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After receiving counsel’s advice, on November 8, 2004, Mr.
Conte sent petitioners a letter informing them that--
I have received guidance from our Counsel regarding the
acceptance of an Offer in Compromise in an instance
where the distribution of the assets of the bankruptcy
has not been completed. This, as you may recall, was
the primary issue surrounding your * * * request for an
offer.
It is Counsel’s opinion, as it is mine, that if the
Service were to accept an offer in this instance, the
Service would at that point no longer have a claim to
any distribution of the bankruptcy proceeds.
It is also our opinion that the only way that an offer
could be accepted under these circumstances, is for the
Service to attempt to determine how much of the
distribution we would be entitled to and add that to
the amount of the offer.
Mr. Conte went on to reason that respondent would likely receive
approximately $20,000 from the pending distribution.
Accordingly, Mr. Conte informed petitioners that their offer-in-
compromise would have to be increased by $20,000 before it could
be accepted.
By letter dated November 22, 2004, petitioners responded
that they could not pay the estimated $20,000 to respondent that
was pending distribution without first receiving the
distribution. As an alternative, petitioners offered to
relinquish any rights they might have to the distribution for the
benefit of respondent. Mr. Conte determined that this offer-in-
compromise still risked respondent’s forthcoming distribution and
thus could not be accepted before receipt of the distribution
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