§1232 Claim by a Governmental Unit Based on the Disposition of Property Used in a Farming Operation

Summary

If a government has an unsecured claim because farm property the debtor used was sold, transferred, or otherwise disposed of, that claim is treated as if it was an unsecured debt that existed before the bankruptcy petition. The claim does not get priority, must be provided for in the debtor’s plan, and will be discharged under section 1228. For some bankruptcy rules (sections 1225(a)(4), 1228(b)(2), and 1229(b)(1)), the amount paid on that claim is whatever a Chapter 7 liquidation would pay if the claim were an unsecured, nonpriority, pre‑petition claim. For other rules (sections 523(a), 1228(a)(2), and 1228(c)(2)), the claim is not treated as the types listed in 523(a)(1)(A) or (B). A government may file a proof of claim for a post‑petition claim. If the debtor files a tax return after filing, the debtor must notify the tax agency and give it 180 days to file; if the agency does not, the debtor or trustee may file a matching claim. Claims are decided under section 502 as if they arose just before the petition.