The issue here is whether the district court correctly ruled that when a corporate debt- or’s fiscal tax year straddles the filing of a petition for Chapter 11 reorganization, the portion of the year’s income tax attributable to income earned during the prepetition part of the year is not allowable as an administrative expense under section 503(b)(l)(B)(i) of the United States Bankruptcy Code. 11 U.S.C. § 503(b)(l)(B)(i) (1988). We affirm.
I.
Hillsborough Holdings Corporation and its 32 wholly-owned subsidiaries (“Debtors”) operate on a taxable fiscal year that runs from June 1st to May 31st. On December 27, 1989, Debtors filed a voluntary petition for *1393 reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Code”). Debtors later filed their consolidated federal income tax return for the tax year ending May 31,1990, and paid in full the pro rata portion of the year’s tax that they attributed to income eаrned during the postpetition part of the tax year (December 27, 1989, through May 31, 1990). The portion of the year’s tax that Debtors attributed to income earned during the prepetition period (June 1,1989, through December 27,1989) remains unpaid.
The Internal Revenue Service (“IRS”), on behalf of the United States of America (“Government”), filed an application with the bankruptcy court, seeking allowance of the. unpaid taxes as a first priority administrative expense under Code sections 507(a)(1) and 603(b)(1)(B)©.
See
11 U.S.C. § 507(a)(1) (1994) (granting first priority to payment of administrative expenses as defined in § 503(b)); 11 U.S.C. § 608(b)(1)(B)© (1988) (including as administrativе expenses certain taxes that are “incurred by the estate”). Debtors objected to the application, claiming that the unpaid taxes were not “incurred by the estate” and were thus not entitled to administrative priority. The bankruptcy court agreed.
See In re Hillsborough Holdings Corp.,
II.
Prior to oral argument, we questioned sua sponte whether the district court’s order affirming the judgment of the bankruptcy court (“Order”) is a “final,” appealable order under 28 U.S.C. § 158(d) (1994). Debtors and the Government asserted that it is. We agree.
Section 158(d) grants this Court jurisdiction to hear appeals only of “final” orders еntered by district courts sitting in review of bankruptcy courts. 28 U.S.C. § 158(d) (1994);
see Lockwood v. Snookies, Inc. (In re F.D.R. Hickory House, Inc.),
Viewed realistically, a bankruptcy case is simply an aggregation of controversies, many of which would constitute individual lawsuits had a bankruptcy petition never been filed. While the goal of the bankruptcy process is to bring all present and potential сontestants together and decide all the claims at the same time, a truly simultaneous resolution is impossible. Each claim represents a variable which must be quantified before a ... workable reorganization plan is adopted. Delayed review of any particular claim, especially claims involving key assets of the debtor’s estate, would render any ... plan purely contingent upon completion of appeals after conclusion of the case. Such an approach would be especially devastating in reorganizations, which рroceed most smoothly when at least some variables become fixed and operate as the basis for further negotiation.
Martin Bros.,
In recognition of these principles, we have previously held that “any order within a bankruptcy case which concludes a particular advеrsary proceeding should be deemed final and reviewable.”
Id.; see Charter Co. v. Prudential Ins. Co. of America (In re Charter Co.),
III.
We review questions of law in bankruptcy procеedings, whether decided by the bankruptcy court or by the district court, de novo.
See Varsity Carpet Servs., Inc. v. Richardson (In re Colortex Industries, Inc.),
Code Section 507(a)(1) accords first priority to the payment of expenses that are incurred in the administration of a bankruptcy estate. 11 U.S.C. § 507(а)(1) (1994). An administrative expense, as defined in section 503(b), includes “any tax incurred by the estate, except a tax of a kind specified in section 507(a)(7)....” 1 11 U.S.C. § 503(b)(l)(B)(i) (1988). Only if a tax (1) IS incurred by the estate and (2) IS NOT of a kind specified in section 507(a)(7) will it qualify for administrative priority. Otherwise, the tax will generally be paid as a sеventh priority claim. See 11 U.S.C. § 507(a)(7) (1988) (granting seventh priority to certain tax claims) (currently codified at 11 U.S.C. § 507(a)(8) (1994)).
The bankruptcy court expressly ruled that the IRS’s claim did not meet either of the aforementioned requirements.
See In re Hillsborough Holdings Corp.,
As to the first issue, whether the unpaid portion of the year’s taxes was “incurred by the estate,” the Government argues that the entire year’s taxes were “incurred” on the last day of the taxable year, which in this case fell within the period of the estate’s existence.
See
11 U.S.C. § 541(a) (1994) (stating that commencement of bankruptcy case creates bankruptcy estate); 11 U.S.C. § 301 (1994) (specifying that voluntary bankruptcy case is commenced by filing of petition);
see also Towers v. United States (In re Pacific-Atlantic Trading Co.),
Section 507(a)(7) states:
(a) The following expenses and claims have priority in the following order:
* * * * * *
(7) Seventh, allowed unsecured claims of governmental units, only to the extent that such claims are for—
(A) a tax on or measured by income or gross receipts—
(i) for a taxable year ending on or before the date оf filing of the petition for which a return, if required, is last due, including extensions, after three years before the date of the filing of the petition;
*1395 (ii) assessed within 240 days, plus any time plus 30 days during which an offer in compromise with respect to such tax that was made within 240 days after such assessment was pending, befоre the date of the filing of the petition; or
(iii) other than a tax of a kind specified in section 523(a)(1)(B) or 523(a)(1)(C) of this title, not assessed before, but assessable, under applicable law or by agreement, after, the commencement of the case[.]
11 U.S.C. § 507(a)(7) (1988). Debtors and the Governmеnt agree that only subsection (iii) is applicable to this ease. Likewise, the parties agree that subsection (iii)’s references to section 523(a)(1) have no effect here. Thus, we need only consider whether the unpaid taxes were “not assessed before, but [were] assessаble ... after[ ] the commencement of the case.”
The appropriate starting point for any statutory analysis is the statute’s plain language.
See McNely v. Ocala Star-Banner Carp.,
The Government asserts that we cannot adhere to the statute’s plain language because its application leads to “absurd” results. For example, a plain reаding of “not assessed before, but assessable after” would also exclude from administrative priority the portion of the year’s tax that Debtors did pay, i.e., the portion attributable to income earned during the postpetition period. The absurdity of that result, according to the Government, is evidenced by the fact that Debtors, the bankruptcy court, and the district court — all without question — treated the taxes attributable to postpetition income as administrative expenses. Similarly, the plain reading would exclude from administrative priority the income taxes for tax yеars that both begin and end postpetition. The Ninth Circuit has expressly noted the absurdity of that outcome.
See Towers v. United States (In re Pacific-Atlantic Trading Co.),
To eliminate these “absurd” results, the Government suggests (based on numerous references to the legislative history) that the phrase “not assessed before, but assessable after” be interpreted as referring to taxes that “were assessable both before and after” the filing. Two Circuits have previously rejected that same argument.
See Towers,
Like both the Eighth and Ninth Circuits, we find that the Government’s proposed interpretation stretches the statutory language so far from its plain meaning that we must reject it.
See Towers,
We believe that subsection (iii) can be read, like the other subsections of 507(a)(7)(A) to address only prepetition taxable activity or events. See 11 U.S.C. § 507(a)(7)(A)® (prepetition tax year ending on or before date of filing) & 507(a)(7)(h) (tax assessed within the 240 days priоr to filing); see also Small Business Admin, v. Preferred Door Co., Inc. (In re Preferred Door Co.),990 F.2d 547 , 549 (10th Cir.1993) (noting that section 507(a)(7) deals with prepetition taxes). Thus, we interpret section 507(a)(7)(A)(iii) *1396 to address taxes derived from prepetition events “not assessed before, but assessable ... after, the commencement of the case.”
L.J. O’Neill,
In opposition to our adopting the approach taken by the Eighth Circuit, the Government arguеs that section 507(a)(7) does not permit different “portions” of a single tax to be treated differently; the section supposedly grants priority only on a tax-by-tax basis. The Government spends considerable time discussing the Internal Revenue Code, progressive tax rates, and the inability of cоrporate debtors to close their taxable year on the filing date. See 26 U.S.C. § 1398(d)(2)(D) (1994) (permitting individual debtors in Chapter 7 or 11 ease to elect to divide taxable year in which bankruptcy case is commenced into two short taxable years). The gist of these arguments is that by allowing Debtors to divide the tax claim into an administrative expense “portion” and a seventh priority tax “portion,” we are allowing Debtors to subvert the tax code. We find the Government’s arguments unpersuasive.
Permitting the tax claim to be divided into two “portions” for priority purposes will have no effect on the total tax liability actually owed by Debtors, the tax rate applied to Debtors income, or the length of Debtors’ taxable year. In keeping with the tax code, the taxes will be imposed as if no bankruptcy petition had ever been filed. The
payment
of the taxes, however, will be govеrned by the principles and priorities of the bankruptcy laws.
See L.J. O’Neill,
IV.
We conclude that the bankruptcy court and the district court properly denied administrative priority to the IRS’s claim for the portion of the year’s tax that was attributable to income earned during the prepetition period. 2 The Order of the district court is AFFIRMED.
Notes
. The Bankruptcy Reform Act of 1994, Pub.L. No. 103-394, redesignated § 507(a)(7) as § 507(a)(8). This case was initiated prior to that change; we adhere to the designation applicable at the start of these proceedings.
. The actual method Debtors used to calculate the prepetition and postpetition portions of their tax liability is somewhat of a mystery. The bankruptcy court refers to the paid taxes as the "pro-rata portion of the
total taxes accrued,
between [the filing date and thе last day of the taxable year].”
In re Hillsborough Holdings Corp.,