In re Harkins, 491 B.R. 518

Debtors are self-employed in Chapter 13; issue is how to calculate current monthly income (CMI) under BAPCPA §101(10A).
Form 22C treats CMI for self-employed debtors as gross receipts minus ordinary and necessary business expenses (net income) on Lines 3a–3c, then annualizes for §1325(b)(4).
Trustee argues CMI should be calculated without deducting business expenses, resulting in higher CMI and five-year plans if above median income.
Court analyzes statutory text and context to decide whether business expenses may be deducted in calculating CMI; ultimately holds that CMI is gross receipts, not net income for self-employed debtors, making five-year commitments appropriate.
Court finds Form 22C inconsistent with the Code; when conflict between Form 22C and the Bankruptcy Code exists, the Code controls; result is three-year vs five-year commitment depending on CMI.
Debtors consolidated cases; confirmation objections focus on whether their plans must provide five-year commitments under §1325(b)(4) based on the CMI measure used to determine median income.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether self-employed debtors may deduct business expenses in calculating CMI.	Debtors argue for net income under Form 22C.	Trustee argues for gross receipts; no deduction for business expenses in CMI.	CMI must be gross receipts; no deduction for business expenses in initial CMI calculation.
Whether §1325(b)(2) allows double deduction of business expenses.	Debtors rely on net income to justify deductions.	Deduction of business expenses occurs after CMI under §1325(b)(2)(B).	No double deduction; if CMI includes gross receipts, §1325(b)(2)(B) deductions apply separately.
Whether Form 22C conflicts with the Bankruptcy Code and thus must yield to the Code.	Form 22C reflects practice for self-employed debtors.	Code controls when forms conflict.	Code controls; Form 22C is superseded by the statute.
Whether applying the gross-receipts method yields patently absurd results.	Debtors contend absurd outcomes would follow.	Plain meaning should govern; Congress could have chosen a different design but did not.	Plain meaning governs; no basis to adopt absurd-result exception here.

Pub. Citizens v. United States Dep’t of Justice, 491 U.S. 440 (U.S. 1989) (absent, broad policy-based reshaping not favored when text unambiguous)
Lamie v. United States Tr., 540 U.S. 526, 540 U.S. 526 (U.S. 2004) (canon against surplusage; interpret to give effect to all words)
Baud v. Carroll, 634 F.3d 327 (6th Cir. 2011) (inconsistencies in means test; supports Code-consistent approach)
In re Pearson, 773 F.2d 751 (6th Cir. 1985) (historical perspective on Chapter 13 for sole proprietors)
Stoecker, 179 F.3d 546 (7th Cir. 1999) (statutory hierarchy: Code prevails over rules/forms)
In re Seafort, 669 F.3d 662 (6th Cir. 2012) (context of reasonableness in bankruptcy interpretations)