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and had to take several medications; (2) due to her heart
condition, Mrs. Andrews was forced to retire in March 2004; (3)
Mr. Andrews suffered from depression and skin cancer; and (4) due
to his health, Mr. Andrews expected to retire at 65 years old.
The retirement analysis outlined the likelihood of increased
housing and medical costs as petitioners aged. Petitioners also
noted that Mr. Andrews had an innocent spouse case pending before
the Tax Court at docket No. 19705-02.
In the remaining three letters, petitioners alleged that
they were victims of Hoyt’s fraud and asserted various arguments
regarding the appropriateness of an offer-in-compromise.
On May 21, 2004, petitioners submitted another letter to Ms.
Cochran, which included 42 exhibits not provided with the
previous letters.
On August 25, 2004, respondent issued petitioners a notice
of determination. In evaluating petitioners’ offer-in-
compromise, respondent made the following changes to the values
of assets petitioners reported on the Form 433-A: (1) Respondent
determined that the value of the section 401(k) plan account was
$153,499 instead of $107,449 (the 70-percent value reported by
petitioners) and reduced petitioners’ net realizable equity by
$35,700 to $117,799 to reflect estimated tax and penalties; and
(2) respondent determined that the house was worth $350,000
instead of $200,000 and reduced petitioners’ net realizable
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