David L. Samuel - Page 16




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          Revenue Manual (CCH), sec. 5.8, at 16,253.  Both petitioner and             
          respondent focus substantial attention in their briefs to the               
          issue of “Dissipation of Assets”, discussed below.                          
               The IRM provides in part, in “Dissipation of Assets”,                  
          section 5.8.5.4, at 16,339-6, the following:                                
               (1)  During an offer investigation it may be                           
               discovered that assets (liquid or non-liquid) have been                
               sold, gifted, transferred, or spent on non-priority                    
               items and/or debts and are no longer available to pay                  
               the tax liability.  This section discusses treatment of                
               the value of these assets when considering an offer in                 
               compromise.                                                            
                         *    *    *    *    *    *    *                              
               (2)  Once it is determined that a specific asset has                   
               been dissipated, the investigation should address                      
               whether the value of the asset, or a portion of the                    
               value, should be included in an acceptable offer                       
               amount.                                                                
               (3)  Inclusion of the value of dissipated assets                       
               must clearly be justified in the case file and                         
               documented on the ICS/AOIC history.  * * *                             
               (4)  When the taxpayer can show that assets have been                  
               dissipated to provide for necessary living expenses, these             
               amounts should not be included in the reasonable collection            
               potential (RCP) calculation.                                           
                         *    *    *    *    *    *    *                              
               (5)  If the investigation clearly reveals that assets                  
               have been dissipated with a disregard of the outstanding tax           
               liability, consider including the value in the reasonable              
               collection potential (RCP) calculation.  [Emphasis added.]             












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