As if the means test wasn’t illogical and opaque enough, consider the unwritten provision for old cars. Where do you find the unwritten allowance? It’s not in the Bankruptcy Code but in the Internal Revenue Manual at 5.8.20.3. The IRS allows a delinquent taxpayer with a paid for car more than 6 years old or…
It wasn’t a week after my friend Fredrick’s presentation on due diligence for bankruptcy lawyers that the need for one of his tricks emerged. There seems to be an ethereal convergence about such things. The client hadn’t revealed to the young lawyer bonuses that he had received in the means test look back period. The…
Drafters of the official bankruptcy forms have excised “household size” from the B-22 where we calculate the part A IRS standard allowances. In its place is “applicable number of persons”, which the form indicates is the number of exemptions the debtor would currently be allowed on their tax return plus the number of other persons…
I expect clients to conflate themselves and their wholly owned business corporation; I didn’t expect the new bankruptcy lawyer to treat the corporation as if it didn’t exist. Yet as I reviewed a B-22 for a rookie bankruptcy lawyer, I found all of the corporation’s gross income included in the means test for the individual…
What can my client do with non exempt cash or readily saleable items not protected by an exemption, the newbie asked. As I looked down my list of things to do with excess cash, I saw an issue I hadn’t explored before: some of best ways to use up non exempt cash may result in…
Are you guilty of any of these means test mistakes dealing with taxes? Using the tax deductions from the pay stubs when your client traditionally owes taxes payable with the return Using the tax deductions from the paystubs when your client traditionally gets a substantial refund Using last year’s tax as the measure for the…
Early in the life of BAPCPA, I sat down to review a means test with a new bankruptcy lawyer. The first part of the form seemed to be complete and make sense, but as I worked my way deeper into the document, unexpected lines were blank, or numbers were small relative to my expectations. Doesn’t…