- 6 - accounts or $96,9547 and that petitioners’ net realizable equity in their retirement accounts and home was the same as the reported values. Cochran also reduced the values of petitioners’ vehicles by 20 percent to reflect their “quick sale values”.8 Cochran summarized petitioners’ assets and liabilities as follows: Fair Quick Net market sale Encumbrance realizable Assets value value or exemption equity Cash $101,981 -- -- $101,981/ 96,954 Retirement accounts 120,903 -- -- 120,903 Vehicles: 1992 Chevy Lumina 200 $160 -- 160 1993 Mercury Villager 1,340 1,072 -- 1,072 1999 Buick LeSabre 3,230 2,584 -- 2,584 Real Estate 84,340 –- –- 84,340 311,994 3,816 $0 1311,200/ 306,013 1 Petitioners’ net realizable equity is actually $311,040. This slight mathematical error is not significant to the overall calculation. Cochran made three adjustments to petitioners’ reported expenses. First, she allowed $1,280 (instead of $2,000) for monthly food, clothing, and miscellaneous expenses. Cochran made this 7 Cochran arrived at the latter figure by reducing the amount of cash in petitioners’ bank accounts by the cash they proposed to pay as part of the offer-in-compromise. Petitioners stated on their Form 656 that “The taxpayers have placed a total of $85,231 on account as advance deposits; the remainder is from cash assets.” Cochran subtracted the claimed advance deposits ($85,231) from the offer amount ($90,258) and reduced the net realizable equity by $5,027 (from $101,981 to $96,954). 8 Cochran was told by petitioners that they had ascertained the value of each vehicle by using its trade-in value and considering its condition to be “fair.”Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011