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As this analysis demonstrates, this is the type of
case where it would be unfair and misleading to calcu-
late average monthly income over only 3 years, because
income which is essentially earned over a much longer
period is bunched into one or two tax years. Further-
more, nowhere in the Code, the Regulations, or the
Internal Revenue Manual is a Revenue Officer such as
yourself constrained to average income over only three
years. IRM 5.8.5.5 identifies a number of situations
which “may warrant placing a different value on future
income than current or past income indicates.” One
such situation is where “a taxpayer has a sporadic
employment history or fluctuating income,” in which
case the revenue officer is directed to “average earn-
ings over several prior years.” Although the IRM does
indicate this is “usually . . . the prior 3 years,” it
does not and should not indicate that this is always
the case, particularly in a situation such as this one
where blind adherence to that rule would be patently
unfair.
Mr. Kaufmann enclosed with Mr. Kauffman’s December 15, 2005
letter a copy of the Income/Expense Table that the second offer
specialist enclosed with the second offer specialist’s September
6, 2005 letter and the following “Analysis of Gross Income” of
petitioner:
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Last modified: March 27, 2008