CURRENT projections for milk prices, coupled with the high commodity costs of the last year, may force many dairy fanners to downsize or sell the cows. However, these restructurings may have tax consequences that replace the stress of mortgage debt with the strain of tax debt. Recent changes in bankruptcy law have made it a useful tool for avoiding those tax problems. Congress added Chapter 12 to the Bankruptcy Code in October 1986. Then, the purpose was to establish a workable system for the adjustment of the debts of family farmers. The financial distress of such farmers from 1982 to 1986 had provided abundant evidence that the other available bankruptcy tools were ill-suited to the task of reorganizing financially distressed family farms.
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