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offer.9 Respondent refused the second offer after applying the
national and local averages to estimate petitioner’s expenses
because the RCP exceeded the full amount of the tax liability and
was certainly much more than petitioner’s offer. In fact,
petitioner’s second offer falls short of a reasonable offer even
if his own calculation of expenses is used. The equity in
petitioner’s home alone exceeds both the offer and the full
amount of the tax liability, even at 25-percent ownership. Even
if we recalculated petitioner’s RCP in a manner most favorable to
petitioner, using a negative multiple of petitioner’s cashflows
with which he could offset equity in his other assets,10 the RCP
would far exceed petitioner’s $2,200 offer and cover most of the
outstanding $38,165.32 tax liability.11 Thus, petitioner’s
9 Calculation of 50-percent or only 25-percent home
ownership also shows that respondent in no way considered
petitioner’s wife’s assets in determining petitioner’s reasonable
collection potential, despite petitioner’s allegations to the
contrary.
10 The regulations and the internal revenue manual are both
silent on how to apply a negative future income. See sec.
301.7122-1T(c), Temporary Proced. & Admin. Regs., supra; 1
Administration, Internal Revenue Manual (CCH), sec. 5.8.5.5, at
16,339.
11 The collection potential based on negative income is
shown in the following calculation:
Second Offer
Equity in home $41,746
IRA 1,809
Cash on hand 5,738
Net value of assets 49,293
Monthly income $3,108
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Last modified: May 25, 2011