Keywords: business expenses . income .
Chapter 13 > Current Monthly Income > Business Expenses Income: Business Expenses; Where to deduct business expenses on Form 22C? Does CMI = "gross" or "net" business income?6 Cases , IssueID 24 |
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Ch 7 Means Test |
Ch 13 Means Test |
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Topic Description:This issue appears to be mostly confined to the Ninth Circuit but has spread to C.D. Ill. Lines of Cases:
Topic Background / Overview: |
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Debtors may not exclude ordinary and neccessary business expenses on line 3b of Form 22C in determining their current monthly income., They must instead list gross receipts as income and deduct business expenses from the expenses part of the form to determine "disposable" monthly income. NOTE: Requiring self-employed people to list their gross, rather than net income in the first part of the form pushes many of them to be above the median income for their state.
this Court will follow Wiegand, Arnold, and Bembenek and find that, in calculating current monthly income, a self-employed debtor must use gross business income and may not deduct business expenses in the calculation. Business expenses are, of course, deductible elsewhere in determining disposable income.
When there are business exepenses, they cannot be deducted on line 3b of Form 22C, they must be entered as an "Other Expenses" in part VI of the form. Below median income debtors can list their expenses on Schedule J.
Above median income debtors should list business expenses as "Other Necessary Expenses" as specified in the Internal Revenue Service Financial Analysis Handbook
statement of monthly income is only relevant if they have primarily consumer debts thereby making them potentially subject to the means testing required under section 707(b) of the Bankruptcy Code. Court agrees. If debts are primarily not primarily consumer debts, means test does not apply.
this Court will follow Wiegand, Arnold, and Bembenek and find that, in calculating current monthly income, a self-employed debtor must use gross business income and may not deduct business expenses in the calculation. Business expenses are, of course, deductible elsewhere in determining disposable income.
Cited by In Re Sharp in following Wiegand and Arnold. All three cases hold that, to the extent the B22C form allows business expenses to be deducted in the initial calculation of current monthly income, the Code controls and the conflicting portions of the form must be disregarded.
Debtors may not exclude ordinary and neccessary business expenses on line 3b of Form 22C in determining their current monthly income., They must instead list gross receipts as income and deduct business expenses from the expenses part of the form to determine "disposable" monthly income. NOTE: Requiring self-employed people to list their gross, rather than net income in the first part of the form pushes many of them to be above the median income for their state.
When there are business exepenses, they cannot be deducted on line 3b of Form 22C, they must be entered as an "Other Expenses" in part VI of the form. Below median income debtors can list their expenses on Schedule J.
Above median income debtors should list business expenses as "Other Necessary Expenses" as specified in the Internal Revenue Service Financial Analysis Handbook
statement of monthly income is only relevant if they have primarily consumer debts thereby making them potentially subject to the means testing required under section 707(b) of the Bankruptcy Code. Court agrees. If debts are primarily not primarily consumer debts, means test does not apply.
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