IRS Tax Refund 6 months+ after CH7

[johnsmith11]

I have been talking to accounts and lawyers and I might have found a way for me to secure some income from my tax return for 2009 (filed by April 15, 2010). I had significant income for 2006, 2007 and 2008 but huge losses so far in 2009 which are forcing me into CH7. According to a tax expert I spoke with I can carry my 2009 losses back to offset against my 06/07/08 income on my 2009 tax return and get a significant ($30k+) tax refund from the IRS. Assuming I file for CH7 in June/July and hopefully its wrapped up 3-4 months after that would that significant 2009 tax return check received in 2010 be subject to the CH7?

[JRScott]

Yes with such a large amount it would indeed be considered property of the bk estate.

If the entire years refund is 30k and you filed July 1st for example, then half of that, 15k, becomes available for disbursement to your creditors. Basically the refund will be sent to the Trustee, not to you. He'll then do what he has to and when he's done return the unused portion to you.

[johnsmith11]

Yes with such a large amount it would indeed be considered property of the bk estate.

If the entire years refund is 30k and you filed July 1st for example, then half of that, 15k, becomes available for disbursement to your creditors. Basically the refund will be sent to the Trustee, not to you. He'll then do what he has to and when he's done return the unused portion to you.

Thanks for the reply. I'm not a guru but I feel like this might not be correct. I would be filing for CH7 in say June of 2009. Using my 2009 losses (reported April 15, 2010) is an election on my tax form. I could simply elect not to use it until 2010 taxes filed in 2011 or 2011 taxes filed in 2012. How is it possible for the trustee to come after tax refunds issued years after a bankruptcy and only accessible by an election made by me? According to NOLO's "How to file for chapter 7 bankruptcy" there are only three types of income that you have to report post bankruptcy and they have to occur within 180 days of the filing date. They include: an inheritance, property from a divorce settlement and proceeds of a life insurance policy. My refund would either happen 1yr, 2yrs or 3yrs after the filing of CH7. I'm not trying to be adversarial and I appreciate your input as this is obviously a very important topic to me to fully understand

[JRScott]

He would only be able to come for it if you filed it with your 2009 taxes.

So in my opinion if you have a choice for when to use it don't do it in 2009, wait til your 2010 taxes that you file in 2011.

Keep in my your tax return is an overpayment of taxes and thus not really income. Since it is an overpayment the BK Court's opinion is that it is income you are stowing away that had you chose to not overpay you would have had to pay creditors. Thus in most jurisdiction if the pro rated amount is a thousand dollars or more then they will seize the refund and declare you an asset case.