Bankruptcy - Individuals in Chapters 7 or 11
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Per IRS Publication 908 Bankruptcy Tax Guide, on page 3:

Individuals in Chapter 7 or 11

When an individual debtor files for bankruptcy under chapter 7 or 11 of the Bankruptcy Code, the bankruptcy estate is treated as a new taxable entity, separate from the individual taxpayer.

The bankruptcy estate in a chapter 7 case is represented by a trustee. The trustee is appointed to administer the estate and liquidate any nonexempt assets. In chapter 11 cases, the debtor often remains in control of the assets as a “debtor-in-possession” and acts as the bankruptcy trustee. However, the bankruptcy court, for cause, may appoint a trustee if such appointment is in the best interests of the creditors and the estate.

During the chapter 7 or 11 bankruptcy, the debtor continues to file an individual tax return on Form 1040 or 1040-SR. The bankruptcy trustee files a Form 1041 for the bankruptcy estate. However, when a debtor in a chapter 11 bankruptcy case remains a debtor-in-possession, he or she must file both a Form 1040 or 1040-SR individual return and a Form 1041 estate return for the bankruptcy estate (if return filing requirements).

On page 7:

Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due

Filing threshold. If the bankruptcy estate has gross income that meets or exceeds the minimum amount required for filing, the trustee or debtor-in-possession must file an income tax return on Form 1041. This amount is equal to the basic standard deduction for a married individual filing separately.

Transmittal for Form 1040 or 1040-SR. Form 1041 is used as a transmittal for Form 1040 or 1040-SR. If a return is required, the trustee or debtor-in-possession must complete the identification area at the top of Form 1041 and indicate the chapter under which the bankruptcy estate filed, either chapter 7 or chapter 11.

Prepare the bankruptcy estate's return by completing Form 1040 or 1040-SR. In the top margin of Form 1040 or 1040-SR, write “Attachment to Form 1041—DO NOT DETACH.” Then, attach Form 1040 or 1040-SR to the Form 1041 transmittal. Enter the tax and payment amounts on lines 24 through 30 of Form 1041, then sign and date the return. An example of a bankruptcy estate's tax return is shown later.

Note. The filing of the bankruptcy estate's tax return does not relieve a debtor from the requirement to file his or her individual tax return on Form 1040 or 1040-SR.

On page 8:

Estimated tax—Form 1041-ES. In most cases, the trustee or debtor-in-possession must pay any required estimated tax due for the bankruptcy estate. See the Form 1041-ES instructions for information on the minimum threshold amount required for filing Form 1041-ES, paying the estimated tax, and exceptions to filing.

On page 7:

Employer identification number (EIN). The trustee or debtor-in-possession must obtain an EIN for a bankruptcy estate. The trustee or debtor-in-possession uses this EIN on all tax returns filed for the bankruptcy estate with the IRS, including estimated tax returns.

CAUTION! The social security number of the individual debtor cannot be used as the EIN for the bankruptcy estate.

Obtain an EIN for a bankruptcy estate by applying in one of the following ways.

  • Online by clicking on the EIN link at IRS.gov/EIN. The EIN is issued immediately once the application information is validated.
  • By telephone at 800-829-4933 from 7:00 a.m. to 7:00 p.m. in the trustee's or debtor-in-possession's local time zone. Assistance provided to callers from Alaska and Hawaii will be based on the hours of operation in the Pacific time zone.
  • By mailing or faxing Form SS-4, Application for Employer Identification Number.

If the trustee or debtor-in-possession hasn't received the bankruptcy estate's EIN by the time the return is due, write “Applied for” and the date you applied in the space for the EIN. For more details, see Pub. 583, Starting a Business and Keeping Records.

Trustees representing 10 or more bankruptcy estates (other than estates that will be filing employment or excise tax returns) may request a series or block of EINs.

Note. This information is not intended to cover bankruptcy law in general, or to provide detailed discussions of the tax rules for the more complex corporate bankruptcy reorganizations or other highly technical transactions.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.