Business income, chapter 13, means test
Posted: Wed Oct 27, 2010 7:12 pm
Weigand basically says you cannot delete business expenses from gross
revenue. It says insert business expenses somewhere down with the
other expenses if the debtor is above median based upon gross income.
The only difference it makes is that projected disposible income is
determined under 1325(b)(3) instead of 1325(b)(1)(B). Then as Peter
noted it is the Lanning and Kagenveama analysis if form B22C is
negative. Incorporating at least 6 months prior to filing completely
removes the issue as only the money paid to the debtor from the
corporation is included as salary. If less then 6 months, then that
gross revenue during portion of time while still operating as a sole
proprietor is included in the income calculation.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868
On Wed 27/10/10 6:36 PM , "Steven B. Lever" sblever@leverlaw.com
sent:
I like the way Peter thinks. However, John, you do have to overcome
Weigand; a case I only partially understand. Peter, is Weigand
ultimately only making the ACP longer for self employed individuals
(as opposed to employees of their own or other business entities), and
not really changing what their PDI calculation is? And does
incorporating prior to the income measuring period sidestep Weigand?
FROM: cdcbaa@yahoogroups.com [mailto:cdcbaa@yahoogroups.com] ON
BEHALF OF P L
SENT: Wednesday, October 27, 2010 5:38 PM
TO: cdcbaa@yahoogroups.com
SUBJECT: Re: [cdcbaa] Business income, chapter 13, means test [1
Attachment]
[ATTACHMENT(S) [1] FROM P L INCLUDED BELOW]
See 1325(b)(2)(B) and Weigand (BAP). I think you have a good
arguemnt that Lanning in conjunction with Kagenveama trumps Weigand if
B22C PDI adjusted for foreseeable income and expenses is $0 or
negative.
Peter M. Lively, JD/MBA
Law Office of Peter M. Lively * Personal Financial Law Center I
11268 Washington Blvd, Suite 203, Culver City, CA 90230-4647
Telephone: (310)391-2400 * (800)307-3328 * Fax: (310)391-2462
A-Bankruptcy-Attorney.com
Personal Financial Law Center II - Costa Mesa, CA
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FROM: John Faucher
TO: "cdcbaa@yahoogroups.com"
SENT: Wed, October 27, 2010 5:28:50 PM
SUBJECT: [cdcbaa] Business income, chapter 13, means test
Hello Chapter 13 gurus:
We have a chapter 13 client with a business relatively high
income (say $6,000/month) and expenses ($5,000/mo.), netting $1,000.
We ran the means test, Form B22C, through our software; it shows
an applicable commitment period of 36 months, based on the net income.
Looking at the form and what it says, especially on lines 3 and 15,
this all makes sense: annualized current monthly income is
derived from the businesss net income, established by setting forth
gross receipts at 3a and subtracting ordinary and necessary business
expense at 3b.
The trustee demands that we put the gross, rather than the net,
income on line 15, and increase the applicable commitment period to 60
months. Looking at the code, in particular 1325(b)(4) and 101(10A),
this makes sense: current monthly income is all income whether
taxed or not, isnt reduced by those eye-crossing paragraphs of 707,
and determines the applicable commitment period.
Has anyone had this issue, and do I have any basis on which to
oppose the 5-year commitment period? As a corollary, how much
precedential value does the court-issued Form B22C have when it
conflicts with the Code? Or is there some way to reconcile these two
which I do not see?
- John D. Faucher
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