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that the discharge of indebtedness income belongs to the
corporation and not him. Specifically, petitioner failed to
prove that the discharge of indebtedness income resulted
exclusively from the cancellation of corporate indebtedness.
Furthermore, other than petitioner’s generalized statement that
“all of * * * [his] money was gone” at the time, there is no
evidence in the record that petitioner was insolvent. See sec.
108(a)(1)(B), (d)(3).3
Finally, we must consider whether it was an abuse of
discretion for the Appeals Office to reject petitioner’s offer in
compromise. Accordingly, we review whether respondent’s
determination regarding the offer in compromise was arbitrary,
capricious, or without sound basis in fact or law. Woodral v.
Commissioner, 112 T.C. 19, 23 (1999); Fowler v. Commissioner,
T.C. Memo. 2004-163.
Upon review of the record, it is clear that the Appeals
Office considered petitioner’s offer in compromise. Petitioner
was given several opportunities to provide additional information
and documentation to support his assertion that the discharged
debt properly belonged to the corporation. While petitioner
continually made assurances to the Appeals Office that such
3 While the record contains only outdated financial
information, to the extent any inference can be drawn with
respect to petitioner’s financial condition the financial
information does not suggest that petitioner was insolvent. For
example, on petitioner’s 1986 Federal tax return, he reported
total income of $840,466. Additionally, on petitioner’s
“Statement of Financial Condition” as of Jan. 13, 1988, his
“Assets in excess of Liabilities” were $5,478,025.
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