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Accordingly, once a plan vesting an estate’s assets in a
liquidating trust is confirmed, the estate is generally not
required to report or pay tax on gains derived by the trust from
disposition of those assets. In that respect, the estate lacks
the potential for the incidence of tax or use of tax losses.
Conversely, at that time the debtor is being released for the
purpose of rehabilitation. Those factors are most conducive to
and support an approach where the estate’s tax attributes be
returned to the debtor.6
In the case before us, all but two of the estate’s assets
were transferred to the liquidating trust. The two assets were
the stock of S corporations, which the estate was permitted to
hold as a mere nominee in order to maintain S corporation status.
Under the terms of the plan, the estate did not maintain control
or, in effect, ownership of the stock. Accordingly, there is no
reason to delay the transfer of the estate’s tax attributes to
the debtor/petitioner in this case. We hasten to note that as of
the time of the summary judgment motion in 2003, petitioner’s
chapter 11 bankruptcy proceeding had not been formally closed.
Under those circumstances, waiting until the closing of the
chapter 11 proceeding would be unjust and a possible detriment to
6 The parties in this case do not contend that the trustee
or the liquidating trust should be considered as a part of the
estate for purposes of sec. 1398 or the use of the estate’s or
the debtor’s tax attributes.
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