Sen. Chuck Grassley (R-Iowa) said on Tuesday that he will introduce legislation to keep the chapter 12 more farmer-friendly after it was weakened by a Supreme Court ruling on Monday in Hall v. U.S., Agriculture.com reported yesterday. The Supreme Court's ruling affirms a lower court ruling that requires an Arizona farm couple to pay full capital gains taxes on land sold after they had entered into a reorganization plan. Grassley has defended his view that bankrupt farmers should be protected from full tax liability previously in Congress. "Although chapter 12 remains a farm-friendly alternative to other bankruptcy plans, this decision does diminish the ability of famers to structure a viable chapter 12 plan,” says Gary Maydew, a retired professor of accounting at Iowa State University who writes for Successful Farming magazine. “Often a sale of the farmer's appreciated farm land may represent the best vehicle to use to execute a payment plan. By asserting the capital gains tax on the sale, the IRS will hinder the ability of farmers to successfully implement a reorganization."
For more information on the Supreme Court's Decision in Hall v. U.S., click here: http://news.abi.org/supreme-court/hall-v-united-states-10-875