On appeal, the District Court for the Middle District of North Carolina (Biggs, J.) affirmed the ruling of the Bankruptcy Court sustaining the Chapter 7 Trustee’s objection to the Debtor’s claimed exemptions. The question presented on appeal was whether the Debtor may exempt entireties property from the bankruptcy estate with respect to a debt owed solely by the Debtor to the Internal Revenue Service (“IRS”) where the IRS is a priority and general unsecured claimant in the Debtor’s bankruptcy case. The District Court reviewed the Bankruptcy Court’s application of the law de novo and its findings of fact for clear error. 
     In adopting and affirming the Bankruptcy Court’s order, the District Court agreed that, while North Carolina law exempts entireties property from the claims of non-joint creditors, such property is not exempt under the U.S. Tax Code. The District Court found that, absent bankruptcy, the IRS would have been able to obtain a lien against the Debtor’s interest in the entireties property under applicable nonbankruptcy law and, therefore, the Bankruptcy Court was correct to disallow the exemption under 11 U.S.C. § 522(b)(3)(b) with respect to the IRS debt. While there was no evidence in the record that the IRS issued the demand necessary to establish a lien, Section 522(b)(3)(B) does not require a creditor to have established a lien in order to prevent a debtor from exempting the property from the bankruptcy estate. The District Court also rejected the Debtor’s contention that the Trustee lacked authority to assume the collection powers of the IRS under 11 U.S.C. § 544(a), noting that nothing in Section 544(a) exempts otherwise nonexempt property from the bankruptcy estate or limits the power of a trustee to collect and reduce to money the nonexempt property of the estate to pay actual creditors.