§ 346

Kmart Corp. v. Illinois Dept of Revenue (In re Kmart Corp.)

Reorganized debtor sought a declaration of the effects under 11 U.S.C.S. § 346 of its plan of reorganization on its Illinois state income tax liability. The debtor and defendant Illinois Department of Revenue filed cross-motions for summary judgment.
Ruling: 
Bankruptcy court lacked jurisdiction to rule on postconfirmation motion to declare effect of state tax liability.
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Commercial case opionion summary, case decided on May 15,2012, LexisNexis #0612-034

In re Brown

Bankruptcy debtor filed a voluntary chapter 13 petition. The debtor filed a motion for order directing trustee to reserve fund pursuant to 11 U.S.C. § 105(a), in which the debtor sought to have the chapter 13 estate pay capital gains taxes triggered by the postpetition sale of the debtor's interest in rental property. The chapter 13 trustee and a creditor objected to some or all of the motion.
Ruling: 
Capital gains taxes owed on sale of property were sole responsibility of debtor and not the estate.
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Illinois Dept of Revenue v. Envirodyne Indus.

Plaintiff, the Illinois Department of Revenue, challenged an order of the bankruptcy court granting an objection by defendants, a taxpayer corporation and several of its subsidiaries, to the Department's proof of claim. The bankruptcy court found that the corporation could carry back its net operating losses from 1988 and 1989 to offset taxable income from prior tax years and held that no additional taxes were due.
Ruling: 
Bankruptcy court properly allowed debtor to offset prepetition income with postpetition losses for tax purposes.
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Brown v. McLain (In re McLain)

Pending before the court were pretrial motions filed by both the debtor and the chapter 7 trustee in three related adversary proceedings. These motions were: (1) the debtor's motion for an expedited hearing for the determination of pre-trial issues; (2) the trustee's motion for contempt and to compel production of the debtor's tax records; (3) the trustee's motion for entry of a pre-trial order; and (4) the debtor's motion to open default.
Ruling: 
Trustee's motion to compel production of certain tax returns was granted to see if any tax refunds or loss carryovers were not turned over to the estate.
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