- Case Type:
- Case Status:
- 18-10944 (11th Circuit, Jun 26,2019) Published
- The Eleventh Circuit affirmed the district court's order upholding the bankruptcy court's decision to deny a claim of exemption under section 222.21, Florida Statutes, by a chapter 7 debtor with respect to his independent retirement account, where the IRA had lost its federal tax-exempt status prior to the petition date and was not maintained in accordance with its own governing instrument because of the debtor's admitted self-dealing transactions with the IRA.
- Procedural context:
- Appeal from the United States District Court for the Middle District of Florida
- Chapter 7 debtor asserted a claim of exemption with respect to a self-directed IRA under section 222.21, Florida Statutes. The debtor opened the IRA in 2012, and its primary asset was a limited liability company. The debtor, through the LLC, then acquired a condominium in Puerto Rico and two vehicles for the debtor and his wife's personal uses, thereby rendering the IRA ineligible for federal tax-exempt status as of January 1, 2014, based on the debtor's self-dealing. Approximately thirteen months later, the debtor sought relief under chapter 7 of the Bankruptcy Code. The chapter 7 trustee objected to the debtor's claim of exemption with respect to the IRA. In response, the debtor argued that the IRA remained exempt under Florida law, even though it was operated in violation of the tax code, because the IRA's governing documents satisfied the requirements of the federal tax law. Following a trial, the bankruptcy court entered an order sustaining the trustee's objection and concluding that the debtor was not entitled to claim an exemption in an IRA that was not in compliance with the federal tax code, and the debtor appealed.
- Marcus, Grant, and Hull, Circuit Judges
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