BDI (D) is an Indiana corporation. Barden was its sole shareholder, chief executive officer, and president. BDI qualified as a 'small business corporation' under I.R.C. § 1361(b), and, presumably at Barden's direction, had elected under I.R.C. § 1362(a) to be treated as an S-corp for purposes of federal income taxation. As an S-corp, BDI was not subject to federal taxation, see I.R.C. § 1363(a), or state taxation. Its income and losses were passed through to its shareholder. P is a Delaware corporation that owns and operates the Majestic Star II Casino and the Majestic Star Hotel in Gary, Indiana. BDI acquired P in 2005 and was, at all times relevant to this dispute, the ultimate owner of 100 percent of its stock. BDI elected to treat P as a QSub for federal tax purposes, pursuant to I.R.C. § 1361(b)(3)(B). All of P's assets, liabilities, and income were treated for federal tax purposes as the assets, liabilities, and income of BDI. P paid no federal taxes and all of its income and losses flowed through to Barden (through BDI). On November 23, 2009, P filed a voluntary petition for bankruptcy relief under the Code. The Debtors became debtors-in-possession of their respective bankruptcy estates, and thus had, with limited exceptions not relevant here, all of the powers and duties of a bankruptcy trustee in a Chapter 11 case. BDI and P retained their status as, an S-corp and a QSub. Barden and BDI did not file bankruptcy petitions, nor did they participate as debtors in any of the petitions at issue in this case. If S-corp status is revoked, the entity cannot elect such status again within five years of the revocation without the consent of the Secretary of the Treasury. That tax status may be revoked if more than half of the corporation's shareholders consent to the revocation. I.R.C. § 1362(d)(1)(B). P caused and consented to the revocation of BDI's status as an S-corp. P's QSub status was automatically terminated. BDI and P became C-corporations as of January 1, 2010. Neither BDI nor Barden sought authorization from P or from the Bankruptcy Court for the Revocation. On December 10, 2010, the Bankruptcy Court issued an order permitting the Debtors to convert P from a Delaware corporation to a Delaware LLC. On November 28, 2011, the P went ahead and converted to an LLC. On December 31, 2010, Ps filed an adversary complaint asserting that the Revocation caused an unlawful post-petition transfer of P's estate property, in violation of §§ 362 and 549 of the Bankruptcy Code. The IRS moved to dismiss contending that the Bankruptcy Court lacked jurisdiction and that the Debtors failed to state a claim under 12(b)(1) and 12(b)(6). Barden and BDI contend that because a QSub has no separate tax existence, P had no cognizable property interest in that status and that even if P's QSub status were a species of property, it was property that belonged to BDI and Barden. The Debtors moved for summary judgment and the Bankruptcy Court granted their motion and denied both the IRS's motion to dismiss. It held that the QSub was the property that belonged to P's bankruptcy estate. The Debtors' emergence from bankruptcy resulted in the cancellation of a substantial amount of indebtedness, which, in turn, generated 'cancellation of debt' (COD) income equal to the amount by which the debt was reduced in bankruptcy. The IRS said that the amount of that COD income was $170 million. COD income is generally subject to federal taxation. See I.R.C. § 61(a)(12) (including in the definition of 'gross income' 'income from the discharge of indebtedness'). With S-corp status, Barden is the taxpayer and would be liable for the taxes on the COD income. Neither Barden nor BDI was part of the P bankruptcy, so they may not qualify for the Bankruptcy Exception and could be liable for the tax on the COD income. The order caused the IRS to lose the benefit of P's tax liabilities being treated as an administrative expense of the bankruptcy estate, which would have allowed the government to be paid before most other creditors. See 11 U.S.C. § 503(b)(1)(B). By contrast, the Debtors, the former creditors who replaced BDI as the holders of P's equity, will continue to enjoy the tax-free status, while BDI retains liability for P's income taxes, even though BDI no longer has access to MSC II's income and cash flow to fund the tax payments. Also, P need not make use of the Bankruptcy Exception and thus need not reduce the value of other tax attributes dollar-for-dollar by the amount of COD income excluded from gross income. Ds appealed.