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Internal Revenue Manual (IRM) section 5.8.11.2.1; she also noted
that petitioners had two other vehicles. Finally, she reduced
petitioners’ other expense of $1,300 to $255, noting that
petitioners had not substantiated the $1,300 but that $255
represented the average amount of attorney’s fees paid by
petitioners in the preceding 29 months. Cochran concluded that
petitioners’ monthly income was $2,806 (reported income of $2,516
+ $290), that petitioners’ monthly expenses totaled $3,495
(reported amount of $5,429 - $6 - $405 - $478 - $1,300 + $255),
and that petitioners had had no monthly excess income or future
income potential.
Cochran also observed that petitioners received in 2004 a
$65,700 taxable distribution from an individual retirement
account. Cochran noted that petitioners’ monthly allowable
expenses of $3,495 exceeded their monthly income of $2,806 by
$689 and allotted $8,268 ($689 x 12) of the $65,700 distribution
to the payment of petitioners’ necessary living expenses.
Cochran considered the balance of the distribution, $57,432, to
be a dissipation of assets and factored that balance into
petitioners’ reasonable collection potential. Cochran concluded
that petitioners’ net realizable equity in their assets was
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