Bankruptcy Schedules: Schedule A/B

This will be the first in a series of blog posts that will focus on completing bankruptcy schedules. We’ll start in this blog with the first schedule – Schedule A/B.

Bankruptcy can be a complex and overwhelming process, but it’s important to accurately complete the required forms and schedules to ensure that your case proceeds smoothly. One of the key schedules that must be completed is Schedule A/B, which lists all of the debtor’s personal property and assets. In this blog post, we’ll go over the basics of completing Schedule A/B in a bankruptcy case.

Step 1: Gather Information

Before you can start filling out Schedule A/B, you’ll need to gather all the necessary information about your personal property and assets. This can include things like your home, car, furniture, electronics, jewelry, and other items of value. Make sure to be thorough in your inventory, and don’t leave anything out.

Step 2: Determine the Value of Your Property

Once you’ve compiled a list of all your personal property and assets, the next step is to determine the value of each item. The value should be based on the fair market value, which is the price that a willing buyer would pay to a willing seller in an arm’s length transaction.

There are several ways to determine the value of your property. You can use online resources like Zillow or Redfin to estimate the value of your home, or use sites like Kelley Blue Book or NADA to estimate the value of your car. For other items like jewelry or electronics, you may need to get an appraisal from a qualified appraiser.

Step 3: Classify Your Property

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Recent Bankruptcy Court Ruling Addresses The Jurisdiction of Bankruptcy Courts To Hear Innocent Spouse Relief Cases

The recent case of In re Bowman, Case No. 20-11512, Section A (Bankr. E.D. La., July 12, 2021) addresses an interesting intersection of tax and bankruptcy law.  Specifically, it looks at the issue of whether bankruptcy courts have jurisdiction to grant a debtor relief as an “innocent spouse” under § 6015 of the Internal Revenue Code, and ultimately determines that it does.

Although it is true that Section 6015(f) does not allow a bankruptcy court to exercise initial subject matter jurisdiction over an innocent spouse defense because only the Secretary of the IRS receives the equitable power to grant innocent spouse relief under that Section, in this case, it was undisputed that the Debtor sought such relief from the Secretary in July 2019 and the Secretary denied the request.  The bankruptcy court determined that § 6015(e)(1)(A) confers subject-matter jurisdiction to determine whether innocent spouse relief should be granted when it is denied by the Secretary. Citing to Pendergraft v. I.R.S. (In re Pendergraft), Adv. No. 16-3246, 2017 WL 1091935, at *3-4 (Bankr. S.D. Tex. Mar. 22, 2017), the Court explained:

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Recent Tax Court Case: Unassessed Taxes Are Not Discharged In Bankruptcy

A recent Tax Court opinion demonstrates the complexities involved when a taxpayer attempts to discharge tax liabilities through bankruptcy proceedings.  The case emphasizes the need for an attorney knowledgeable in both tax and bankruptcy cases to ensure that the the best, most-viable tax arguments are put forward in the proceedings.

A brief outline of the case is set forth below:

Barnes v. Comm’r, T.C. Memo. 2021-49 | May 4, 2021 | Lauber, J. | Dkt. No. 6330-19L

Short Summary:  The taxpayers challenged a proposed deficiency in the Tax Court related to their 2003 tax year.  Prior to the Tax Court issuing an opinion, the taxpayers filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the District of Columbia.  The IRS participated in the bankruptcy proceedings and filed a proof of claim for tax deficiencies—however, the 2003 tax year was not included.

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