- 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.”
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Last modified: May 25, 2011