- 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. 5.15.1.3 (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
12(...continued)
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. 5.15.1.3.2.4 (Mar. 2000). Petitioners do not allege that
their credit card expense was incurred for either of these
reasons.
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