in general when is the short year election under section 139

in general when is the short year election under section 1398 of the internal Rebe us code advisable

Solution

Short year election under section 1398, of the Internal Revenue Code is applicable in case of an Individual Debtor in the year on the day before on which the bankrupcy case commences. If he files a petion under the above mentioned section with prior approval of secretary, his tax year can be divided in to two parts.

i.e First part and Second part.

First part is the part which ends on the commencement date, and

Second part is the part which starts on the commencement date

If the debtor elects the Short year, his tax liability for the first part of the year can allowed as claim, which reduces the Federal Tax liability of the individual debtor.

Short year election under section 1398 of the internal Rvenue us code is advisable, only when his ( individual debtor\'s ) assets are in bankruptcy estate which are other than exempted assets.