Donald and Yvonne Clayton - Page 8

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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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