Supreme Court Rules on Treatment of Taxes Arising from Sale of Farm Assets During Chapter 12 Bankruptcies

By Hamid R. Rafatjoo and Rob L. Smith

On May 14, the Supreme Court ruled in Hall v. United States, 132 S. Ct. 1882, that capital gains taxes incurred by individuals who had filed bankruptcy under Chapter 12 of the bankruptcy code were not taxes “incurred by the estate” and were therefore non-dischargeable under section 1222(a)(2)(A) of the code. This ruling has significant impact on family farmers and fisherman who are contemplating filing for relief under Chapter 12.
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