Larry D. Delpit Dorothy D. Delpit v. Commissioner Internal Revenue Service

This case raises the question whether an automatic stay provision of the Bankruptcy Code, 11 U.S.C. § 362 (a)(1) (“Section 362(a)(1)”), applies to an appeal from a Tax Court judgment concerning an alleged tax deficiency on the part of the debtor. We conclude that Section 362(a)(1) applies to such an appeal. Accordingly, we hold that the proceedings before us are stayed as a matter of law.

I.

This case arose from a $38,939,020.97 claim by respondent-appellee Commissioner of Internal Revenue (“Commissioner”) against petitioners-appellants Larry D. Delpit and Dorothy D. Delpit (“Delpits”). On December 12, 1986, the Commissioner issued a Notice of Deficiency in the above amount to the Del-pits. The Commissioner claimed that the Delpits were responsible for certain tax liabilities arising from sham accounting transactions by Kern, Inc. (“Kern”), an oil refinery holding company that was formerly owned by the Delpits.

The Delpits disputed the Commissioner’s claim and filed a petition in Tax Court on March 13, 1987. On April 2, 1992, the Tax Court issued memorandum findings of fact and an opinion in favor of the Commissioner. See Delpit v. C.I.R., 61 T.C.M. (CCH) 2303 , 1991 WL 43439…