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2. Petitioners’ Income, Assets, and Future Expenses
Petitioners assert that Ms. Cochran erroneously determined
their reasonable collection potential by: (1) Considering 77
months of petitioners’ future income instead of 48 months; (2)
failing to adequately consider their age, health, retirement
status, medical costs, and the likelihood of future increases in
medical and housing costs; and (3) improperly valuing
petitioners’ house. Petitioners’ arguments are not persuasive.
Section 5.8.5.5 of the IRM provides that, when a taxpayer
makes a cash offer to compromise an outstanding tax liability,
only 48 months of future income should be considered.
Petitioners made a cash offer, but Ms. Cochran used 77 months of
future income. At trial, Ms. Cochran acknowledged that she
should have used only 48 months of future income. Ms. Cochran
recomputed petitioners’ reasonable collection potential using 48
months and determined that it was $329,068, instead of $394,318,
as reflected in the notice of determination. Ms. Cochran
testified that the change would not have had an effect on her
final determination because, using either calculation,
petitioners’ reasonable collection potential was greater than
their offer amount ($60,400). We find that Ms. Cochran’s error
did not amount to an abuse of discretion because, even when the
error is corrected, petitioners’ reasonable collection potential
of $329,068 far exceeds their offer amount of $60,400.
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