Opinion ID: 1502953
Heading Depth: 1
Heading Rank: 2

Heading: As to Taxes Paid by the Trustee After the Order of Liquidation.

Text: Following the order of liquidation of January 12, 1938, the trustee paid a total of $2,316.76 to the United States and the State of New Jersey for Social Security taxes and New Jersey unemployment compensation taxes. This total included the sum of $705.36 for Old Age Pension insurance pursuant to the Act of August 14, 1935, c. 531, Title II, Sec. 201, 49 Stat. 622, 42 U.S.C.A. § 401, of which the employees advanced $205.36, leaving a balance of $500 paid by the trustee on this account. The referee recommended to the District Court that the trustee be surcharged as to this $500    with the difference between the $500    and the amount which would be paid in dividends on the said claim [of the United States]   . The District Court confirmed this conclusion and the trustee has not appealed from its order. The trustee was authorized expressly to carry on the business of the debtor. The taxes which he incurred were inescapable if that business was to be carried on. They were therefore expenses of administration when incurred. Section 77B, sub. k(5), provides that upon entry of an order of liquidation, debts shall be entitled to priority as provided in section 64 [104]; We are of the opinion that the word debts includes expenses of administration, which are debts incurred by the trustee. These debts of the trustee included the claim of the appellant, the taxes and all other expenses of administration. All were on a parity before the entry of the order of liquidation and they remained upon a parity after the order of liquidation was filed. All were payable as expenses of administration pursuant to the provisions of Section 64 of the Bankruptcy Act as amended. [3] In short, the claim of the appellant was and is entitled to share in the corpus of the estate upon an equal footing with the taxes referred to under this, the second heading of this opinion.