Arthur A. Lemann III and Roberta A. Lemann - Page 20

                                       - 20 -                                         
          local standard or the amount actually paid for transportation               
          expense.  IRM, exh. 5.15.1-11 (Oct. 2000).  On that basis, the              
          specialist reduced petitioners' claimed monthly expense of $680             
          for transportation to the local standard of $289.  Likewise,                
          conditional expenses like credit card debt, i.e., expenses                  
          charged to a credit card that were not for basic living expenses,           
          are not allowable where the tax liability would not be paid                 
          within 5 years.  IRM, sec. (Mar. 2000).  On that basis,            
          the offer specialist disregarded petitioners' claimed monthly               
          credit card expense of $1,600.13                                            
               The foregoing calculations of the offer specialist produced            
          monthly future income of $2,813, which the offer specialist                 
          estimated petitioners could pay for 59 months; i.e., until                  

          national standards); (2) housing, utilities, and transportation             
          (based on local standards); and (3) other expenses like health              
          care.  Other expenses, so-called conditional expenses, are                  
          allowable only if the tax liability, including projected                    
          accruals, can be fully paid within five years.  Credit card                 
          payments and repayments on other unsecured debts are examples of            
          conditional expenses.  See, e.g., Schulman v. Commissioner, T.C.            
          Memo. 2002-129 n.6.                                                         
               As noted in our findings, the offer specialist increased               
          petitioners' claimed monthly expense for housing and utilities by           
          $50.  The basis on which the offer specialist made this                     
          adjustment is not clear from the record.  In any event, it                  
          constitutes a concession by respondent.                                     
               13 Minimum payments on unsecured debts like credit cards are           
          allowed if a taxpayer substantiates and justifies the expense as            
          necessary for either the health and welfare of the taxpayer                 
          and/or his or her family, or for the production of income.  IRM,            
          sec. (Mar. 2000).  Petitioners do not allege that              
          their credit card expense was incurred for either of these                  

Page:  Previous  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  26  27  Next

Last modified: May 25, 2011