United States v. Dawes (In Re Dawes)
652 F.3d 1236
| 10th Cir. | 2011Background
- Daweses filed Chapter 12 bankruptcy to reorganize farming assets and operations.
- Post-petition, they sold several tracts of farm land, generating new federal income tax liabilities.
- IRS challenged the treatment of these post-petition taxes in their Chapter 12 plan.
- Daweses proposed treating post-petition taxes as administrative expenses incurred by the estate and secured unsecured claims under §1222(a)(2)(A).
- The court examined whether post-petition taxes are “incurred by the estate” under §503(b)(1)(B)(i) and who is liable for post-petition taxes in Chapter 12.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether post-petition federal income taxes are incurred by the estate under §503(b)(1)(B)(i). | IRS contends taxes arise from estate actions and are incurred by the estate. | Daweses contend taxes are incurred by the debtor, not the estate. | Post-petition taxes are incurred by the debtor, not the estate. |
Key Cases Cited
- Knudsen v. I.R.S., 581 F.3d 696 (8th Cir. 2009) (supports treatment of certain farm-asset tax relief under §1222(a)(2)(A))
- Holywell Corp. v. Smith, 503 U.S. 47 (1992) (ties tax payment duty to the income tax return; distinguishes debtors from estate for taxes)
- Corley v. United States, 556 U.S. 303 (2009) (statutory interpretation canon about giving effect to all provisions)
- Hydro Res., Inc. v. E.P.A., 608 F.3d 1131 (10th Cir. 2010) (text cited regarding legislative aims and competing goals)