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benefit of respondent. While this offer would have reduced the
risk that petitioners would receive a windfall from the
bankruptcy by virtue of the offer-in-compromise, it did nothing
to reduce respondent’s risk with respect to other creditors. As
Mr. Conte explained in his closing memorandum: if the offer-in-
compromise were accepted, any remaining funds in the bankruptcy
“would go to other creditors or to the taxpayer.” Petitioners
again fail to present any authority to suggest that their other
creditors would be precluded from objecting to any distribution
to respondent after the acceptance of their offer-in-compromise.
Petitioners make two additional arguments on why
respondent’s determination was an abuse of discretion. First,
petitioners suggest that respondent was announcing a bright-line
rule and did not exercise discretion at all. Second, petitioners
argue that respondent abused his discretion because he rejected
the offer-in-compromise solely on the basis of the amount offered
in contravention of section 7122(d)(3). We address each in turn.
Petitioners first take issue with Mr. Conte’s requirement
that their offer-in-compromise be increased by the amount of the
expected distribution from the bankruptcy. The IRM guidelines
instruct that an acceptable offer-in-compromise would have to
include the amount that respondent expected to receive from the
bankruptcy in addition to what respondent could collect from
petitioners directly. Petitioners argue that by relying upon
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