Dunckley v. Cohen (In Re Dunckley)
452 B.R. 241
10th Cir. BAP2011Background
- Debtors Borgman and Dunckley filed Chapter 7 in Oct. 2009 and exempted 2009 federal refunds including the child tax credit on Schedule C.
- Trustee objected to the exempt portion arising from the child tax credit (the $818 in Borgman; $2,000 in Dunckley).
- Debtors’ refunds were partly due to the earned income credit and the additional child tax credit; estate share calculated as 81.92 percent.
- Colorado Rev. Stat. § 13-54-102(1)(o) exempts the full amount of any refund attributed to a child tax credit or earned income credit.
- Lower courts held that the non-refundable child tax credit cannot be attributed to a refund; the Panel reverses and adopts a broader interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the exemption covers refunds attributed to the child tax credit | Debtors: credit portions are exempt as they are attributed to the refund | Trustee: non-refundable nature means no refund is attributed | Yes; the refund portion attributed to the credit is exempt |
| How to interpret 'attributed to' in the statute | Broader reading: any refund caused by the credit is attributed | Narrow reading: only directly paid refunds count | Broader interpretation approved; refunds increased by credit are attributed |
| Does non-refundable status defeat exemption | Non-refundable does not defeat attribution to the refund | Non-refundable portion cannot be attributed to the refund | Non-refundable still can be attributed to the refund and exempt |
| Is Landgrebe controlling in Colorado on point | Landgrebe supports exemption of credit-caused refunds | Landgrebe is distinguishable or unpersuasive | Colorado adopts broader attribution, not Landgrebe’s limitation |
| Should Ohio-style 'payments' jurisprudence control | Statutory language in Colorado not identical to Ohio; broader reading preferred | Ohio cases limit as payments, not applicable here | Not controlling; Colorado statute interpreted broadly |
Key Cases Cited
- Barowsky v. Rochelle, 946 F.2d 1516 (10th Cir. 1991) (prepetition refund held property of the estate; tax refunds and credits treated similarly)
- In re Montgomery, 224 F.3d 1193 (10th Cir. 2000) (earned income credit treated as property of the estate)
- Segal v. Rochelle, 382 U.S. 375 (1966) (loss-carryback refund as property of the estate)
- El Jebel Shrine Ass'n v. McGlone, 26 P.2d 108 (Colo. 1933) (liberal construction of exemption statutes for debtors)