11 B 45378
In re Nekessa Danyelle Johnson The debtor filed a motion to vacate the Court’s order of March 27, 2012, which disallowed her exemption in an adoption tax credit provided by the Internal Revenue Code (the “I.R.C.”) on the basis of the general “public assistance benefit” exemption in 735 Ill. Comp. Stat. 5/12-1001(g)(1). The issue of whether the adoption tax credit is a public assistance benefit for purposes of the Illinois exemption statute is one of first impression in this jurisdiction. The Court noted that because the debtor filed her petition and taxes and claimed the credit in tax year 2011, section 36C of the I.R.C., which was in effect for that tax year, governed the matter. Explaining that the adoption tax credit was enacted as a financial incentive to defray the high costs associated with the adoption process, the Court noted that the Patient Protection and Affordable Care Act, which amended the I.R.C. for tax years 2010 and 2011, made the adoption tax credit refundable, allowing lower-income adoptive families to receive, for the first time, a cash refund from the government for their adoption expenses. Because the credit was refundable for the tax year at issue and because the Seventh Circuit has instructed that an exemption statute should be liberally construed in favor of the debtor, the Court granted the debtor’s motion to vacate the order that had disallowed her exemption in the adoption tax credit and overruled the trustee’s objection to the exemption.