⁸11 USC Sections 728(a) and 1146(a).

⁹11 USC Section 346(c)(1) prohibits corporations from bifurcating state and local income tax periods; Sec. 1399 states that no new taxable entity is created when a corporation files for bankruptcy.

¹⁰In re Pacific-Atlantic Trading Co., 64 F3d 1292 (9th
Cir. 1995); see also Elizabeth Bellus, 125 F3d 821 (9th Cir. 1997).

¹¹In re Hillsborough Holdings Corp., 156 BR 318 (MD Fla 1995), affd, 116 F3d 1391 (11th Cir. 1997).

¹²Sec. 1398(b)(2) states that for the purposes of bankruptcy, a partnership is not treated as an individual, but an individual debtors interest in a partnership is treated the same as any other interest of the debtor.

¹³Aron B. Katz, 116 TC 5 (2001).

¹⁴In re Prime Motor Inns Inc., 144 BR 554 (SD Fla. 1992).

¹⁵Accounting Principles Board, Opinion No. 28, Interim Financial Reporting (1973).

¹⁶Financial Accounting Standards Board, Statement of Financial Accounting Standards No. 18, Financial Reporting for Segments of a Business EnterpriseInterim Financial Statements (November 1977).

¹⁷Under the gross-profit method, previous-period returns are examined to arrive at an estimated gross-profit percentage of sales. Current-year sales are then multiplied by this percentage to derive this periods estimated gross profit. COGS is the difference between sales and gross profit.

¹⁸Because the purpose of bifurcation is to determine tax liabilities, modified accelerated cost recovery rules (not GAAP methods) will be used to derive the current-years depreciation figures, pro-rated daily between the two short periods.

¹⁹See Kieso and Weygandt, Intermediate Accounting (John Wiley & Sons, 7th ed. 1992).

²⁰See note 10, supra.

²¹In re Northeastern Ohio Gen. Hosp. Assn, 126 BR 513 (ND OH 1991).

²²See In re Garfinckels Inc., 203 BR 814 (D DC 1996).

²³Id.

²⁴See In re Marion County Treasurer, 214 BR 188 (SD IN 1997).

²⁵See In re Lorber Indus. of California Inc., 675 F2d 1065 (9th Cir. 1982).

²⁶See In re Sunnyside Coal Co., 146 F3d 127 (10th Cir. 1998).

²⁷In re Bayly Corp., 163 F3d 1205 (10th Cir. 1998).

²⁸See note 26, supra.

²⁹This includes wages, salaries and commissions for vacation, severance and sick pay.

³⁰11 USC Section 1114(e)(1).

³¹This treatment is new to the last decade. Previously, all taxes for the year of a bankruptcy filing would have been considered first priority. Taxes for the previous three years would have been (and still are) exempted claims. Older taxes would have been (and still are) dismissible through bankruptcy court.

³²For example, Federal income taxes can be collected without the bar of the statute of limitations. A side agreement with the IRS for these particular taxes, in addition to the bankruptcy plan/discharge, would be required to stay all creditor action. As a practical matter, if the taxpayer were a corporation and could not reach an agreement on both the bankruptcy plan and with the IRS on exempted claims (if any), the corporation might have to liquidate.