This case concerns an appeal from a bankruptcy court ruling on the effect of IRS tax liens for 1981 and 1982 income taxes in a Chapter 11 proceeding where the debtors are acting as debtors-in-possession. The district court vacated the bankruptcy court's decision and opinion and remanded the matter for further proceedings. On remand, the bankruptcy court must strike a stipulation regarding legal conclusions under 11 U.S.C. § 545(2), account for new facts including state tax liabilities and payments to the IRS, and reconsider whether the hypothetical bona fide purchaser standard creates an unfair advantage for debtors-in-possession compared to trustee-controlled estates and whether that standard logically applies to such debtors under the tax code.

taxesfederal powerpropertyprocedure