Chapter 7 and Chapter 11 Tax Tips

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A chapter 7 or Chapter 11 bankruptcy filing does not absolve the filer from filing a personal income tax return. At the date of the bankruptcy filing a bankruptcy estate is created. At this point, the individual must file a personal tax return for his personal income before and after the bankruptcy estate is created and an income tax return must be filed for the bankruptcy estate.

If a couple files a bankruptcy estate together then they must file a bankruptcy estate income tax return for each individual separately. They can still file a joint personal income tax return.

I have been involved where tax preparers have filed only a personal income tax return for a couple who jointly filed a Chapter 11 bankruptcy estate, including the taxable income for both bankruptcy estate tax returns with the personal income in a personal income tax return and it is a mess untangling it all.

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