Opinion ID: 1266472
Heading Depth: 3
Heading Rank: 1

Heading: Any Farm Assets

Text: Neither § 1222(a)(2)(A) nor any other provision in Chapter 12 defines the phrase farm assets. But 11 U.S.C. §§ 541, 1207, 101, and 522 are instructive in defining farm assets. See McQueen & Williams, supra. Section 541(a)(1) provides that the property of the estate consists of all legal or equitable interests of the debtor in property as of the commencement of the case. Under § 1207(a), [p]roperty of the estate includes, in addition to the property specified in section 541 . . . all property of the kind specified in such section that the debtor acquires after the commencement of the case. . . . Therefore, postpetition income is included in the ambit of the estate and is usually used to fund, along with other financial sources, the Chapter 12 farming operations plan. It is this property of the estate that is subject to administration under the Bankruptcy Code and is used to satisfy, among other things, allowed claims in accordance with the priority and distributional rules in bankruptcy. McQueen & Williams, supra. The term property, as used in §§ 541 and 1207, is interchangeable with the term asset, as used in §§ 101(18) and 522(2). See id. (noting that § 101(18) uses the term `assets related to a farming operation' to determine family farmer eligibility and that, under § 522(a), the individual debtor must file a `Schedule of Assets' so that the parties in interest can determine the extent and value of the property of the estate). An `asset' is defined as `1. An item that is owned and has value. 2. The entries on a balance sheet showing the items of property owned, including cash, inventory, equipment, real estate, accounts receivable, and goodwill. 3. All the property of a person available for paying debts. ' Navarre v. Luna (In re Luna), 406 F.3d 1192, 1199 (10th Cir.2005) (quoting Black's Law Dictionary 112 (7th ed.1999)) (emphasis added). As a result, § 1222(a)(2)(A)'s use of the term `any farm assets,' like § 522's use of the term `assets' and §§ 541(a) and 1207's use of the term `property,' is all encompassing and broadly defined. McQueen & Williams, supra. Furthermore, § 101(18), (20), and (21) give a specific meaning to the phrase farm assets, as used in § 1222(a)(2)(A). Section 101(18) provides that a family farmer is one engaged in a farming operation. Section 101(20) defines a farmer as a person that received more than 80 percent of [his] gross income during the taxable year . . . immediately preceding the taxable year . . . in which the case . . . was commenced from a farming operation owned or operated by such person. (Emphasis added.) Farming operation is defined as including farming, tillage of the soil, dairy farming, ranching, production or raising of crops, poultry, or livestock, and production of poultry or livestock products in an unmanufactured state. 11 U.S.C. § 101(21). Thus, farm assets would include any asset related to farming operations, whether or not actually used in farming operations. McQueen & Williams, supra. Farm assets would therefore include capital assets under I.R.C. § 1231, other property that may receive favorable tax treatment under I.R.C. § 1232, and inventory items that would otherwise generate ordinary income under I.R.C. § 61. Id. Here, the slaughter hogs were assets, as they were the property of the Knudsens. The slaughter hogs were also farm assets because they were a part of the Knudsens' farming operation, which included the production of livestock. Thus, the slaughter hogs constitute farm assets.