Newman v. Schwartzer (In Re Newman), 487 B.R. 193

Debtor Eugene Scott Newman, Jr. filed a Chapter 7 petition in Nevada on Dec 2, 2011; discharge occurred Mar 12, 2012.
The jointly filed 2011 tax refund was not listed or exempted in original schedules.
Trustee sought turnover of $4,727 of the 2011 refund as estate property under §541 and §542(a).
Debtor amended Schedule C after turnover was granted to claim exemptions but the amendment was not before the turnover ruling.
Nevada community property law and joint-spousal control made the refund-like assets property of the estate; the court held the entire prorated refund was subject to turnover.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the 2011 tax refund was estate property	Schwartz er contends the refund is estate property under §541(a)(2) as community property.	Newman argues any exemption or non-estate interest should apply; the refund may not be fully estate property.	Yes; the refund was property of the debtor’s estate.
Whether any portion of the refund could be exempt	Trustee seeks turnover of the full amount; exemption arguments are improper here.	Debtor contends earned income credit exemption should apply under Nev. Rev. Stat. 21.090.	Not exempt; amended Schedule C not before the turnover ruling and not considered on appeal.
Whether §542(a) requires debtor to have current possession	Trustee may compel turnover even if funds are no longer in debtor’s possession.	Possession/conduct must exist at turnover or avoidance rules apply.	§542(a) does not require present possession; value may be recovered; turnover proper.
Whether excusable neglect tolls amendment of Schedule C	Debtor’s counsel acted with excusable neglect in failing to amend earlier.	Motion should have been raised in the bankruptcy court; appeal is not proper for this issue.	Rule 60(b) relief must be sought in bankruptcy court; not granted on appeal.

Nichols v. Birdsell, 491 F.3d 987 (9th Cir. 2007) (tax refund right constitutes property of the estate under §541)
In re White, 389 B.R. 693 (9th Cir. BAP 2008) (standard for property inclusion and turnover)
In re Sheehan, 253 F.3d 507 (9th Cir. 2001) (evidence not before the trial court not considered on appeal)
In re Ruiz, 455 B.R. 745 (9th Cir. BAP 2011) (section 542(a) turnover; no present possession required)
Maggio v. Zeitz, 333 U.S. 56 (1948) (pre-Code turnover procedures and possession concerns)
Beaman v. Vandeventer Black, LLP (In re Shearin), 224 F.3d 353 (4th Cir. 2000) (trustee turnover against non-debtor possessors)
Boyer v. Davis (In re USA Diversified Prods., Inc.), 193 B.R. 868 (Bankr. N.D. Ind. 1995) (possession not strictly required for turnover)
Travelers Cas. & Sur. Co. v. Pac. Gas & Elec. Co., 549 U.S. 443 (2007) (analysis of property interests under federal law)