Procedurally Taxing: Tenancy by the Entirety and Bankruptcy Exemptions (December 16, 2021)

Keith Fogg, Clinical Professor of Law at Harvard Law, has made available for download his article, “Tenancy by the Entirety and Bankruptcy Exemptions” published on the Procedurally Taxing blog. The article begins as follows:

In the case of In re Morgan, No. 21-50455 (M.D.N.C. 2021) the bankruptcy court sustained an objection by the trustee to the exemptions claimed by the debtor.  The basis for the objection was that even though the debtor owned certain property in the form of tenancy by the entireties he could not escape the federal tax lien.  The holding is consistent with prior case law and shows the power of the federal tax lien versus other types of liens.  The Supreme Court’s decision in Craft v. United States, 535 U.S. 274 (2002) continues to make a significant difference for debtors living in states with strong tenancy by the entireties laws which, prior to Craft, provided protection from this impact of the federal tax lien.  Because of the treatment of secured property of tax creditors in B.C. 724, Craft benefits not only the IRS but certain unsecured creditors.  In this case the trustee seeks to establish the lien interest of the IRS not for the benefit of the IRS but for these other creditors who, but for the ability of the federal tax lien to reach this type of property interest, would have no ability to do so.

Click here to view Keith Fogg’s summary of “Tenancy by the Entirety and Bankruptcy Exemptions”

Posted by Anthony Tran, Associate Editor, Wealth Strategies Journal

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