- 14 -
Cir., Sept. 12, 1996); In re Page, 163 Bankr. 196, 197-198
(Bankr. D. Kan. 1994).
As explained in the recent opinion of the Court of Appeals
for the Sixth Circuit --
The * * * [taxpayers] argue that the statutory
period was in fact tolled during the pendency of their
bankruptcy proceeding, under section 346(i)(2) of the
Bankruptcy Code, 11 U.S.C. sec. 346(i)(2). [11 U.S.C.]
Section 346(i)(2), like I.R.C. section 1398(i),
provides that at the close of a bankruptcy proceeding,
debtors shall succeed to any unused tax attributes
(including NOLs) to which the estate originally
succeeded at the inception of the proceeding. Unlike
I.R.C. section 1398(i), though, 11 U.S.C. sec.
346(i)(2) goes on to state: "The debtor may utilize
such tax attributes as though any applicable time
limitations on such utilization by the debtor were
suspended during the time during which the case was
pending." On its face, this language appears to
support the * * * [taxpayers’] contention that I.R.C.
section 6511(a) should have been tolled. The sweep of
this sentence is significantly circumscribed, however,
by [11 U.S.C.] sec. 346(a), which states:
Except to the extent otherwise provided
in this section, subsections (b), (c), (d),
(e), (g), (h), (i), and (j) of this section
apply notwithstanding any State or local law
imposing a tax, but subject to the Internal
Revenue Code of 1986.
11 U.S.C. sec. 346(a). In this context, "subject to
the Internal Revenue Code" essentially means that the
named Bankruptcy Code subsections, including the
tolling provision in subsection (i), have no effect on
the Federal tax laws. Such is the holding in In re
Page, 163 B.R. 196, 197-98 (Bankr. D. Kan. 1994), where
the court found [11 U.S.C.] sec. 346(a) "not extremely
well-drafted" but clear enough to make subsection (i)
applicable "only to State and local laws." [Firsdon v.
United States, __ F.3d __ (6th Cir., Sept. 12, 1996)].
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