United States Ninth Circuit

The bankruptcy court had jurisdiction to reopen a bankruptcy proceeding to consider the tax consequences of the reorganization of the debtor-partnership, where: 1) as part of the bankruptcy, the partnership was reorganized into a limited liability company with a 1% ownership interest in two commercial buildings, over $200 million of partnership debt was forgiven, and the individual partners reported cancellation of debt income on their tax returns; 2) the California Franchise Tax Board sought to assess $13 million in unpaid income taxes on the individual partners, characterizing the transaction as a disguised sale and the reported cancellation of debt income as capital gains; and 3) under the "close nexus" test, post-confirmation jurisdiction in this case extends to matters such as tax consequences that likely would have affected the implementation and execution of the plan if the matter had arisen contemporaneously.

Appellate Information

• Decided 09/10/2013
• Published 09/10/2013

Judges

• PAEZ

Court

• United States Ninth Circuit

Counsel