Roger D. and Mary M. Catlow - Page 11

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          taxes attributable to the partner’s participation in the                    
          partnership.  Petitioners argue that Appeals was required to let            
          them pay $35,000 to compromise what they estimate is their                  
          approximately $575,000 Federal income tax liability for 1981                
          through 1998.  Where an underlying tax liability is not at issue            
          in a case invoking our jurisdiction under section 6330(d), we               
          review the determination of Appeals for abuse of discretion.  See           
          Sego v. Commissioner, 114 T.C. 604, 610 (2000); see also Clayton            
          v. Commissioner, T.C. Memo. 2006-188; Barnes v. Commissioner,               
          T.C. Memo. 2006-150.  We reject the determination of Appeals only           
          if the determination was arbitrary, capricious, or without sound            
          basis in fact or law.  See Cox v. Commissioner, 126 T.C. 237, 255           
          (2006); Murphy v. Commissioner, 125 T.C. 301, 308, 320 (2005),              
          affd. 469 F.3d 27 (1st Cir. 2006).                                          
               Where, as here, we decide the propriety of Appeals’s                   
          rejection of an offer-in-compromise, we review the reasoning                
          underlying that rejection to decide whether the rejection was               
          arbitrary, capricious, or without sound basis in fact or law.               
          We do not substitute our judgment for that of Appeals, and we do            
          not decide independently the amount that we believe would be an             
          acceptable offer-in-compromise.  See Murphy v. Commissioner,                
          supra at 320; see also Clayton v. Commissioner, supra; Barnes v.            
          Commissioner, supra; Fowler v. Commissioner, T.C. Memo. 2004-163;           
          Fargo v. Commissioner, T.C. Memo. 2004-13, affd. 447 F.3d 706               






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