Estate of Carol Andrews, Deceased, Robert Andrews, Special Administrator, and Robert Andrews - Page 15

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          309, 320 n.10 (2005), affd. 469 F.3d 27 (1st Cir. 2006); Barnes             
          v. Commissioner, T.C. Memo. 2006-150.                                       
          A.   Economic Hardship                                                      
               Petitioners assert that Ms. Cochran abused her discretion by           
          rejecting their offer-in-compromise because “There is no                    
          indication that SO Cochran gave any substantive consideration to            
          Petitioners’ demonstrated special circumstances or that they                
          would experience a hardship if required to make a full-payment.”            
          In support of this assertion, petitioners argue:  (1) Ms. Cochran           
          failed to discuss petitioners’ special circumstances in the                 
          notice of determination; and (2) Ms. Cochran erroneously                    
          determined petitioners’ reasonable collection potential and                 
          failed to take into account their future expenses.                          
               Section 301.6343-1(b)(4)(i), Proced. & Admin. Regs., states            
          that economic hardship occurs when a taxpayer is “unable to pay             
          his or her reasonable basic living expenses.”  Section 301.7122-            
          1(c)(3), Proced. & Admin. Regs., sets forth factors to consider             
          in evaluating whether collection of a tax liability would cause             
          economic hardship, as well as some examples.  One of the examples           
          involves a taxpayer who provides full-time care to a dependent              
          child with a serious long-term illness.  A second example                   
          involves a taxpayer who would lack adequate means to pay his                
          basic living expenses were his only asset to be liquidated.  A              
          third example involves a disabled taxpayer who has a fixed income           

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