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of discretion. Goza v. Commissioner, 114 T.C. 176, 181-182
(2000). Whether an abuse of discretion has occurred depends upon
whether the exercise of discretion is without sound basis in fact
or law. See Freije v. Commissioner, 125 T.C. 14, 23 (2005);
Ansley-Sheppard-Burgess Co. v. Commissioner, 104 T.C. 367, 371
(1995).
Petitioner does not seek to challenge his underlying tax
liability. He challenges only the rejection of his OIC. We
therefore review for abuse of discretion.
Section 7122(a) authorizes the Secretary to compromise any
civil case arising under the internal revenue laws. The
Commissioner will generally compromise a liability on the basis
of doubt as to collectibility only if the liability exceeds the
taxpayer’s reasonable collection potential. Lemann v.
Commissioner, T.C. Memo. 2006-37. A taxpayer’s reasonable
collection potential is calculated by determining and adding
together the taxpayer’s net equity and his future income. See
id.; sec. 301.7122-1(b)(2), Proced. & Admin. Regs. Respondent
concedes that petitioner had no equity available to satisfy his
2002 tax liability. Respondent argues, however, that petitioner
had sufficient future income to pay his tax liability in full.3
3 The parties do not dispute the amount of petitioner’s
allowable living expenses.
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