Lynwood D. Hall, et Ux., Petitioners v. United States (566 U.S. 506)
U.S. Supreme Court · decided May 14, 2012 · Supreme Court Database (Spaeth)
- Citation
- 566 U.S. 506 · 132 S. Ct. 1882
- Decided
- May 14, 2012
- Term
- October Term 2011
- Vote
- 5–4
- Majority author
- Justice Sotomayor
- Issue area
- Federal Taxation
- Disposition
- Affirmed
- Outcome
- Petitioning party lost
- Ideological direction
- Liberal
Opinion excerpt
Justice Sotomayor delivered the opinion of the Court. Under Chapter 12 of the Bankruptcy Code, farmer debtors .may treat- certain claims owed to a governmental unit resulting from the disposition of farm assets as discharge-able, unsecured liabilities. 11 U. S. C. § 1222(a)(2)(A). One such claim is for “any tax . . . incurred by the estate.” § 503(b)(l)(B)(i). The question presented is whether a federal income tax liability resulting from individual debtors' sale of a farm during the pendency of a Chapter 12 bankruptcy is “incurred by the estate” and thus dischargeable. We hold that it is not. I A In 1986, Congress enacted Chapter 12 of the Bankruptcy Code, §1201 et seq., to allow farmer debtors with regular annual income to adjust their debts. Chapter 12 was modeled on Chapter 13, § 1301 et seq., which permits individual debtors with regular annual income to preserve existing assets subject to a “court-approved plan under which they pay creditors out of their future income.” Hamilton v. Lanning, 560 U. S. 505, 508 (2010). Chapter 12 debtors similarly file a plan of reorganization. § 1221. To be confirmed, the plan must provide for the full payment of priority claims. § 1222(a)(2). In the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPÁ), § 1003, 119 Stat. 186, Congress created an exception to that requirement: “Contents of plan “(a) The plan shall—…
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