IN RE SMITH

No. 08-2880.

614 F.3d 654 (2010)

In re Keith SMITH and Dawn Smith, Debtors. Keith Smith and Dawn Smith, Plaintiffs-Appellants, v. SIPI, LLC and Midwest Capital Investments, LLC, Defendants-Appellees.

United States Court of Appeals, Seventh Circuit.

Decided July 27, 2010.


Attorney(s) appearing for the Case

Arthur G. Jaros, Jr., Attorney (argued), Richter & Jaros, Oak Brook, IL, for Debtors.

Robert S. Krockey, Attorney (argued), Krockery, Cernugel, Cowgill, Clark, Ltd., Joliet, IL, Edward P. Freud, Lindsay A. Fisher (argued), Attorneys, Ruff, Weidenaar & Reidy, Chicago, IL, for Defendants-Appellees.

Before WILLIAMS, SYKES, and TINDER, Circuit Judges.


TINDER, Circuit Judge.

It stands to reason that people facing bankruptcy might also have tax problems, so federal courts often apply the bankruptcy statutes in tandem with other sources of tax law. This case presents a puzzling tension between the bankruptcy fraudulent transfer statute, 11 U.S.C. § 548, and Illinois law on the "tax sale" of a debtor's property.

Section 548 allows debtors to avoid certain transfers of their property to creditors, but only...

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