In re Middendorf, (Bkrtcy.D.Kan.)

Bankruptcy Estate - Court allocates tax refund utilizing "calendar day" method to determine estate's interest therein.

A tax refund to which Chapter 7 debtors were entitled as a result of their overpayment of federal income taxes, both as a result of wage withholding that occurred both pre- and postpetition and due to the debtors' estimated prepayment of taxes, using prepetition income, shortly after realizing a profit from the sale of stock, had to be allocated between the pre and postpetition periods, for purpose of determining what portion of the refund was estate property and what portion was the debtors' separate property. To make this allocation, a bankruptcy judge in Kansas used the "calendar day" method to calculate the amount of taxes that debtors had paid prepetition, either by wage withholding or through their estimated payment, and then subtracted the debtors' total tax debt for the year. The difference was the amount of the refund that was included in property of the estate.

Date of the decision: 2/13/08

Full opinion click here.

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

For full opinion click here.