- 22 -
Thus, $42,384 is collectible from petitioners’ future income.13
2. Petitioners’ Assets
a. Annuity
Instead of including the annuity payments in petitioners’
gross monthly income, Mr. Owens included the annuity as an asset.
Petitioners do not dispute treating the annuity as an asset, but
they argue that Mr. Owens erred by not decreasing the value of
the annuity by the tax consequences of its liquidation. Mr.
Owens testified that he should have decreased the value of the
annuity to account for the tax consequences. However, Mr. Owens
did not calculate the tax consequences. In their February 28,
2005, letter, petitioners estimated that the after-tax value of
the annuity was $104,135. Because Mr. Owens did not determine
the annuity’s after-tax value, we shall accept petitioners’
estimated value.
b. Dissipated Assets
Mr. Owens determined that petitioners were intentionally
dissipating their assets when they obtained a second mortgage in
May 2001 and refinanced a portion of that mortgage in February
2004. Essentially, Mr. Owens determined that petitioners were
pulling equity out of their house without consideration for their
outstanding tax liabilities. Mr. Owens included the amount of
13 Because petitioners made a cash offer, respondent
considered 48 months of petitioners’ disposable income ($883 x 48
months = $42,384). See IRM sec. 5.8.5.5.
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