Missouri Building LLC v. Clark (In re Seferyn), B.A.P. 10th Cir., No. KS-07-094 (May 15, 2008)

Bankruptcy Appellate Panel Upholds IRA Assets Exclusion discusses how a 10th U.S. Circuit Bankruptcy Appellate Panel ruled that ESOP proceeds rolled into an IRA were excludable from the debtor's bankruptcy estate:

Missouri Building argued the ESOP was not a qualified retirement plan because it did not comply with IRS's Revenue Ruling 2004-4, which meant the IRA assets should be counted among the debtor's bankruptcy estate. "The IRS issued a favorable determination letter specific to the ESOP established by Volo Holdings in its organization form at the time of creation. Missouri Building did not present evidence that the ESOP was established and administered in any way other than the way initially approved by the IRS," the court said.

This is consistent with a 2005 Supreme Court Ruling that exempts IRAs from a debtor's bankruptcy estate.

Related Links:

• IRS Revenue Ruling 2004-4 – Prohibited Allocations of Securities in an S Corporation – This revenue ruling pertains to ESOPs, subchapter S corporations, synthetic equity, nonallocation years, and "listed transactions."
• IRC Section 409(p) Anti-Abuse Testing, History of Regulations, and Private Letter Ruling (PLR) 200804023
• In re Christopher Joseph SEFERYN, Debtor. Missouri Building, LLC, Appellant, v. Carl R. Clark, Trustee, and Christopher Joseph Seferyn, Appellees. , 10th Cir.BAP (Kan.), May 15, 2008
• US Supreme Court Extends Bankruptcy Protection to IRAs