Sometime this summer, the Supreme Court is expected to issue its ruling in U.S. v. Quality Stores. In this case, the Supreme Court reviewed the Sixth Circuit’s holding that supplemental unemployment compensation benefits (“SUB payments”) relating to severance payments are not subject to FICA taxes. U.S. v. Quality Stores, 693 F.3d 605 (6th Cir. 2012). The Sixth Circuit decision resurrects a long-disputed issue regarding the applicability of FICA to severance pay.
The Seventh Circuit Court of Appeals recently held that a plan under chapter 13 of the Bankruptcy Code can modify the rights of a purchaser of delinquent real estate taxes on a debtor’s home by providing for payment of those taxes over time rather than in a lump sum. See In re LaMont (No. 13-1187, 7th Cir. January 7, 2014).
In connection with the bankruptcy of a bank holding company (the “Bank Holdco”) and its operating bank subsidiary (the “Bank”), there are often different classes of creditors competing for one tax refund.
The Bottom Line:
The Bottom Line:
On August 15, 2013, in Zucker v.
In re Majestic Star Casino, LLC, F.3d 736 (3rd Cir. 2013), the U.S. Court of Appeals for the Third Circuit broke from other courts by holding that S corporation status (or "qualified subchapter S subsidiary" or "QSub" status) is not property of the estate of the S corporation's bankruptcy estate. Other Circuits have routinely held that entity tax status is property of the estate.
Over the next few years, a significant number of distressed bank-holding companies will face the end of interestdeferral periods and the prospect of payment defaults on certain debt instruments and trust-preferred securities. The looming obligations to repay deferred interest may escalate the need for financial restructuring at these holding companies and may create attractive opportunities for investors to recapitalize or acquire their subsidiary banks, including in a bankruptcy scenario.
In another recent private letter ruling,19 the IRS ruled that an ownership change pursuant to a bankruptcy reorganization plan qualified for an exception to the general rule limiting net operating loss ("NOL") carryforwards under Section 382(a).