Congress Should Amend the Bankruptcy Code to Ease Tax Liability on Asset Sales Prior to Confirmation of a Reorganization Plan According to Latest ABI Quick Poll
Contact: John Hartgen
CONGRESS SHOULD AMEND THE BANKRUPTCY CODE TO EASE TAX LIABILITY ON ASSET SALES PRIOR TO CONFIRMATION OF A REORGANIZATION PLAN, ACCORDING TO LATEST ABI QUICK POLL
September 24, 2008, Alexandria, Va. — A majority of respondents (54 percent) in a recent ABI Quick Poll agreed that Congress should legislatively overturn the Supreme Court’s Piccadilly opinion by amending the Bankruptcy Code to ease the tax liability on asset sales prior to the confirmation of a reorganization plan. Thirty-eight percent of respondents “strongly agreed” and 16 percent “somewhat agreed” that Congress should pass legislation to amend §1146 (a) to ease the tax liability on asset sales pre-confirmation.
Thirty-eight percent of respondents, however, thought that the Supreme Court’s Piccadilly ruling should stand and that Congress should not amend the Bankruptcy Code to ease the tax liability on asset sales prior to confirmation of a reorganization plan. Twenty-seven percent “disagreed strongly” and 11 percent “somewhat disagreed” that Congress should amend §1146(a) to ease the tax liability on asset sales pre-confirmation. Seven percent of respondents did not know or had no opinion on the issue.
In a 7-2 decision reached early this year, the U.S. Supreme Court repudiated a benefit often granted to corporate debtors in sales of assets under Bankruptcy Code §363, outside the context of a reorganization plan. In Florida Dept. of Revenue v. Piccadilly Cafeterias Inc., the Court held that the exemption on transfer taxes contained in Code §1146(a) applies only to transfers of assets made pursuant to a reorganization plan confirmed by a bankruptcy court.
ABI members and members of the public were welcome to submit their response to the statement: “Congress should legislatively overturn the Supreme Court’s Piccadilly opinion by amending section 1146(a) to ease the tax liability on asset sales pre-confirmation.”
ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://www.abiworld.net/quickpoll/ to access the results of previous ABI Quick Polls.
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,700 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.