In the Matter of Unified Control Systems, Inc., Bankrupt. James S. Mahon, Trustee in Bankruptcy v. United States Internal Revenue Service

This case involves a controversy between the United States and the Bankruptcy trustee concerning the right of the Government to recover federal excise taxes against the estate of the bankrupt. The United States filed its proof of claim in the sum of $2,804,-839.35. The trustee filed objections, relying on section 57j of the Bankruptcy Act (11 U.S.C. 93(j)), which provides that a debt which constitutes a “penalty or forfeiture” may not be allowed in bankruptcy, except to the extent that the claiming party can show “pecuniary loss.” The Bankruptcy judge agreed with the trustee. The district…