Deed Tax Bankruptcy

​Chapter 11 and 12- Exemption Under Federal Law

The U.S. Congress has provided a special tax provision exempting deeds executed as part of a plan of reorganization under Chapter 11 and Chapter 12 bankruptcy cases.  For more information on federal Bankruptcy Code see United States Code.

• Chapter 11, According to Section 1146 (a) of the federal Bankruptcy Code:

“The issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under Section 1129 of this title, may not be taxed under any law imposing a stamp tax or similar tax.”

• Chapter 12, According to section 1231 (a ) of the federal Bankruptcy Code:

“The issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under Section 1225 of this title, may not be taxed under any law imposing a stamp tax or similar tax.”   

Deeds from Chapter 7, 9, and 13 Bankruptcy - Taxable

Deed tax is due on the execution of a deed conveying legal ownership of real property from a bankruptcy estate in connection with the following bankruptcy cases: 

• Chapter 7 (liquidation)

• Chapter 9 (municipal reorganization)

• Chapter 13 (individual repayment plan)