Court to decide whether farmers must pay tax

June 13, 2011 - 11:12 AM

WASHINGTON (AP) — The Supreme Court will decide whether a couple must pay taxes on the bankruptcy sale of their family farm.

The high court on Monday agreed to hear an appeal from Lynwood and Brenda Hall.

The Halls were forced to sell their family farm for $960,000 to settle their bankruptcy debts. That sale brought about capital gains taxes of $26,000.The Halls wanted the taxes treated as part of the bankruptcy, paying part of it and having the court discharge the rest.

The IRS objected to that plan, saying all of the taxes must be paid and the 9th U.S. Circuit Court of Appeals in San Francisco agreed with the tax agency.

The high court will review that decision.

The case is Lynwood and Brenda Hall v. United States, 10-875.