstanding the 

remedial policies of the Current Use Program, it still requires taxpayers to prove they qualify for 

an exemption. See 32 V.S.A. § 3755(e); Ephesus House, 2005 VT 16, ¶ 14.1

 Under 26 C.F.R. § 

1.175–3, farming activities includes raising crops and livestock. None of the LaBries’ 

supplemental activities are the listed types of farming in 26 C.F.R. § 1.175–3. The supplemental 

activities are dissimilar in type from the listed types of farming. The Department correctly 

interpreted this definition to mean selling horses is a farming activity but providing lessons, 

cottage rentals, and carriage rides is not. 

The situation here is similar to the one described in McKillips. See 72 B.R. at 568–69, 

which also addressed the allocation of farm and non-farm income in the context of breeding 

and raising horses. See id. The bankruptcy court determined training horses, which is fee based, 

is not a farming operation because it does not contain the same risks as farming. See id. In this 

case, the LaBries’ demonstrations, lessons, camps, and carriage rides are also fee based and do 

not qualify as farming. The reasoning is also consistent with Poe. 62 Collier Bankr.Cas.2d 365. 

Further, training horses does not fall under the traditional definition of farming. See McKillips, 

72 B.R. at 567–68. Indeed, the LaBries’ claims for farm-related activities are even further 

attenuated because they go beyond the fees charged for training horses, to include those 

associated with camp offerings, cottage rentals, and carriage rides. See id. at 567–69. In the 

absence of explicit statutory recognition, the Court cannot conclude that these activities are 

part of farming “in its ordinary and accepted sense.” 26 C.F.R. § 1.175–3. Rather, camps, 

cottage rentals, and carriage rides are more typical of resort activities than farming. 2

 

1 Mollica, does not compel a different conclusion. That case turned on the off-season use of the building, and did 

not involve the application of the income test at issue here. 

2

 The summary judgment record raises a significant question as to whether the LaBries are entitled to enrollment 

in the Current Use Program because they are operating a farm for pleasure. Under 26 C.F.R. § 1.175–3, a person 

who engages in farming for recreation or pleasure is not a farmer. In their memorandum of law, the LaBries wrote: 

“The LaBries, in their farm operation have suffered losses since 2002, and have no gross income as defined by the 

I.R.C.” The LaBries also stated the farm became operational in 2002. That is, the LaBries have never shown a profit 
 In sum, the Court grants summary judgment in favor of the Department because there 

are no material disputed facts and the Department is entitled to judgment as a matter of law. 

See V.R.C.P. 56(a); Lamay, 2012 VT 49, ¶ 6. The Court rests its decision on its interpretation of 

32 V.S.A. § 3742(7)(A) and 26 C.F.R. § 1.175–3 as excluding lessons, training, and cottage rentals 

as farming income. 3

Order

 The Court GRANTS Appellee’s motion for summary judgment. The appeal is DENIED,

and the Commissioner’s determination is SUSTAINED.

So ordered. 

Electronically signed on May 08, 2014 at 04:25 PM pursuant to V.R.E.F. 7(d). 

______________________________________ 

John P. Wesley 

Superior Court Judge 

Notifications: 

William M. McCarty (ERN 3621), Attorney for Plaintiff Dolores Labrie 

William M. McCarty (ERN 3621), Attorney for Plaintiff Robert A. Labrie 

Will S. Baker (ERN 3383), Attorney for Defendant Vermont Department of Taxes 

wesley 

 

in their business since it began operating twelve years ago. The Internal Revenue Code creates a presumption that 

a person engages in for-profit horse breeding if the person can show profit in two out of seven years. 26 U.S.C. § 

183(d). Where a person routinely fails to show a profit from horse breeding, the Internal Revenue Service may 

determine the person engages in a hobby rather than a for-profit activity. See Bronson v. Comm’r of Internal 

Revenue, T.C.Memo. 2012-17, *6 (T.C. 2012). Based on their representation of never making a profit from their

business, the Court might conclude the LaBries are not farmers because they raise horses for pleasure rather than 

for profit. However, the Court need not decide this issue because it would require further facts and the parties 

have not briefed it. 

3

 Although not raised by the parties, the Department would also be entitled to summary judgment on procedural 

grounds. Under V.R.C.P. 56(c)(1),(3), a party seeking to dispute a fact must attach a statement of disputed facts 

with citations to the record. Where a party fails to attach a statement of disputed facts, the Court may accept the 

facts recited in the statement of undisputed facts. See V.R.C.P. 56(e); Gallipo v. Rutland, 2005 VT 83, ¶¶ 31–33, 178 

Vt. 244. Here, the Department attached a statement of undisputed facts that indicated more than half of the 

LaBries’ gross income came from non-farm sources. See Appellee’s Statement of Undisputed Material Facts, ¶ 20. 

The LaBries did not attach a statement of disputed material facts, as required by V.R.C.P. 56(c)(1), and thus 

admitted this fact. See V.R.C.P. 56(e); Gallipo, 2005 VT 83, ¶ 33. The LaBries attempt to dispute the facts within 

their memorandum of law, without a separate statement of disputed facts together with citations to the record, is 

ineffective to create disputed facts.