SECTION 2. BACKGROUND

.01 Chapter 12 of the Bankruptcy Code provides for the adjustment of debts of a family farmer or fisherman with regular annual income and contemplates the filing of a plan to do so. The income tax effects of transactions proposed in a chapter 12 plan could affect the feasibility of the plan in some cases.

.02 The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109–8, 119 Stat. 23 (2005), amended 11 U.S.C. § 1231(b) to allow bankruptcy courts to authorize the proponents of chapter 12 plans to request determinations of the federal income tax effects of proposed plans, limited to questions of law. In the event of an actual controversy, the court may declare the tax effects of a proposed plan after the earlier of the date on which the governmental unit

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reflected an accurate statement of the controlling facts, (4) the transactions proposed in the plan were carried out substantially as proposed, and (5) there has been no change in the law that applies to the period during which the transactions were consummated.