Arthur A. Lemann III and Roberta A. Lemann - Page 6

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          compromise, petitioners' future income was $2,713 for 48 months,3           
          or $130,224.  In a letter to her dated May 14, 2002, Mr. Lemann             
          responded:                                                                  
               It seems to me that the future income calculation                      
               overlooks two important facts:                                         
               1.   I am now 60 years of age and may very well not                    
                    have 4 more years of productivity;                                
               2.   Converting that future income potential into a                    
                    $130,224.00 lump sum is impossible given my                       
                    financial circumstances.                                          
               The offer specialist's notes record that she received this             
          letter on May 21, 2002, and that on May 23, 2002, she discussed             
          with Mr. Lemann the special circumstances that would give rise to           
          a departure from the standard computation of future income and              
          gave examples.  The offer specialist's notes further record that            
          Mr. Lemann did not provide her with any information that                    
          constituted special circumstances.                                          
               On May 24, 2002, the offer specialist forwarded her final              
          computations of petitioners' reasonable collection potential to             
          the Appeals officer.  In computing petitioners' net realizable              
          equity in assets, the specialist accepted petitioners' $125,000             
          estimate of the value of their residence as reported on their               


               3 Under Internal Revenue Manual (IRM) guidelines, for                  
          purposes of evaluating "cash" offers-in-compromise such as                  
          petitioners', future income for 48 months is considered, whereas            
          future income for 60 months is generally used when deferred                 
          payment offers-in-compromise (which may include both a lump-sum             
          payment and an installment agreement) are evaluated.  IRM, sec.             
          5.8.5.4 (Nov. 2000).                                                        




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