2A • THURSDAY, JANUARY 13, 2011
SALISBURY POST
S TAT E
Mogul behind Murphy Family Farms loses IRS tax fight RALEIGH (AP) — Former pork mogul Wendell H. Murphy and his family have lost a four-year legal battle with the Internal Revenue Service over a tax shelter created after the 2000 sale of their business empire. A federal judge in Washington, D.C., sided in August with the IRS, which claimed the tax shelter was “an economic sham,” The News & Observer of Raleigh reported Wednesday. Murphy, whose company pioneered the factory-style hog farms that now dominate the industry, sought to overturn an IRS claim that he and his family owed $26 million
in taxes, plus a penalty estimated at about $10 million. The case involved an attempt to shield some of the assets from the sale of No. 2 hog producer Murphy Family Farms to Smithfield Foods in 2000 for more than $450 million in stock and assumed debt. The sale excluded assets that Smithfield didn’t want, and those assets were then distributed to Murphy and seven members of his family. Receiving those assets generated substantial tax ramifications that surprised the Murphys, according to court documents. The family turned to accounting firm Ernst & Young, which for $2
million created a tax shelter designed to enable the Murphys to report on their tax returns losses of $100 million. Tax shelters are used by wealthy individuals to eliminate, reduce or defer tax liabilities on annual income. The IRS determined the investment partnerships the family formed “had no business purpose other than tax avoidance, lacked economic substance, and, in fact and substance, (constitute) an economic sham for federal income tax purposes.” In September 2009, the Murphys conceded the IRS properly assessed their tax bills when it disallowed the
losses generated by the tax shelter. The Murphys continued to dispute the IRS assessing a 40 percent penalty. Judge Edward Damich upheld the penalty after a two-week trial, ruling that the family failed to show that it acted in good faith. Wendell Murphy says the family decided against appealing the ruling because success seemed unlikely. Murphy said he and his family relied on “trusted advisers” at Ernst & Young. “They were wrong so, ultimately, we were wrong,” he said. The family continues to challenge an IRS bill to reimburse $146,702 in
court costs such as trial transcripts and witness fees but excluding attorneys’ fees. Murphy is a former state senator and former chairman of the board of trustees at North Carolina State University. The 1960 NCSU graduate’s name is fixed on the football center at Carter-Finley Stadium. The News & Observer won the Pulitzer Prize for public service for its 1995 investigative series examining intensive hog growing methods, profiling Murphy, and describing his sponsorship of state laws that exempted hog operations from local zoning laws and tougher environmental regulations.
STUDENTS
Snow causing more trouble in mountains
FROM 1a more options. “We do have flexibility to revise schedules and do interesting things like take trips, go to events, libraries, planetariums, etc,” he told the Post in an e-mail. “The flexibility is something valuable in an otherwise rigid and too much of a ‘mono-view’ society.” Mary Wilhelm, director of the countywide home school co-op, said she follows a strict schedule, only nixing class in extreme circumstances. “The only time we’ve ever canceled school due to weather is when it involves a power outage,” she told the Post in an e-mail. “That definitely disrupts the school day.” Wilhelm said a few disruptions kept her boys from finishing their work early enough Monday to play in the snow. But in the past they have gotten up early to knock out their school work. “We have always had a full school day, but knowing they could play in the snow gave them the extra incentive needed to stay focused and get their work completed early so they could enjoy the benefits of a snow day without losing instructional time,” she said. Fink, who serves as vice president of the Rowan County Home School Association, said she can fashion a lesson out of almost anything, includ-
Sara Fink, 12, checks on her new 3-week-old brother, Levi, as Seth does school work at the dining room table.
“The only time we’ve ever canceled school due to weather is when it involves a power outage. That definitely disrupts the school day.” MARY WILHELM director of the countywide home school co-op WAYne hinshAW/FOR the SaLISBURY POSt
During a break from studies, Seth Fink, 8, slides in the drivesnowballs” with her brothers. way at their home in Cleveland. ing a snow day. “In our family we do take one or two snow days just to enjoy the snow,” she said. “You can still get some learn-
ing in while they’re out playing. Children like hands on things.” Sara Lynn said she’s been “running around throwing
The boys said they’ve mastered building an igloo and snow fort. Tammy Brown, president of the county Home School Association, said this week has-
n’t been “totally business as usual” for her children, Chandler, 10, Gabrielle, 8, and Cameron, 5. “All children enjoy playing in the snow and my children love going to see grandpa and sliding down his big hill,” she said. Brown, who has more than 15 years of experience in the education sector, said finding “teachable moments” is at the heart of every experience her children encounter. “I think in home school every day is a lesson,” she said. “It’s a lifestyle of learning, so it’s taking anything that comes up that is part of nature and seizing the moment to teach.” Contact reporter Sarah Campbell at 704-797-7683.
RALEIGH (AP) — Roads across North Carolina are getting back to normal after the first major winter storm of 2011, but problems are lingering in some areas. Snowfall is continuing in parts of the western mountains, especially around Haywood County. The snow isn’t supposed to stop falling until later today. The state Department of Transportation says secondary roads in the southeastern part of the state also need more work to remove ice and snow. Sampson, Duplin, Onslow, Pender and Robeson counties were especially hard hit by the storm. Asheville has seen four storms since the beginning of December, and crews have only had a few normallength work days since Christmas, with most days seeing teams managing roadways around the clock. Cathy Ball, the director of Public Works for the city, said she expects that will continue until later today or Friday. The heavy workload is pushing the department’s overtime budget to its annual allotment.
Annual budgets for handling snow, ice take a hit RALEIGH (AP) — Treacherous road conditions are forcing the state transportation department and some cities and towns to deplete their annual budgets for handling snow and ice, even though two months of winter remain. After dealing with a series
of winter storms, North Carolina’s Department of Transportation had already spent more than $25 million on managing slippery roadways through the end of last week, much of it during the major storm that began Christmas Day. The department typically gets $30 mil-
Posters • The Dixonville-Lincoln Community Association will meet at 5 p.m. Saturday at Hall’s Chapel Primitive Baptist Church.
Lottery numbers —
RALEIGH (AP) — These North Carolina lotteries were drawn Wednesday: Cash 5: 05-24-26-28-29 Pick 4: 1-8-6-5 Evening Pick 3: 3-5-1 Midday Pick 3: 4-1-0 Powerball: 19-21-23-40-48, Powerball: 27, Power Play: 4
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lion for winter work through the fiscal year ending in June. Cleanup costs for the storm that snarled traffic this week work won’t be available for days, but DOT spokesman Steve Abbott said it will likely push the department over the $30 million mark.
Getting mother to hospital for baby’s birth no easy task in storm HARTFORD, Conn. (AP) — As the third snowstorm in three weeks rolled up the East Coast early Wednesday, Josh Clukey realized he would have no choice but to venture out: His pregnant wife was showing signs of labor. Sometime after midnight, the couple bundled up and left their home in Eastford for a hospital in Willimantic, normally a 25minute trip. Instead it was a harrowing hour. “It was dark, and the snow was blowing all over the place. I drove really slow,” said Clukey, 24, whose son, Ryland James, was born a few hours after dawn. “There was maybe only about 6 inches on the roads at the time, but the plows hadn’t come out yet.” The storm buried parts of the Northeast in more than 2 feet of snow, smothering highways, halting trains and plunging thousands of homes and business into cold darkness. The storm, which iced over much of the South before sweeping up the coast, wreaked havoc on transportation across southern New England. In Massachusetts, Gov. Deval Patrick declared a state of emergency and mobilized the National Guard. He said the storm brought more snow and a wetter kind of snow than officials expected, leaving more than 100,000 people without power or heat by noon. In New York, where city leaders took heavy criticism for their slow work after a Dec. 26 blizzard, officials rolled out a massive response that quickly cleared the streets.
sArAh cAmpbell/SaLISBURY POSt
Kiersten hyde, a 9-year-old student at Koontz elementary, works out on a stationary bicycle using a Playstation game in the X-arcade at the J.F. hurley Family YMCa.
DAYS
ting the opportunity to play the Wii was one of the highlights of their week.
FROM 1a
Making up days
games. “We came here today because we didn’t have anything to do,” she said. Black’s daughter, Destiny Black-Walker, 9, who attends Hanford-Dole Elementary School, said she’s been entertaining herself by playing with her Barbie dolls, riding her bike and playing with the family’s dog, Pooch. Cindy Corby spent Wednesday with her grandson, Taylor Corby, 6, who attends Hanford-Dole. She said they’ve been enjoying the snow and playing board games. “We spent the day at the library and we’re off to see ‘Yogi Bear’ after this,” she said. Despite the quality time together, Corby admits she’s “definitely ready for them to go back (to school).” Nine-year-old Kiersten Hyde, a student a Koontz Elementary, said he’s anything but ready to go back to class. “I enjoy being at home,” he said. “I enjoy seeing my brother and sister and I get to spend time with my family.” Kiersten said he’s been having snowball fights with his brother, Cameron Hyde, 7, and drinking hot cocoa to stay warm. He spent part of the day at the Y on Wednesday riding a stationary bicycle hooked to a Playstation. “It’s really fun,” he said. Kiersten’s brother, Cameron, chose to play Wii bowling with Samantha Shimberg, a student at Hanford-Dole, instead of tackling the bicycle. Cameron and Samantha agreed that get-
Rowan-Salisbury students will spend one Saturday — Jan. 22 — in class. Scheduled teacher workdays on Jan. 21 and Feb. 21 will also be used as make-up days. Rita Foil, the district’s public information officer, said a makeup day for today’s canceled classes has yet to be decided. “It will be announced later,” she said. “When we kind of get through all the results of this storm then we’ll review the options and come up with a decision.” The Kannapolis Board of Education will have an emergency meeting at 11 this morning to discuss changes to the school calendar. The school system has already announced Tuesday and Feb. 21 as makeup days, but will have to make a decision about additional days. State law mandates students attend school a minimum of either 180 days or have 1,000 hours of instruction. Foil said the only body that could decide that students don’t have to make up school days missed due to inclement weather is the state legislature. “Right now that’s not an option,” she said. Vanessa Jeter, director of the North Carolina Department of Public Instruction’s Communications and Information Division, said the only time during her 20-year tenure that she’s seen make-up days waived was after Hurricane Floyd dumped massive amounts of rain on eastern North Carolina, causing severe flooding, which became a public health concern. Contact reporter Sarah Campbell at 704797-7683.