[UPDATED] US v. Hall

Summarized by Louis Bubala , Kaempfer Crowell
15 years 7 months ago

Citation:

Ninth Circuit, Case No. 08-17267, Opinion, Aug. 16, 2010

Tag(s):

9th Circuit

Ruling:

The Court ruled that post-petition capital gains taxes from the sale of Chapter 12 debtors' farm are not dischargeable. Sections 1222 and 507 only provide for conversion of pre-petition taxes to dischargeable claims. Sections 1222, 507 and 503 also provide for such conversion of administrative expenses including taxes incurred by the estate, but Chapter 12 estate cannot incur taxes under the Internal Revenue Code. Judge Paez dissented that Congressional intent was clear that the taxes are dischargeable, as held by the Eighth Circuit and Tenth Circuit BAP.

Procedural context:

Appeal from District Court for the District of Arizona, reversing the Bankrupty Court's order sustaining the IRS' objection to the plan over treatment of the post-petition capital gains tax.

Facts:

Debtors filed Chapter 12 petitions, and the Bankruptcy Court approved the sale of their farm. The IRS asserted a post-petition capital gains tax. Debtor sought to treat the claim as unsecured, to be paid to the extent funds are available with the balance discharged.

Judge(s):

O'Scannlain (on panel, Trott) (dissenting, Paez)

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