Eleventh Circuit: S Corporation Election Is Not Property of Bankruptcy Estate
The U.S. Court of Appeals for the Eleventh Circuit ruled in Owoc v. Liquidating Trustee (No. 24-14048, decided August 10, 2026) that a bankrupt company's Subchapter S corporation election is not property of its bankruptcy estate. As a result, the company's former CEO and sole shareholder may revoke the S election without violating the automatic stay. The practical significance: an owner may not wish to continue recognizing income generated by the bankrupt entity on their personal return. This decision clarifies that the S election — and the right to revoke it — remains with the shareholder, not the estate. Clients with S corporation interests or involvement in bankruptcy proceedings should consult with counsel to evaluate the implications for their tax and estate planning.