(a) An entity may timely file a request for payment of an 
administrative expense, or may tardily file such request if permitted by 
the court for cause.
    (b) After notice and a hearing, there shall be allowed 
administrative expenses, other than claims allowed under section 502(f) 
of this title, including--
        (1)(A) the actual, necessary costs and expenses of preserving 
    the estate, including wages, salaries, or commissions for services 
    rendered after the commencement of the case;
        (B) any tax--
            (i) incurred by the estate, except a tax of a kind specified 
        in section 507(a)(8) of this title; or
            (ii) attributable to an excessive allowance of a tentative 
        carryback adjustment that the estate received, whether the 
        taxable year to which such adjustment relates ended before or 
        after the commencement of the case; and

        (C) any fine, penalty, or reduction in credit relating to a tax 
    of a kind specified in subparagraph (B) of this paragraph;
        (2) compensation and reimbursement awarded under section 330(a) 
    of this title;
        (3) the actual, necessary expenses, other than compensation and 
    reimbursement specified in paragraph (4) of this subsection, 
    incurred by--
            (A) a creditor that files a petition under section 303 of 
        this title;
            (B) a creditor that recovers, after the court's approval, 
        for the benefit of the estate any property transferred or 
        concealed by the debtor;
            (C) a creditor in connection with the prosecution of a 
        criminal offense relating to the case or to the business or 
        property of the debtor;
            (D) a creditor, an indenture trustee, an equity security 
        holder, or a committee representing creditors or equity security 
        holders other than a committee appointed under section 1102 of 
        this title, in making a substantial contribution in a case under 
        chapter 9 or 11 of this title;
            (E) a custodian superseded under section 543 of this title, 
        and compensation for the services of such custodian; or
            (F) a member of a committee appointed under section 1102 of 
        this title, if such expenses are incurred in the performance of 
        the duties of such committee;

        (4) reasonable compensation for professional services rendered 
    by an attorney or an accountant of an entity whose expense is 
    allowable under paragraph (3) of this subsection, based on the time, 
    the nature, the extent, and the value of such services, and the cost 
    of comparable services other than in a case under this title, and 
    reimbursement for actual, necessary expenses incurred by such 
    attorney or accountant;
        (5) reasonable compensation for services rendered by an 
    indenture trustee in making a substantial contribution in a case 
    under chapter 9 or 11 of this title, based on the time, the nature, 
    the extent, and the value of such services, and the cost of 
    comparable services other than in a case under this title; and
        (6) the fees and mileage payable under chapter 119 of title 28.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2581; Pub. L. 98-353, title III, 
Sec. 446, July 10, 1984, 98 Stat. 374; Pub. L. 99-554, title II, 
Sec. 283(g), Oct. 27, 1986, 100 Stat. 3117; Pub. L. 103-394, title I, 
Sec. 110, title II, Sec. 213(c), title III, Sec. 304(h)(2), Oct. 22, 
1994, 108 Stat. 4113, 4126, 4134.)


                      Historical and Revision Notes

                         legislative statements

    Section 503(a) of the House amendment represents a compromise 
between similar provisions in the House bill and the Senate amendment by 
leaving to the Rules of Bankruptcy Procedure the determination of the 
location at which a request for payment of an administrative expense may 
be filed. The preamble to section 503(b) of the House bill makes a 
similar change with respect to the allowance of administrative expenses.
    Section 503(b)(1) adopts the approach taken in the House bill as 
modified by some provisions contained in the Senate amendment. The 
preamble to section 503(b) makes clear that none of the paragraphs of 
section 503(b) apply to claims or expenses of the kind specified in 
section 502(f) that arise in the ordinary course of the debtor's 
business or financial affairs and that arise during the gap between the 
commencement of an involuntary case and the appointment of a trustee or 
the order for relief, whichever first occurs. The remainder of section 
503(b) represents a compromise between H.R. 8200 as passed by the House 
and the Senate amendments. Section 503(b)(3)(E) codifies present law in 
cases such as Randolph v. Scruggs, 190 U.S. 533, which accords 
administrative expense status to services rendered by a prepetition 
custodian or other party to the extent such services actually benefit 
the estate. Section 503(b)(4) of the House amendment conforms to the 
provision contained in H.R. 8200 as passed by the House and deletes 
language contained in the Senate amendment providing a different 
standard of compensation under section 330 of that amendment.


                        senate report no. 95-989

    Subsection (a) of this section permits administrative expense 
claimants to file with the court a request for payment of an 
administrative expense. The Rules of Bankruptcy Procedure will specify 
the time, the form, and the method of such a filing.
    Subsection (b) specifies the kinds of administrative expenses that 
are allowable in a case under the bankruptcy code. The subsection is 
derived mainly from section 64a(1) of the Bankruptcy Act [section 
104(a)(1) of former title 11], with some changes. The actual, necessary 
costs and expenses of preserving the estate, including wages, salaries, 
or commissions for services rendered after the order for relief, and any 
taxes on, measured by, or withheld from such wages, salaries, or 
commissions, are allowable as administrative expenses.
    In general, administrative expenses include taxes which the trustee 
incurs in administering the debtor's estate, including taxes on capital 

gains from sales of property by the trustee and taxes on income earned 
by the estate during the case. Interest on tax liabilities and certain 
tax penalties incurred by the trustee are also included in this first 
priority.
    Taxes which the Internal Revenue Service may find due after giving 
the trustee a so-called ``quickie'' tax refund and later doing an audit 
of the refund are also payable as administrative expenses. The tax code 
[title 26] permits the trustee of an estate which suffers a net 
operating loss to carry back the loss against an earlier profit year of 
the estate or of the debtor and to obtain a tentative refund for the 
earlier year, subject, however, to a later full audit of the loss which 
led to the refund. The bill, in effect, requires the Internal Revenue 
Service to issue a tentative refund to the trustee (whether the refund 
was applied for by the debtor or by the trustee), but if the refund 
later proves to have been erroneous in amount, the Service can request 
that the tax attributable to the erroneous refund be payable by the 
estate as an administrative expense.
    Postpetition payments to an individual debtor for services rendered 
to the estate are administrative expenses, and are not property of the 
estate when received by the debtor. This situation would most likely 
arise when the individual was a sole proprietor and was employed by the 
estate to run the business after the commencement of the case. An 
individual debtor in possession would be so employed, for example. See 
Local Loan v. Hunt, 292 U.S. 234, 243 (1943).
    Compensation and reimbursement awarded officers of the estate under 
section 330 are allowable as administrative expenses. Actual, necessary 
expenses, other than compensation of a professional person, incurred by 
a creditor that files an involuntary petition, by a creditor that 
recovers property for the benefit of the estate, by a creditor that acts 
in connection with the prosecution of a criminal offense relating to the 
case, by a creditor, indenture, trustee, equity security holder, or 
committee of creditors or equity security holders (other than official 
committees) that makes a substantial contribution to a reorganization or 
municipal debt adjustment case, or by a superseded custodian, are all 
allowable administrative expenses. The phrase ``substantial contribution 
in the case'' is derived from Bankruptcy Act Secs. 242 and 243 [sections 
642 and 643 of former title 11]. It does not require a contribution that 
leads to confirmation of a plan, for in many cases, it will be a 
substantial contribution if the person involved uncovers facts that 
would lead to a denial of confirmation, such as fraud in connection with 
the case.
    Paragraph (4) permits reasonable compensation for professional 
services rendered by an attorney or an accountant of an equity whose 
expense is compensable under the previous paragraph. Paragraph (5) 
permits reasonable compensation for an indenture trustee in making a 
substantial contribution in a reorganization or municipal debt 
adjustment case. Finally, paragraph (6) permits witness fees and mileage 
as prescribed under chapter 119 [Sec. 2041 et seq.] of title 28.


                               Amendments

    1994--Subsec. (a). Pub. L. 103-394, Sec. 213(c), inserted ``timely'' 
after ``may'' and ``, or may tardily file such request if permitted by 
the court for cause'' before period at end.
    Subsec. (b)(1)(B)(i). Pub. L. 103-394, Sec. 304(h)(2), substituted 
``507(a)(8)'' for ``507(a)(7)''.
    Subsec. (b)(3)(F). Pub. L. 103-394, Sec. 110, added subpar. (F).
    1986--Subsec. (b)(1)(B)(i). Pub. L. 99-554, Sec. 283(g)(1), 
substituted ``507(a)(7)'' for ``507(a)(6)''.
    Subsec. (b)(5). Pub. L. 99-554, Sec. 283(g)(2), inserted ``and'' 
after ``title;''.
    Subsec. (b)(6). Pub. L. 99-554, Sec. 283(g)(3), substituted a period 
for ``; and''.
    1984--Subsec. (b). Pub. L. 98-353, Sec. 446(1), struck out the comma 
after ``be allowed'' in provisions preceding par. (1).
    Subsec. (b)(1)(C). Pub. L. 98-353, Sec. 446(2), struck out the comma 
after ``credit''.
    Subsec. (b)(2). Pub. L. 98-353, Sec. 446(3), inserted ``(a)'' after 
``330''.
    Subsec. (b)(3). Pub. L. 98-353, Sec. 446(4), inserted a comma after 
``paragraph (4) of this subsection''.
    Subsec. (b)(3)(C). Pub. L. 98-353, Sec. 446(5), struck out the comma 
after ``case''.
    Subsec. (b)(5). Pub. L. 98-353, Sec. 446(6), struck out ``and'' 
after ``title;''.
    Subsec. (b)(6). Pub. L. 98-353, Sec. 446(7), substituted ``; and'' 
for period at end.


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not 
applicable with respect to cases commenced under this title before Oct. 
22, 1994, see section 702 of Pub. L. 103-394, set out as a note under 
section 101 of this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-554 effective 30 days after Oct. 27, 1986, 
see section 302(a) of Pub. L. 99-554, set out as a note under section 
581 of Title 28, Judiciary and Judicial Procedure.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 106, 346, 348, 361, 364, 
365, 504, 507, 557, 726, 901, 922, 1114, 1205, 1226, 1228, 1326 of this 
title; title 26 section 1398.