Order Sustaining Trustee's Objection to Exemption. The Chapter 7 Trustee objected to the Debtor’s claimed exemption of real property held as a tenancy by entirety with his non-filing spouse. Specifically, the Court considered whether the Debtor may exempt entireties property when the Internal Revenue Service holds a valid tax lien against that property and is a priority and general unsecured claimant in the Debtor’s bankruptcy case. Existing caselaw has established that the bankruptcy estate includes interests in entireties property even where only one spouse has filed. While the Debtor may exempt his tenancy by entirety interest in real property pursuant to 11 U.S.C. § 522(b)(3)(B), and thereby prevent the Trustee from distributing it to satisfy creditors, the Debtor may do so only to the extent that the Debtor’s interest “is exempt from process under applicable nonbankruptcy law.” Nonbankruptcy law includes state law and, under North Carolina law, the Debtor may exempt tenancy by entirety interests from the claims of non-joint creditors. Applicable nonbankruptcy law, however, also includes federal law, including the United States Tax Code. Under federal tax law, as interpreted by the United States Supreme Court in United States v. Craft, 535 U.S. 274 (2002), a federal tax lien attaches to the spouse’s interest in entireties property despite the existence of state law limitations on debts held by non-joint creditors. Therefore, the IRS debt for which the Debtor was liable prepetition is not immune or exempt from process under applicable nonbankruptcy law. Accordingly, the Court sustained the Trustee’s objection and the Debtor’s exemption was denied to the extent of the IRS tax lien and any debts held by joint-creditors of the Debtor and his non-filing spouse.