Section 16.27 Cases Treating Abandonments as Taxable Transfers

• Library: Bankruptcy Practice (2007 Ed. + 2015 Cum Supp)

C. (§16.27) Cases Treating Abandonments as Taxable Transfers

The leading case espousing the view that a bankruptcy trustee’s abandonment of property during the pendency of a bankruptcy proceeding is a taxable transfer to the estate is In re A.J. Lane & Co., 133 B.R. 264 (Bankr. D. Mass. 1991). In Lane, the debtor owned three apartment complexes, valued at approximately $53 million, which were encumbered by liabilities in excess of their fair market value. Together the properties had a built-in gain for tax purposes of nearly $41 million. The debtor filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code, and the Chapter 11 trustee sought to...