Free Course Work On Insolvency Taxation

Published: 2021-06-21 23:46:24
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Category: Finance, Business, Taxes

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Question 1

The governments contented that its claim for Atlantic Trading Company income taxes ,was claimed to be entitled to first priority rule as an administrative expense instead of the unsecured tax claim since the said taxes of the state were not just any tax but tax specified in the 507(a)(7)(A)(iii) pursuant to 503 (b) (1)(B)(i). The government failed to file the immediate proof of the claim. Since the company made profits in which it was to remit some percentage to the government, the government was not supposed to make administrative expenses on the company. The facts and procedural history of this case is not in order as required by the law. The law requires that the government make immediate claim to proof the claim of administrative expenses prior to income taxes pursuant to 726(a) (1). The company has a right to remit the taxes to the government as per the proceeds of that particular trading period. The government needs not to disturb the smooth running of different companies businesses. However, as per article 726(a) (1) companies in business existence during tax period should remit the revenue to the government in time for smooth running of the government failure to do so will forced the government (Basu,34). The company in business needs to be transparent and show accountability in the transactions it undertakes.

The Atlantic pacific Trading Company had the right has per the law to remit the taxes including the administrative expenses only when the trade was favorable as specified in the 507(a) (7) (A) (iii). When deciding such cases the court can assess the potential claim from the complainant and the defendant. Facts and procedural history of the case has to be determined by the court before ruling the case (Ribstein,54)Administrative tax expenses have to be remitted to government treasury during the financial year however if the company do not remit as per the stipulated time the court can rule in favor of the government.

Question two.

- In accordance to the law entailing the priority tax claims, the Internal Revenue Authority receives quickly a less priority to the claim of compensation by Archie. This fact is supported by the fact the person is bankrupt and the states their does don has any claim on the context of claiming for the taxes until the person recovers financial. On the other hand, Reggie stands at a higher position of claiming for compensation from Archie since it can be evidenced that he spent the much in a luxurious, manner despite the fact that knew he was bankrupt.

- Archie can successfully discharge the claim by the Internal Revenue Authority since the law gives room for allowances to bankrupt individuals who have less or nothing to pay with. On the other hand, he is obligated to pay Reggie as of immediate time that he gets a reliable amount of funds. This is due to the fact that this is a personal agreement that states the responsibility and responsibilities of a personal contract.

- The plan cannot be confirmed in the case scenario where it has a relatively stable argument entailing the incompetence of Archie possibility to pay the amount as of then stated.

Question 3

In relations to Wolff’s case, the Internal Revenue Authority can claim for compensation on the funds from the Smiths account since they can evidentially affirm to the fact that Smith deposited most of the taxes into his account. On the other hand, the IRS can claim that there is no standing evidence as to the claim of Smiths death due to his absence of his body to prove his real death. This in other words means that the IRS can still use a different way to sue them company successfully. In accordance to the law act under 11 U.S.C. § 547(b), the it is clear and legally essential to support the government in conclusion that the district court had erred in the final findings of the fact that it was undisputed for the transfer of funds from the debtor to the Internal Revenue Authority which was a transfer of funds from the debtor in terms of property. On the other hand, we can conclude that the court adjudicating the case did abuse its range of discretion in declining the treat of considering the Government’s affirmative allowed defense which is provided under the 11 U.S.C. § 547(c).

Question 4

- The taxpayer upon in this case is required to include the cancelled debt into his or her gross income for the sake of taxation since it is a voluntary cancellation.
- The taxpayer in this case qualifies to exclude the discharge benefit of $40 from his gross income based on the Publication 4128, Tax Impact of Job Loss and the Tax Center to Assist Unemployed Taxpayers.
- The taxpayer in this case qualifies to exclude the discharge benefit of $30 from his gross income based on the Publication 4128, Tax Impact of Job Loss and the Tax Center to Assist Unemployed Taxpayers.
- The taxpayer is deemed to have encountered a loss of $ 35,000. Because the loss is on personal use of property, it does not qualify to be deducted from his gross income since he or she must recognize a gross income of $35,000 upon cancellation of the loan. The taxpayer is also supposed to feel Form 1099-C.
- A and B are deemed to include the gain to their taxable gross income because upon the cancellation of the debt A gains of $400 whereas B is considered to have $600 since the cancellation was voluntary.

Question 5

- The employee’s gain is included on his taxable gross income; the $700 is due for tax at the prevailing rates.
2.a) The $40,000 gain under IRC sec.267(b) by the taxpayer qualifies to be exempted from gross income since it qualifies to be from business indebtedness.
2.b) The taxable gain of the taxpayer will be calculated as to its worth as in the year.
3.The gain or loss will be accounted for as equal to the difference between the fair market value of the $100,000 as by the year 2008.
4. The amount taken into account with respect to the value of $40,000 discharge shall be properly adjusted for unamortized premium discount with respect to indebtedness discharge.
5. a) The gain or loss is taken into account as depending on the market values of the $100,000 as in accordance with interest rate.
b) The scenario causes the amount to be charged for loss or gain to be $40000.

Works Cited

Basu, Subhajit. Global Perspectives on E-Commerce Taxation Law. Burlington, VT: Ashgate, 2007. Print.
Ribstein, Larry E, and Erin A. O'Hara. The Law Market. New York: Oxford University Press, 2009. Print.

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