In Re the Matter of Ned H. Donnell, AKA Ned Halcomb Donnell, Bankrupt. Ned H. Donnell v. Commissioner of Internal Revenue Service

This bankruptcy case presents two questions, one substantive, the other procedural. The procedural question is whether the bankruptcy court abused its discretion in granting the defendant-appellee Commissioner of Internal Revenue Service (Commissioner) 20 extra days in which to file his notice of appeal from the judgment of the bankruptcy court entered on April 10, 1978. The substantive question is whether the plaintiff-appellant bankrupt (Donnell) “reported” the federal income tax he owed for 1970 on his return for that year, within the meaning of § 17(a)(1)(c) of the (old) Bankruptcy Act, 11 U.S.C. § 35 (a)(1)(c) (1976), by merely reporting his gross income and (improperly) claimed deductions, without, however, explicitly reporting that he owed the tax for which he has ultimately been found liable. The bankruptcy court held for Donnell on the substantive question. The district court ruled that the bankruptcy court did not abuse its discretion in granting the Commissioner an extension of time to file his notice of appeal; but that the bankruptcy court erred in ruling in favor of the bankrupt on the substantive question. We affirm.

I.

Donnell was a shareholder in a corporation…