Table of Contents
Catch-up contributions for IRC section 401(k) participants whose employer previously filed for bankruptcy. Under the Pension Protection Act of 2006, P.L. 109-280, if you participated in an IRC section 401(k) plan and the employer who maintained the plan filed for bankruptcy in an earlier year, you may be able to contribute up to $7,000 to your traditional or Roth IRA. See Publication 590, Individual Retirement Arrangements (IRAs), for details.
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. On April 20, 2005, BAPCPA became law. However, most of BAPCPA's provisions became effective 180 days after the bill was signed into law, or October 17, 2005. The BAPCPA provides that:
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Debtors filing under chapters 7, 11, 12, and 13 of the Bankruptcy Code must file all applicable federal, state, and local tax returns that become due after a case commences. Failure to file tax returns timely or obtain an extension can cause a bankruptcy petition to be converted to another chapter or dismissed. In chapter 13 cases, the debtor must file all required tax returns for tax periods ending within 4 years of the filing of the bankruptcy petition.
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The confirmation of a plan under chapter 11 does not discharge a corporate debtor from tax debts for which the debtor filed a fraudulent return or willfully attempted to evade or defeat tax.
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In chapter 11 cases of individuals, wages and income from self-employment earned during the bankruptcy case are property of the estate. Income that is property of the estate should be reported on the bankruptcy estate's tax return.
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Withheld taxes, taxes for which a return was not filed, taxes for which a return was untimely filed within 2 years of the bankruptcy, and taxes that the taxpayer attempted to evade or defeat are now excepted from the chapter 13 discharge.
Photographs of missing children. The IRS is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.
This publication covers the federal income tax aspects of bankruptcy. Bankruptcy proceedings begin with the filing of a petition in bankruptcy court, and that filing creates the bankruptcy estate.
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The bankruptcy estate generally consists of all of the assets of the person or entity filing the bankruptcy petition.
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The bankruptcy estate is treated as a separate taxable entity if the bankruptcy petition is filed by an individual under chapter 7 or 11 of the Bankruptcy Code, discussed later.
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The tax obligations of taxable estates are discussed later under Taxes and the Bankruptcy Estate.
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Generally, when a debt owed to another person or entity is canceled, the amount canceled or forgiven is considered income that is taxed to the person owing the debt. If a debt is canceled under a bankruptcy proceeding, the amount canceled is not income. However, the canceled debt reduces other tax benefits to which the debtor would otherwise be entitled. See Debt Cancellation, later.
This publication is not intended to cover bankruptcy law in general, or to provide detailed discussions of the tax rules for the more complex corporate bankruptcy reorganizations or other highly technical transactions. Additionally, this publication is not updated on an annual basis and may not reflect recent developments in bankruptcy or tax law. If you need more guidance on the bankruptcy or tax laws applicable to your case, you should seek professional advice.
Publication
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225 Farmer's Tax Guide
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525 Taxable and Nontaxable Income
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536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts
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538 Accounting Periods and Methods
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544 Sales and Other Dispositions of Assets
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551 Basis of Assets
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4492 Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma
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4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments
Form (and Instructions)
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SS-4 Application for Employer Identification Number, and separate instructions
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982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment)
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1040 U.S. Individual Income Tax Return, and separate instructions
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Schedule SE (Form 1040) Self-Employment Tax
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1040X Amended U.S. Individual Income Tax Return, and separate instructions
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1041 U.S. Income Tax Return for Estates and Trusts, and separate instructions
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1041-ES Estimated Income Tax for Estates and Trusts
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Schedule I (Form 1041) Alternative Minimum Tax (AMT), and separate instructions.
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4506 Request for Copy of Tax Return
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4506-T Request for Transcript of Tax Return
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4852 Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
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4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
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7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns
See How To Get Tax Help, later, for information about getting these publications and forms.
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