In re Schilke Case No: 056-41813

Under a Code provision added by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), that allows Chapter 12 debtors to pay, as general unsecured debts not included among the priority claims that otherwise must be paid in full, any debt "owed to a governmental unit that arises as a result of the sale, transfer, exchange, or other disposition of any farm asset used in the debtor's farming operation," a Chapter 12 debtor was entitled to pay, as a general unsecured claim not entitled to priority, a capital gains tax that arose in connection with the postpetition sale of real estate and other farm assets to fund the debtor's plan, even though the debtor's Chapter 12 estate was not a separate taxable entity. The bankruptcy estate need not be a separate taxable entity in order for taxes to be "incurred by the estate" and thus entitled to priority under 11 U.S.C.A. 503(b)(1)(B).

Date of decision: 11/28/07

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