                   IN THE COURT OF APPEALS OF IOWA

                                  No. 18-0001
                            Filed December 5, 2018


EDWARD J. KOVARIK,
    Plaintiff-Appellant,

vs.

IOWA DEPARTMENT OF REVENUE,
     Defendant-Appellee.
________________________________________________________________


      Appeal from the Iowa District Court for Howard County, Margaret L.

Lingreen, Judge.



      A taxpayer challenges orders by the Iowa Department of Revenue denying

him relief under the Iowa Tax Amnesty Act of 2007 and disallowing business losses

claimed in four tax years. AFFIRMED.



      Kevin E. Schoeberl of Story Schoeberl & Seebach, LLP, Cresco, for

appellant.

      Thomas J. Miller, Attorney General, and Hristo Chaprazov, Assistant

Attorney General, for appellee.



      Heard by Tabor, P.J., and Mullins and Bower, JJ.
                                         2


TABOR, Presiding Judge.

        Seeking tax amnesty was a costly move for Edward Kovarik. He petitioned

under the Iowa Tax Amnesty Act of 2007 and attached his state returns for 2003

through 2006. The Iowa Department of Revenue (the department) not only denied

amnesty but disallowed deductions claimed for business expenses on the attached

returns. Kovarik unsuccessfully pursued an administrative remedy and judicial

review.   He continues to challenge the revenue department decisions in this

appeal.

        Like the district court, we conclude the department correctly denied

amnesty, finding Kovarik failed to file his 2002 return and owed outstanding

obligations from the four following years. We also agree Kovarik must repay

amounts he improperly deducted as “hobby losses” in those tax years.

   I.      Facts and Prior Proceedings

        Kovarik grew up on an eighty-acre farm near Elma, Iowa. In his youth,

Kovarik helped out on the acreage and joined clubs such as 4-H and Future

Farmers of America. But after high school he left rural Iowa. He attended college

in Washington, D.C. and served in the United States Navy from 1956 to 1960.

        He spent his career in the railway industry. Because his work involved

transfers around the country, Kovarik ended up owning two condominiums—one

in Forest Park, Georgia, and one in Roanoke, Virginia. Kovarik retired in 1990 and

returned to Iowa. In his retirement, Kovarik continued to do consulting as a freight

car inspector. At first, he lived with his sister and her husband in Marion. When

his brother who stayed on the farm died in 2003, Kovarik stepped in to manage the

family’s land. Kovarik moved back to Howard County in 2006.
                                               3


       One year later, our legislature enacted the Iowa Tax Amnesty Act of 2007.

2007 Iowa Acts ch. 177. The program opened a narrow window for taxpayers to

meet delinquent liabilities with fifty-percent less interest and no penalties.1 The

program was available to taxpayers who had “tax liabilities delinquent as of

December 31, 2006, including tax due on returns not filed, tax liabilities owed to

the department as of December 31, 2006, or tax liabilities not reported nor

established but delinquent as of December 31, 2006.” Id. § 3. Taxpayers could

apply for amnesty from September 4 through October 31, 2007. Id.

       Kovarik applied on the last day. In his October 31 application, he checked

a box stating: “Return has not been filed.” Kovarik attached his unfiled return for

tax year 2006 and the amount due of $299.15 (including $293 in taxes and $6.15

representing “one-half interest”). He also attached copies of his filed tax returns

for 2003, 2004, and 2005—stating he owed no additional tax for those years.

       On November 9, the revenue department notified Kovarik his amnesty

request was under review. For its review, the department needed information

about his failure to file a 2002 Iowa tax return.2 The department also sought

documentation to verify the expenses Kovarik claimed on his filed tax returns. The

department set a fifteen-day deadline for Kovarik to respond.

       As the department awaited Kovarik’s response to its inquiry about the

unfiled 2002 return, it began scrutinizing his 2003 through 2006 filed returns.



1
  According to Dennis Schutt, a forty-year veteran of the Iowa Department of Revenue,
the Act’s purpose was to “encourage people to file correct returns” and “pay the tax and
half the interest.” Schutt testified the 2007 Act required taxpayers to file all missing returns
with the department to qualify for amnesty.
2
  The department’s query of the Internal Revenue Service (IRS) showed no federal 2002
return on file for Kovarik.
                                           4


There, the department “discovered a pattern of substantial losses and little or no

income being reported on them,” according to investigator Schutt. Kovarik had

reported losses for his railway consulting business, condominium rentals, and the

farming operation.

         After some back and forth with Kovarik, the department denied his request

for tax amnesty in late November 2007. The department reasoned Kovarik did not

qualify for amnesty because he did not file a 2002 Iowa individual income tax

return. The department also disallowed Kovarik’s claimed business losses for

2003 through 2006. As a result, the department assessed Kovarik additional

income tax, penalty, and interest for those four years totaling $13,182.98.

         Kovarik filed an unsuccessful protest.   An administrative law judge (ALJ)

affirmed the denial of amnesty and found the additional assessment to be

“essentially correct.” The ALJ noted the “unpaid tax liability” from 2003 through

2007 provided the department “an additional basis for denial of Kovarik’s

application for amnesty.” The ALJ’s proposed order directed the department to

revise the assessment to allow Kovarik to deduct expenses related to his rental of

the tillable farmland. The department’s director affirmed the ALJ’s proposed order.

Kovarik sought judicial review. The district court affirmed the director’s final order.

Kovarik now appeals the judicial review.

   II.      Scope and Standards of Review

         The Iowa Administrative Procedure Act governs our review. Iowa Code

§ 17A.19(10) (2017); Nance v. Iowa Dep’t of Revenue, 908 N.W.2d 261, 267 (Iowa

2018) (citing Lange v. Iowa Dep’t of Revenue, 710 N.W.2d 242, 246 (Iowa 2006)).

In reviewing the judicial review order, we act in the same appellate capacity as the
                                         5

district court. Nance, 908 N.W.2d at 267. If we reach the same conclusions as

the district court did about the agency action under the administrative standards,

we affirm. Id. Otherwise we reverse. Id.

      Several different standards are at play here. The first question is whether

substantial evidence supported the department’s action.           See Iowa Code

§ 17A.19(10)(f).   Evidence is substantial if its quantity and quality “would be

deemed sufficient by a neutral, detached, and reasonable person, to establish the

fact at issue when the consequences resulting from the establishment of that fact

are understood to be serious and of great importance.” Id. § 17A.19(10)(f)(1).

When we assess the evidentiary support for the agency’s fact findings, we consider

proof detracting from those findings, as well as evidence in support of them.

Nance, 908 N.W.2d at 267 (citing Lange, 710 N.W.2d at 247). We defer to

credibility determinations by the “presiding officer” who had an opportunity to

observe the demeanor of the witnesses. Id. (citing Lange, 710 N.W.2d at 247);

see also Iowa Code § 17A.19(10)(f)(3).

      The second question is whether the department properly applied the law to

the facts—an application vested in the department’s discretion. See Nance, 908

N.W.2d at 267. So we only reverse the department’s application of the law to the

facts if we determine the application was “irrational, illogical, or wholly

unjustifiable.” See id. (citing Iowa Ag Constr. Co. v. Iowa State Bd. of Tax Review,

723 N.W.2d 167, 174 (Iowa 2006)); see also Iowa Code § 17A.19(10)(m).

      The third question involves a constitutional challenge. We review de novo

the taxpayer’s claim the department violated his right to due process by not
                                             6

allowing him enough time to show he was eligible for tax amnesty. See ABC

Disposal Sys., Inc. v. Dep’t of Nat. Res., 681 N.W.2d 596, 605 (Iowa 2004).

   III.      Discussion

   A. Amnesty

          Kovarik first contests the denial of his application for tax amnesty. Before

addressing his points of contention, we pause to consider the purpose of offering

amnesty to delinquent taxpayers.

          In May 2007, Iowa joined a growing number of states implementing tax

amnesty programs. See Jason A. Bremer & Belinda S. Morgan, States Adopt A

Profitable “Carrot and Stick” Approach to Tax Amnesty, J. Multistate Tax’n, July

2004, at 6, 8 (observing “state legislatures are increasingly turning to tax amnesty

programs as a means of immediately pumping much-needed cash into their state

treasuries”). “Generally speaking, tax amnesty programs raise short-term revenue

by inducing taxpayers to come forward and pay outstanding tax liabilities.” Id. at 8.

Iowa’s amnesty program followed that norm. In the words of investigator Schutt,

Iowa taxpayers were “given a chance to wipe their slate clean” if they filed all the

required returns.

          Under the Iowa Act, delinquent taxpayers could apply for amnesty subject

to some restrictions:

                  The tax amnesty program shall provide that upon written
          application by a taxpayer and payment in full by the taxpayer of
          amounts due from the taxpayer to this state for a tax covered by the
          tax amnesty program plus interest equal to fifty percent of the interest
          that is due, the department shall not seek to collect any other interest
          or penalties which may be applicable. The department shall not seek
          civil or criminal prosecution for a taxpayer for the period of time for
          which amnesty has been granted to the taxpayer. Failure to pay all
          tax liabilities due the state and delinquent as of December 31, 2006,
                                            7

       shall invalidate the amnesty. Amnesty shall be granted for only the
       periods specified in the application and only if all amnesty conditions
       are satisfied by the taxpayer.

2007 Iowa Acts ch. 177, § 3 (emphasis added).

       Here, the department determined Kovarik did not qualify for amnesty

because he failed to file his 2002 Iowa individual income tax return. On appeal,

he attacks that determination on both factual and legal fronts.3

       Starting with the factual argument, Kovarik asserts he filed his 2002 Iowa

return “with no tax due.” But he blames trouble with records retention as the reason

he cannot produce proof of that filing.4 He also asserts IRS publications suggested

he need only retain records for three years. He alleges these circumstances

constituted “good cause” for not filing his 2002 return.5 From this premise, he

asserts the department should have granted amnesty.

       As noted above, the ALJ’s credibility findings command deference under

our substantial-evidence review.       See Iowa Code § 17A.19(10)(f)(3).           Noting

Kovarik did not produce a copy of a 2002 return and the department and the IRS

had not record of receiving a return, the ALJ decided “the preponderance of

evidence in the record supports the department’s finding that Kovarik did not file

an Iowa tax return for the 2002 tax year.” See Broadlawns Med. Ctr. v. Sanders,

792 N.W.2d 302, 306 (Iowa 2010) (noting we give deference to credibility


3
  Additionally, Kovarik asserts the ALJ “never affirmed the department’s denial” of his tax
amnesty application. The record disproves this assertion. In her conclusions of law, the
ALJ wrote: “the [d]epartment acted correctly in denying his amnesty application based
upon his failure to file an Iowa return for the 2002 tax year.”
4
  Kovarik alleges he could not recreate his 2002 tax return because he lost his records in
a 2012 burglary at the farmstead. But the department first asked for more information
from Kovarik in November 2007.
5
  As the department points out in its appellee’s brief, the 2007 Amnesty Act does not
mention “good cause” as an excuse for not filing a state tax return.
                                           8


determinations of the “presiding officer”).        Giving due deference, we find

substantial evidence supports the finding Kovarik did not file a 2002 return.

       Next we turn to the application of law to that fact.          See Iowa Code

§ 17A.19(10)(m). Kovarik argues the 2007 Act “does not specifically state that

unfiled tax returns will result in the denial of the application for tax amnesty.”

Rather, he reads the Act’s “amnesty conditions” as including: (1) filing an

application; (2) paying taxes that are due; and (3) filing those returns that are

required.6 Kovarik maintains he complied with these conditions.

       In response, the State highlights this amnesty restriction: “Failure to pay all

tax liabilities due the state and delinquent as of December 31, 2006 shall invalidate

the amnesty.” 2007 Iowa Acts Ch. 177, § 3. Based on that restriction, the State

believes Kovarik’s failure to file his 2002 Iowa return “proved fatal to his tax

amnesty application because the only way for [him] to prove that he did not have

a delinquent tax liability as of December 31, 2006 related to tax year 2002 was to

file his 2002 Iowa return.” In addition to the failure to file his 2002 return, both the

ALJ and district court cited Kovarik’s unpaid tax liabilities for 2003 through 2006 as

another ground for denying his amnesty application.

       Like the district court, we conclude the director properly upheld the denial

of Kovarik’s tax amnesty application.          The department’s decision was not

“irrational, illogical, or wholly unjustifiable.” See Iowa Code § 17A.19(10)(m). The

2007 Act required taxpayers to pay all outstanding tax liabilities as of December




6
   The ALJ reasoned: “Given Kovarik’s ongoing income, he would have been required to
file an income tax return in 2002.”
                                          9


31, 2006, to qualify for amnesty. Because Kovarik owed additional amounts on

his state tax bill, the department could deny his application.

       Finally, Kovarik raises a procedural due process challenge.7 See generally

Iowa Code § 17A.19(10)(a). Specifically, Kovarik complains the department gave

him only fifteen days to secure a copy of his missing 2002 return. But Kovarik

notified the department within eleven days he no longer had the paperwork to

recreate his 2002 return. He did not ask for an extension or otherwise challenge

the reasonableness of the department’s deadline. He also fails to establish how

more time would have helped him. The department held a hearing and considered

his position. On this record, Kovarik cannot show the department’s deadline

violated his right to procedural due process. See Behm v. City of Cedar Rapids,

___ N.W.2d ___, ___, 2018 WL 4178517, at *33 (Iowa 2018) (explaining

procedural due process claim cannot focus on only part of the process afforded,

“but must consider the entire panoply of available procedures”).

       Because Kovarik fails to prove he is entitled to relief under any subdivision

of section 17A.19(10), we affirm the director’s denial of tax amnesty.

    B. Business Losses for Railroad Consulting And Condominium Rental

       Kovarik next argues the director wrongly decided he could not deduct

business losses related to his railroad consulting activities and condominium

rentals.   In challenging the tax assessments resulting from the department




7
 Procedural due process requires notice and opportunity to be heard in a proceeding
adequate to safeguard the constitutional protection invoked. See State v. Seering, 701
N.W.2d 655, 666 (Iowa 2005) (quoting Bowers v. Polk Cty. Bd. of Supervisors, 638 N.W.2d
682, 691 (Iowa 2002)), superseded by statute on other grounds, 2009 Iowa Acts ch. 119,
as recognized in In re T.H., 913 N.W.2d 578, 587–88 (Iowa 2018).
                                            10

disallowing his claimed expenses, Kovarik bears the burden of proof.                   See

Camacho v. Iowa Dep’t of Revenue & Fin., 666 N.W.2d 537, 542 (Iowa 2003).

        But before we address the particulars of his argument, we look first to the

law on “hobby losses.” See 26 U.S.C. §§ 162, 183(a) (2006).8 Under our state

statutes, the starting point for calculating taxable income is the adjusted gross

income “as properly computed for federal income tax purposes under the Internal

Revenue Code.”        Iowa Code § 422.7.         The Internal Revenue Code allows

taxpayers to deduct their ordinary and necessary business expenses. See 26

U.S.C. § 162(a). Deductibility depends on whether the taxpayer engaged in the

activity for profit. Comm’r v. Groetzinger, 480 U.S. 23, 35 (1987). Taxpayers don’t

need to have “a reasonable expectation of a profit.” Meinhardt v. Comm’r, 766

F.3d 917, 919 (8th Cir. 2014) (quoting DKD Enters. v. Comm’r, 685 F.3d 730, 735

(8th Cir. 2012)). But they must have “a good faith intention of making a profit or of

producing income.” Id. (quoting DKD Enters., 685 F.3d at 735). When deciding if

the taxpayer was operating with “a genuine profit motive,” the factfinder is not

bound by the taxpayer’s stated intention. Id. (quoting DKD Enters., 685 F.3d at

735).

        To help apply the profit-motive standard, the IRS drafted a list of nine factors

based on a body of case law. Portland Golf Club v. Comm’r, 497 U.S. 154, 175

(1990). The factors include: (1) how the taxpayer carries on the activity; (2) the



8
  In passing section 183, Congress wanted to prevent taxpayers from taking deductions
for activities carried on as hobbies rather than businesses. Thomas J. Gallagher, 10 Am.
Jur. 2d Proof of Facts § 165 (1976 & Supp. Sept. 2018). This “hobby loss” provision aimed
to ensure that taxpayers did not aggregate their personal activities of taxpayers with their
income-producing activities. Id. Subject to exceptions, section 183 allows deductions for
activities only if they are engaged in for profit. Id.
                                         11


taxpayer’s expertise; (3) time and effort expended by the taxpayer in carrying on

the activity; (4) the expectation assets used in the activity may appreciate in value;

(5) the success of the taxpayer in conducting similar or dissimilar activities; (6)

history of taxpayer income and losses from the activity; (7) the amount of

occasional profits earned, if any; (8) the taxpayer’s financial status; and (9)

personal pleasure or recreation derived from the activity. Id. (citing 26 C.F.R.

§§ 1.183–2(b)(1)–(9)). As discussed below, the department properly applied this

test in determining Kovarik was not operating with a sincere profit motive when he

claimed business losses for his consulting and condominium-rental activities.

       1. Railroad Consulting

       After retiring in 1990 from his long-held railroad job, Kovarik did consulting

as a freight car inspector. He worked through a firm that put him in touch with

manufacturers who needed inspections. The first few years of consulting were

busy ones, according to Kovarik. But then demand dwindled. Kovarik attended a

rail association trade show each year in an attempt to cultivate contacts but was

unsuccessful in drumming up much business. In information he provided to the

department in 2009, Kovarik acknowledged he had not realized a profit from

consulting for any of the seventeen years he had been conducting the activity.

       On his Schedule C, Kovarik reported $7380 in income from rail car

inspections in 2004 but no income from this activity in 2003, 2005, or 2006. At the

same time, he reported business expenses for his consulting efforts totaling

$45,021.59 for those four years. The expenses included travel, lodging, meals,

and work clothing. Given the claimed expenses, his net losses—disallowed by the

department—totaled $37,641.59.
                                         12


       The ALJ’s decision, affirmed by the director, carefully stepped through each

of the nine factors listed by the IRS in determining if Kovarik undertook the

consulting activity with a true profit motive. An abbreviated version of that analysis

follows:

       (1) Kovarik’s manner of carrying out the activity weighed heavily against

finding he aimed to make a profit. His recordkeeping was unprofessional. He did

not plan the logistics well. Kovarik made little effort to reduce overhead. And he

did not adapt to a changing market.

       (2) Kovarik’s expertise likewise did not support a profit motive. Kovarik

brought substantive knowledge of rail inspections to the endeavor but had no

background in operating a profitable consulting business.

       (3) The time and effort Kovarik expended did not reveal an intent to derive

a profit from the consulting business. He worked an estimated 300 hours in 2004

but had no income from inspections in the other three tax years at issue. Still, he

incurred the expense of monthly visits to the Forest Park condominium.

       (4) Because Kovarik purchased no assets for the consulting business,

appreciation of asset value was not relevant.

       (5) Kovarik offered no evidence of other relevant business ventures.

       (6)–(7) Kovarik experienced a history of losses with no occasion for profit,

despite his testimony that business boomed in the early years. These factors tilted

against finding he intended to turn a profit in consulting.

       (8) Kovarik’s financial status neither bolstered nor undermined his intent to

profit from consulting. As the ALJ found, “Kovarik does not appear to be a rich
                                              13


man.” That said, his income from his railroad pension and other retirement funds

were enough to provide him with “a comfortable living in rural Iowa.”

       (9) Whether Kovarik engaged in consulting for personal pleasure or

recreation rather than profit was hard to gauge. The ALJ believed he likely enjoyed

attending the conventions and maintaining contact with others in the rail industry.

       All told, these factors supported the ALJ’s conclusion Kovarik lacked a good

faith intention to profit from his consulting business—at least during the tax years

at issue. The conclusion was logical and based on largely undisputed facts. See

Iowa Code § 17A.19(10)(m). It was not unreasonable, capricious, or an abuse of

discretion. See § 17A.19(10)(n). As a result, we must affirm on this issue. Next

up is the second category of disallowed expenses.

       2. Condominium Rental

       While working out of Atlanta early in his career, Kovarik purchased a

condominium in the suburb of Forest Park, Georgia. It served as his primary

residence from 1974 through 1984, when his company transferred him to Virginia.

He then purchased a second condominium in Roanoke, where he lived until his

retirement in 1990. He did not sell either condominium when he moved back to

Iowa. And he still owned both condominiums during the tax years at issue.

       Kovarik said he kept the Roanoke condominium as rental property. He

considered the Forest Park condominium as “potential” rental property but also

used it as the headquarters for his consulting business.9 He did little to market the

properties. As a result, Kovarik was unsuccessful in leasing either condominium


9
  Kovarik reported utility costs and mileage for trips to the Georgia property for his rail car
inspections.
                                         14


during the tax years at issue. Yet Kovarik made regular trips to Virginia and

Georgia to inspect the condominiums. On his Schedule E, Kovarik reported travel

expenses for these inspections, as well as expenses for mortgage interest,

property insurance, management fees, utility costs, depreciation, and furniture

storage. For the Roanoke property, Kovarik reported total expenses and net

losses of $68,241.40 for 2003 through 2006.

       Like the analysis of the consulting business—but in an even more

pronounced fashion—the ALJ found the nine-factor test tipped away from a true

profit motive behind Kovarik’s real estate holdings.         For instance, the ALJ

observed: “Kovarik offered no evidence to support a finding that he approached

rental of the Roanoke condominium in a businesslike manner.”             He had no

experience in renting residential real estate and sought no professional expertise.

He traveled quarterly to inspect the property but stayed no longer than a day or

two. The modest appreciation of the property did not speak to Kovarik’s intent to

profit from its rental. In fact, the properties showed a history of uninterrupted

losses. And while he did not use the property for vacations, he also did not secure

rental income. The ALJ’s conclusions, adopted by the director, were reasonable,

justified, and within the department’s broad discretion. We affirm on this issue.

     C. Business Losses for Farmland Rental

       In his final issue, Kovarik alleges the director made a mistake in disallowing

certain farm-rental losses. Kovarik took over as the farm manager when his

brother James died in March 2003.10


10
   In his will, Kovarik’s brother named Kovarik and his sister as beneficiaries of the
farmland. His estate remained open until 2008. Neither Kovarik nor the department
                                           15


       Kovarik reported personal expenses associated with the farming operation

on his Schedule F totaling $92,836.84 for tax years 2003 through 2006.11 For the

same time period, he reported farm-rental income of $17,340—for a net loss of

$75,496.84.

       The department disallowed his entire reported loss. To a small degree, the

ALJ disagreed. The ALJ summed up her disagreement: “Cash rental of the tillable

land on a farm was a business pursuit engaged in for profit and a deduction of

ordinary and necessary expenses related to this activity should have been

allowed.” The ALJ directed the department to reduce the tax assessments based

on adjustments to the net losses related to the tillable land. The ALJ’s proposed

order specified two-thirds of Kovarik’s expenses for travel to the farm and the entire

amount of reported expenses for rental of vehicle or equipment, repairs, storage,

and utilities be disallowed. The ALJ reasoned Kovarik was unable to explain how

many of his claimed expenses “related to the rental of the farmland in any way.”

       On appeal, Kovarik claims the ALJ allowed the department to pursue a new

issue after the administrative hearing. The new issue, in his estimation, centered

on the “excessive” nature of the farm-related expenses claimed on his Schedule F.

He maintains this procedure violated his right to due process. See Wedergren v.

Bd. of Dirs., 307 N.W.2d 12, 16 (Iowa 1981) (“To comport with due process, a


offered evidence showing when the estate transferred the land to the beneficiaries. The
ALJ noted: “Even though the farmland was part of the James Kovarik estate for at least a
portion of the assessment period, [Edward] Kovarik treated it as property that he owned.”
But at oral arguments, the department conceded the ALJ did not consider that
circumstance when analyzing the validity of the farm-related deductions.
11
   As the district court noted, Kovarik’s claimed expenses included “mileage for travel to
inspect the property; the cost of insurance, taxes, and utilities (2003 only); storage and
warehousing; the cost of constructing the building (2003-2004 only); vehicle and
machinery rental fees; repairs and maintenance.”
                                         16


person must ordinarily be informed somehow of the issues involved in order to

prevent surprise at the hearing and allow an opportunity to prepare.”).

       The department disputes Kovarik suffered any surprise from the inquiry into

the deductibility of his claimed expenses at the contested case hearing. As the

ALJ noted, Kovarik had notice before the hearing that the department doubted the

deductibility of his farm-related expenses.       At the hearing, Kovarik fielded

questions about his travel—two or three times per week from Marion to Howard

County (a roundtrip of 240 miles)—to check on the farmhouse and storage. For

instance, the department’s attorney asked: “But that wasn’t really related to your

business of renting out the farmland was it?”        Kovarik answered: “Check on

conditions of the farm. I don’t know what the conditions of the fences were, or

maybe if somebody else was in there.” The attorney followed up: “And that didn’t

strike you as excessive?” Kovarik answered: “No because other people were

doing it.” Kovarik’s counsel did not object to this line of questioning.

       In our de novo review of his constitutional claim, we conclude Kovarik has

not shown the department deprived him of notice or an opportunity to be heard on

the claimed farm-related expenses.          Kovarik had ample warning and an

opportunity to respond to the department’s questions about the frequency of his

travels to the farm, as well as the storage, warehousing, and machinery expenses.

       In the alternative, Kovarik argues we should reverse the director’s decision

under subsections (a), (b), (d), (f), (m), and (n) of section 17A.19(10). But Kovarik

fails to flesh out his argument under any of these provisions. Our supreme court

has determined the “widely varying standards of review” for different mistakes

alleged under 17A.19(10) make it “essential for counsel to search for and pinpoint
                                         17

the precise claim of error on appeal.” Jacobson Transp. Co. v. Harris, 778 N.W.2d

192, 196 (Iowa 2010).      Absent that precision, we cannot entertain Kovarik’s

request to upend the director’s determination of allowable farm-related expenses.

       And even if we could process Kovarik’s general complaint, no basis for

reversal appears. The ALJ carefully analyzed whether expenses were ordinary

and reasonable in carrying out the farm-rental business. The ALJ treated the

farmhouse and non-income-producing portions of the farmstead separately from

the leased, tillable acres. This separate treatment was justified under persuasive

precedent examining comparable facts. See Meinhardt, 766 F.3d at 921 (rejecting

taxpayers’ argument leasing farm land and personal use of the farmhouse were

one activity).

       When examining the cash-rental activities, the ALJ recognized responsible

land owners would routinely monitor the activity of a tenant, ensuring maintenance

such as weed control and timely planting and harvest. But the ALJ found “no

logical reason” to inspect the farm several times per week. The ALJ noted Kovarik

offered no measure for discerning how much travel related to business purposes.

The department conceded one-third of Kovarik’s travel expenses related to

supervision of the cash-rental tenant. The ALJ accepted that concession as a

“generous view” of the allowable deductions.

       The ALJ also concluded the expenses claimed for maintaining the

homestead and storing personal property, such as vintage tractors, were unrelated

to the cash-rental farm business.      Because the ALJ’s order, adopted by the

director, was rational and logical, we decline to reverse.

       AFFIRMED.
