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There never was and never has been any intent to
dissipate assets. The taxpayers believed the amount
due was still being determined in litigation.
In the February 28, 2005, letter, petitioners also stated:
The taxpayers would like to substantially increase the
Offer amount and abandon their special circumstances
arguments related to retirement, medical conditions,
and the fact that they are victims of a convicted
felon. They would like to offer the full collection
potential * * * of $150,000 contingent on acceptance of
the payment on November 1, 2006.
On March 8, 2005, respondent issued petitioners a notice of
determination.7 Because he concluded that petitioners dropped
their doubt as to collectibility with special circumstances and
effective tax administration arguments, respondent did not
address those arguments. Respondent determined that there was no
doubt as to petitioners’ liability because the assessments were
made pursuant to decisions entered in Durham Farms #1, J.V. v.
Commissioner, T.C. Memo. 2000-159, affd. 59 Fed. Appx. 952 (9th
Cir. 2003).
In evaluating petitioners’ offer-in-compromise based on
doubt as to collectibility, respondent accepted the values of
assets petitioners reported. Respondent did not include the
value of the house, the 1997 Ford F-150, the 1999 Toyota 4-
Runner, or the household goods in the calculation of petitioners’
7 Respondent issued two nearly identical notices of
determination, one addressed to Mr. Lindley and the other
addressed to Mrs. Lindley. To avoid confusion, we refer to the
notices of determination as a single notice of determination.
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