Increased Tax Relief for Family Farmers in Chapter 12

In Bankruptcy by Coolidge Wall

While most of the US media is focused on various bills that have been hung up in congress over the last year, a bill providing additional tax relief to family farmers through Chapter 12 bankruptcy, has not received much attention. On October 26, 2017, President Trump signed the Family Farmer Bankruptcy Clarification Act of 2017 (H.R. 2266) into law. This new law expands the tax relief granted to family farmers in 2005, and legislatively overturns the narrow interpretation of the Supreme Court of that 2005 act. The legislation in 2005 was intended to give tax relief to family farmers in …

The Bankruptcy Court as a “court of the United States” – A Warning to Attorneys

In Bankruptcy by Coolidge Wall

In the unreported decision of Grossman v. Wehrle (In re Royal Management, Inc.), the Sixth Circuit joined ranks with the Second, Third and Seventh Circuits in holding that “a bankruptcy court is a ‘court of the United States’ within the meaning of 28 U.S.C. § 1927,” opposing the position taken by the Ninth and Tenth Circuits. The real story is not the existence of the split in authority, but rather the verification that bankruptcy courts in the Sixth Circuit (which is comprised of Kentucky, Michigan, Ohio and Tennessee) have augmented authority to issue sanctions against attorneys who increase expenses and …

Good News for Underwater Homeowners

In Bankruptcy by Coolidge Wall

A homeowner is considered to be “underwater” or “upside down” on their house if they owe more to the bank on their mortgage (or mortgages) than the value of the home. Some homeowners in this position are simply unable to sustain the expenses of retaining the home, and unable to continue making payments. There are options other than bankruptcy for those homeowners, but many of those options carry the threat of an increased income tax burden. For example, a homeowner may be able to obtain a mortgage modification that reduces the amount of the debt to match the value of …

Inherited IRAs Are Not Exempt From Bankruptcy

In Bankruptcy, General, Tax by Coolidge Wall

When filing for bankruptcy, a person may exempt “retirement funds” from the bankruptcy estate. However, last week the Supreme Court decided that the term “retirement funds” does not include funds in an inherited IRA. An inherited IRA is a traditional or Roth IRA that a person has inherited from the original owner. Inherited IRAs are different from traditional or Roth IRAs. First, the person who inherited the IRA must withdraw the funds within five years of the original owner’s death or take annual minimum distributions regardless of the age of the person. Additionally, the person can withdraw funds at any …