Dostal v. Comm'r

T.C. Memo. 2005-264

UNITED STATES TAX COURT

JOSEPH G. DOSTAL, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 13090-04L. Filed November 16, 2005.

Robert M. Clegg, for petitioner.

Catherine L. Campbell, for respondent.

MEMORANDUM OPINION

WHALEN, Judge: Respondent issued a notice of

determination concerning collection action(s) under section

6320 and/or 6330 (notice of determination) sustaining a

levy on petitioner’s property to collect unpaid taxes for

taxable years 2000 and 2001. (Section references in this

opinion are to the Internal Revenue Code, as amended,
 - 2 -

unless stated otherwise.) The issue for decision is

whether the Appeals officer who made the determination

abused her discretion by rejecting an offer-in-compromise

made on petitioner’s behalf.

Background

The facts set out herein are taken from the

stipulation of facts filed by the parties and the exhibits

referred to therein. The stipulation of facts and the

exhibits filed by the parties are incorporated herein.

Petitioner resided in the State of Washington at the time

his petition in this case was filed.

Petitioner filed his separate individual income tax

return for taxable year 2000 on or about October 15,

2001, wherein he reported total tax of $137,465 and zero

payments. As of March 13, 2003, petitioner owed

$143,165.96 with respect to taxable year 2000.

Petitioner filed his separate individual income tax

return for taxable year 2001 on or about October 12, 2002.

In that return, he reported total tax of $51,622 and

Federal income tax withholding of $10,692, for balance

owing of $40,930. As of March 13, 2003, petitioner owed

$45,675.28 with respect to taxable year 2001. Petitioner’s

tax returns for taxable years 2000, 2001, 2002, and 2003

are summarized in the appendix hereto.
 - 3 -

On or about March 18, 2003, respondent sent to

petitioner a Notice of Federal Tax Lien Filing and Your

Right to a Hearing Under IRC 6320 which stated that a

notice of Federal tax lien had been filed with respect to

taxable years 2000 and 2001 in the amounts of $143,165.96

and $45,675.28, respectively.

On the following day, March 19, 2003, respondent sent

to petitioner a final notice, Notice of Intent to Levy and

Notice of Your Right to a Hearing, with respect to the

amount petitioner owed for taxable year 2000. On the same

date, respondent sent a similar notice with respect to the

amount petitioner owed for taxable year 2001.

In response, petitioner timely filed a request for a

collection due process hearing. Petitioner’s request for

a hearing indicates his disagreement with respondent’s

“Notice of Levy/Seizure”. The hearing request does not

indicate petitioner’s disagreement with the notice of

Federal tax lien. Petitioner’s hearing request sets out

the following reasons for his disagreement with the notice

of levy/seizure:
 - 4 -

Notice of Levy/Seizure

1. The tax payer [sic], Mr. Joseph Dostal,
files this Collection Due Process Hearing
based on the grounds that he anticipates
an Offer in Compromise disputing the
collectability of the herein mentioned
tax but does not dispute the amount of
liability;

2. Tax Payer [sic] is currently experiencing
financial hardship and a levy it is felt
would constitute a substantial hardship
for tax payer [sic] and his family;

3. Upon further examination, taxpayer should
be placed in “non-collectability status”
during the pendency of this appeal.

As contemplated in his request for hearing, petitioner

submitted an offer-in-compromise approximately 4 months

later on August 20, 2003. Petitioner offered to pay

$20,000 to compromise the tax liabilities, plus any

interest, penalties, additions to tax, and additional

amounts required by law with respect to his individual

income tax for tax years “2000, 2001 & 2002”. As the

reason for submitting the offer-in-compromise, petitioner

checked the box entitled “Effective Tax Administration”,

which states as follows:

“I owe this amount and have sufficient assets to
pay the full amount, but due to my exceptional
circumstances, requiring full payment would cause
an economic hardship or would be unfair and
inequitable.” You must include a complete
Collection Information Statement, Form 433-A
and/or Form 433-B and complete Item 9.
 - 5 -

Contrary to petitioner’s hearing request, petitioner’s

offer-in-compromise did not raise doubt as to

collectibility as the basis of the offer.

Attached to petitioner’s offer-in-compromise is a

Form 433B, Collection Information Statement For Businesses,

for J. Dostal Investments, Inc. That form reports that

J. Dostal Investments, Inc., had business assets of de

minimis value, consisting of a computer and office

furniture, a checking account, and two brokerage accounts.

Section 7 of the form lists the following income and

expenses:

Total Income Gross Total Expenses Actual
Source Monthly Expense Items Monthly

19. Gross receipts $295,498 27. Materials purchased
20. Gross rental income 28. Inventory purchased
21. Interest 29. Gross wages & salaries $76,770
22. Dividends 30. Rent 6,300
Other income (specify 31. Supplies
in lines 23-25) 32. Utilities/telephone
23. 33. Vehicle gasoline/oil
24. 34. Repairs & maintenance
25. 35. Insurance
(Add lines 19 36. Current taxes 13,121
through 25) Other expenses
26. TOTAL INCOME 295,498 (include installment pay-
ments, specify in lines
37-38)
37. Statement 1, depreciation 26,447
38. Pension, interest expense 12,315
(Add lines 27 through 38)
39. TOTAL EXPENSES 134,953

Section 7 of Form 433-B calls for “monthly” income and

expenses. However, the income and expenses set forth on

Form 433-B appear to be computed on an annual basis. The

amounts set out on the form correlate with the income and

expenses reported on the income tax return filed on behalf
 - 6 -

of “J Dostal, Investment [sic], Inc.” on Form 1120S, U.S.

Income Tax Return for an S Corporation, for taxable year

2002. That tax return reports gross receipts of $295,498

and total deductions of $134,953 for ordinary income of

$160,545.

Also attached to petitioner’s offer-in-compromise is

a Form 433-A, Collection Information Statement for Wage

Earners and Self-Employed Individuals, for petitioner and

his wife. That form lists the following monthly income and

expenses for the couple:

Total Income Gross Total Expenses Actual
Source Monthly Expense Items Monthly

24. Wages (yourself) $5,400 35. Food, clothing and misc. $800
25. Wages (spouse) 36. Housing and utilities 1,942
26. Interest-dividends 37. Transportation 990
27. Net income from business 38. Health care 560
28. Net rental income 39. Taxes (income and FICA)
29. Pension/Social Security 40. Court ordered payments
(yourself)
30. Pension/Social Security 41. Child/dependent care
(spouse)
31. Child support 42. Life insurance
(Spouse)
32. Alimony 43. Other secured debt 500
33. Other 10,000 44. Other expenses 600
34. Total income 15,400 45. Total living expenses 5,972

Thus, the Form 433-A petitioner filed suggests that his

income exceeds living expenses by $9,428 per month before

income taxes. Form 433-A also lists the following assets

owned by petitioner and his wife:
 - 7 -
Checking accounts
Checking account (********1731) $825
Checking account (******63) 20 $845

Brokerage accounts
Brokerage account (******31CK) 9,000
Brokerage account (******07) 541 9,541

Investments
National securities SEP IRA 60,000
US Bank SEP IRA 14,000 74,000

Automobiles
Lexus, 2000 23,000
Loan -28,000
Kia, 1998 2,000
Loan -3,000
Ford truck, 1968 1,500
-4,500
Real estate
Arlington, VA residence 500,000
Loan -450,000 25,000

Personal assets
Furniture/personal effects 8,900
Jewelry 500 9,400

Business assets
Office furniture 2,000

Item 9 of the offer-in-compromise asks the taxpayer

to set forth the reasons the offer-in-compromise is

requested. In response, petitioner’s offer-in-compromise

refers to a cover letter written by petitioner’s attorney.

In that letter, petitioner’s attorney states as follows:

Mr. & Mrs. Dostal do not dispute the amount owed
and admittedly have sufficient assets and means
to pay this amount, within the short-term, but
due to several mitigating factors, and their need
for these funds to be used for his and his
family’s needs, it would be and would indeed
cause a sufficient economic hardship for my
clients and their family members.
 - 8 -

Petitioner’s attorney repeats his contention that

petitioner cannot part with the funds necessary to make

full payment because those funds will be needed, after his

retirement, to satisfy his medical and living expenses and

to support him, his wife, and his children. Petitioner’s

attorney states as follows:

given Mr. Dostal’s age and retirement needs,
future and current medical and living costs,
and projected retirement needs, he is required
to contribute a certain amount to his retirement
accounts to insure a modest living standard for
himself, his wife, and children.

Petitioner’s attorney summarizes petitioner’s position as

follows:

Considering Mr. Dostal’s age, his future
financial and health needs, his spouse and
children’s future financial needs, it is clear
that any and all savings, retirement savings
and the like, will be needed, and spent toward
their support, and the future support of their
children. The amount of taxes owed, the Dostal’s
[sic] present and future financial needs,
Mr. Dostal’s few remaining years or months of
employment remaining [sic], and their family
support needs, warrant approval of this Offer
in Compromise.

Petitioner’s attorney emphasizes that petitioner

had incurred unsecured debt in the aggregate amount of

approximately $203,000 and had monthly medical expenses

of approximately $1,000, consisting of medical insurance
 - 9 -

payments, copays, and costs of prescription medications.

Petitioner’s attorney suggests that petitioner’s total

monthly expenses are as follows:

Health insurance premium $560.00
Uninsured medical expenses 600.00
Unsecured debt finance charge 2,368.33
($203,000 at 14 percent)
Other expenses 3,000.00
Total expenses 6,528.33

Petitioner’s attorney does not reconcile the above monthly

expenses with those set forth on Form 433-A attached to

the offer-in-compromise, which shows total monthly living

expenses of $5,972.

Petitioner was approximately 63 years of age when the

offer-in-compromise was submitted on his behalf. He was

self-employed as a stock broker. He operated his business

through a subchapter S corporation, J Dostal Investments,

Inc., often referred to as J Dostal Investment, Inc.

Petitioner’s wife, Teresa Dostal, formerly Teresa S.

Fisher, was approximately 35 years of age at the time the

offer-in-compromise was submitted. Ms. Dostal was vice

president of J Dostal Investments, Inc., and owned

50 percent of that entity. She had a son, Adam, and a

daughter, Natalie, who were 11 and 9 years of age,

respectively, when the offer-in-compromise was submitted.
 - 10 -

In due course after submission of petitioner’s offer-

in-compromise, the Appeals officer wrote to petitioner

stating that she had been assigned petitioner’s hearing.

In her letter, the Appeals officer noted that petitioner

had submitted an offer-in-compromise, and she said that the

offer would be “considered as a part of your collection due

process hearing”. In that connection, the Appeals officer

stated as follows:

I have reviewed your offer and the financial
documentation submitted by your representative.
It does not appear based on upon [sic] the
provisions, conditions and examples provided
in the Internal Revenue Regulations section
301.7122-1(c)(3) and in the Internal Revenue
Manual section 5.8.22.2(4), that you qualify
for an Effective Tax Administration Offer in
Compromise due to economic hardship. I will be
happy to discuss other alternative collection
options with you, such as an installment
agreement.

Petitioner’s attorney met with the Appeals officer

in her office on April 20, 2004. Following that meeting,

petitioner’s attorney sent the Appeals officer a letter

dated May 5, 2004, transmitting various documents which

the Appeals officer had requested. Among the documents

were statements from two brokerage firms, National

Securities Corp. and Piper Jaffray, which show that as

of March 31, 2004, petitioner and his wife had brokerage

accounts valued at $179,836.67, as follows:
 - 11 -
3/31/04

National Securities Corp., acct. for Teresa S. Fisher $2,145.00
National Securities Corp., acct. for Joe Dostal 139,580.70

Piper Jaffray, acct. for Joe Dostal 3,484.70
Piper Jaffray, retirement acct. for Joe G. Dostal 34,541.63
Piper Jaffray, acct. for Teresa S. Fisher 84.64
179,836.67

In his letter of May 5, 2004, petitioner’s attorney, among

other things, disclosed to the Appeals officer that

“Mr. Dostal has a tax liability for 2003, of roughly

$70,000.00 and intends to pay this with funds on hand;

namely, funds from his retirement account(s).”

At that time, petitioner had requested the first of

two extensions to file his return for 2003. Petitioner’s

return would not be filed until on or about October 14,

2004, more than 5 months later. As filed, the return

reported total tax of $11,575 and Federal income tax

withholding of $6,415, leaving an amount due of $5,160.

See appendix. The record does not explain why petitioner’s

attorney advised the Appeals officer that petitioner’s tax

liability for 2003 was $70,000.

Shortly thereafter, during a telephone conference,

the Appeals officer advised petitioner’s attorney that she

could not consider petitioner’s offer-in-compromise, as a

collection alternative because petitioner had incurred

unpaid tax liabilities for tax year 2003. The Appeals

officer gave petitioner’s attorney a short time to request
 - 12 -

another collection alternative. In response, petitioner’s

attorney proposed that petitioner enter into an installment

agreement. The Appeals officer responded that certain

conditions must be met before she would consider an

installment agreement. These included “payment in full for

the amount determined to be owed for the tax year 2003,

including the estimated tax penalty computed to be due”, a

substantial payment of petitioner’s tax liability for

taxable years 2000 and 2001, and submission of copies of

the Forms W-2, Wage and Tax Statement, for petitioner and

his wife for taxable year 2003. Petitioner’s attorney

notified the Appeals officer that petitioner could not meet

the specified conditions for entry into an installment

agreement.

In due course, the Appeals officer issued her

determination that “the Notice of Intent to Levy and the

proposed collection action was appropriate.” In an

attachment to the notice of determination, the Appeals

officer summarized her discussions with petitioner’s

attorney, the most significant of which are summarized as

follows:
 - 13 -

During our conference, we advised that you did
not qualify for an ETA offer [an offer in
compromise based upon Effective Tax Administra-
tion] because you had not demonstrated that you
had an undue hardship as defined under the Code
of Federal Regulations Section 6343-1. We
advised that you had the ability to full pay
your tax liability and we proposed that your
representative ask you to consider an installment
agreement and/or liquidation of your retirement
accounts in order to satisfy the tax liability.
We asked your representative to provide us with
some additional documentation which included a
draft of your Form 1040 for 2003. We advised
that you could not owe a balance due if you still
wished to pursue an offer.

On May 10, 2004 we received some additional
documentation from your representative. In his
cover letter, your representative advised us that
you were going to owe $70,000.00 for the tax year
2003 and intended to pay the amount due with
funds from your retirement accounts.

On May 19, 2004 and May 25, 2004, we held
telephone conferences with your representative
and advised that we could no longer consider an
offer because you had not complied with your
payment requirements and had incurred another
liability while your offer was being considered.
We noted that the current balance in your
retirement accounts was approximately
$178,000.00. Your representative asked if you
could enter into an installment agreement. We
advised that we would consider an installment
agreement if you paid your 2003 tax year in full,
made a substantial payment towards your tax
liability for 2000 and 2001, and provided some
missing documentation in order to determine the
precise amount of your monthly installment
payment. * * *

Your representative advised that he would
discuss the proposal with you. We asked to be
contacted by June 1, 2001 [sic]. On May 26, 2004
we sent and faxed a letter to your representative
outlining the terms under which we could consider
an installment agreement. On June 1, 2004, your
 - 14 -

representative contacted us and advised that you
could not meet the terms of our proposal. He
asked us to issue a notice of determination to
you.

Discussion

Before a levy can be made on any property or right to

property, the Commissioner is obligated to provide the

taxpayer with notice of the Commissioner’s intent to levy

and notice of the taxpayer’s right to a fair hearing before

an impartial officer of the Appeals Office. Secs. 6330(a)

and (b) and 6331(d). If the taxpayer requests a section

6330 hearing, he or she may raise in that hearing any

relevant issue relating to the unpaid tax or the proposed

levy, including appropriate spousal defenses, challenges to

the appropriateness of the collection actions, and “offers

of collection alternatives, which may include the posting

of a bond, the substitution of other assets, an installment

agreement, or an offer-in-compromise.” Sec. 6330(c)(2)(A).

A determination is then made which takes into consideration

those issues, the verification that the requirements of

applicable law and administrative procedures have been met,

and “whether any proposed collection action balances the

need for the efficient collection of taxes with the

legitimate concern of the person that any collection action

be no more intrusive than necessary.” Sec. 6330(c)(3).
 - 15 -

In this case, petitioner’s position is that

respondent abused his discretion in the subject notice

of determination, which sustained the proposed collection

action for 2000 and 2001, because respondent refused to

process petitioner’s offer-in-compromise. Thus, the only

issue in this case involves a collection alternative,

petitioner’s offer-in-compromise. We review the

determination for an abuse of discretion because the

underlying tax liability is not at issue. Lunsford v.

Commissioner, 117 T.C. 183, 185 (2001); Nicklaus v.

Commissioner, 117 T.C. 117, 120 (2001).

Section 7122(a) authorizes the Secretary to compromise

any civil case arising under the internal revenue laws.

The regulations set forth three grounds for the compromise

of a liability: (1) Doubt as to liability; (2) doubt as

to collectibility; or (3) promotion of effective tax

administration. Sec. 301.7122-1(b), Proced. & Admin.

Regs.; see sec. 7122(c)(1). Neither doubt as to liability

nor doubt as to collectibility is at issue in the instant

case.

The Secretary may compromise a liability to promote

“effective tax administration” when: (1) Collection of the

full liability would cause the taxpayer economic hardship

within the meaning of section 301.6343-1, Proced. & Admin.
 - 16 -

Regs.; or (2) exceptional circumstances exist such that

collection of the full liability would be detrimental to

voluntary compliance by taxpayers; and (3) compromise of

the liability will not undermine compliance by taxpayers

with tax laws. Sec. 301.7122-1(b)(3), Proced. & Admin.

Regs.; see 2 Administration, Internal Revenue Service

(CCH), section 5.8.11.2, at 16,385-3 (taxpayer’s liability

may be eligible for compromise to promote effective tax

administration if the taxpayer is not eligible for

compromise based on doubt as to liability or doubt as to

collectibility, and taxpayer has exceptional circumstances

to merit the offer). Under section 301.6343-1(b)(4)(i),

Proced. & Admin. Regs., a levy creates economic hardship

“if satisfaction of the levy in whole or in part will cause

an individual taxpayer to be unable to pay his or her

reasonable basic living expenses.”

Petitioner contends for three reasons that respondent

abused his discretion by refusing to accept petitioner’s

offer-in-compromise. First, petitioner contends that the

Appeals officer “was without basis in determining that

Mr. Dostal was in substantial non-compliance.” As we

understand petitioner’s brief, he complains that the

Appeals officer “declined to consider” his offer-in-

compromise because of petitioner’s “noncompliance with
 - 17 -

tax filings.” Petitioner emphasizes that, contrary to the

determination of the Appeals officer, he “has filed all of

his prior tax returns, including a validly filed automatic

extension for his 2003 tax return and the 2003 return

itself.” Petitioner acknowledges that his attorney had

thought that his tax liability for the year was $70,000.

Petitioner notes that, in fact, the liability “was actually

much lower and taxpayer has paid the liability.”

Second, petitioner asserts that the Appeals officer

abused her discretion because she “summarily rejected” the

offer-in-compromise “and demanded the taxpayer enter into

an installment agreement.” According to petitioner the

Appeals officer took this action “without making the

required financial analysis.” Petitioner contends that the

Appeals officer “rejected this offer outright because the

taxpayer’s OIC (offer-in-compromise) showed the ability to

pay the taxes in full.” Petitioner complains that

the IRS failed to even consider what affect [sic]
on the taxpayer, and his family, would be [sic]
by him using his meager retirement account to
satisfy the tax obligation, and insisted that the
2003 obligation be cured, and that a sub-stantial
down payment be made on the 2000 and 2001 tax
liability amounting to $139,000.00 as of June 1,
2004.

Petitioner also complains that the Appeals officer failed

to take into account the “schedules of national and local
 - 18 -

allowances”, referred to in section 7122(c)(2), and failed

to determine, based upon the facts and circumstances of

this case, whether it was appropriate to use those

schedules.

For his last reason, petitioner argues that “the

financial information clearly showed that the IRS’

settlement demands would be an undue hardship on the

taxpayer and his family, and basically force them into the

streets.” In effect, petitioner is arguing that collection

of the full liability for tax years 2000 and 2001 would

cause petitioner and his family economic hardship within

the meaning of section 301.6343-1, Proced. & Admin. Regs.

Thus, it appears that petitioner is relying on section

301.7122-1(b)(3)(i), Proced. & Admin. Regs., to support his

contention that respondent should have accepted his offer-

in-compromise. Petitioner has identified no “compelling

public policy or equity considerations”, applicable to his

tax liability for taxable years 2000 and 2001, that would

provide a basis to apply section 301.7122-1(b)(3)(ii),

Proced. & Admin. Regs.

We disagree with each of petitioner’s points and, for

the reasons set out below, we find that the determination

to proceed with collection of petitioner’s tax for 2000

and 2001 was not an abuse of respondent’s discretion.
 - 19 -

First, contrary to petitioner’s assertion, the Appeals

officer did not suspend her consideration of the offer-in-

compromise because petitioner had failed to meet his filing

requirements. Rather, the Appeals officer took that action

after petitioner’s attorney disclosed that petitioner’s

unpaid tax liability for 2003 was $70,000. The Appeals

officer had no reason to doubt this disclosure and no way

of knowing that petitioner’s return, when it was filed

approximately 5 months later, would report an unpaid tax

liability of $5,160. In response to that disclosure, the

Appeals officer advised petitioner’s attorney that she

could no longer consider the offer-in-compromise because

petitioner had not complied with the “payment requirements”

for his 2003 return.

In this case, we cannot fault the Appeals officer for

her concern about the fact that petitioner had, according

to his attorney, allowed a substantial additional tax

liability to accrue for 2003 without payment. For example,

in Orum v. Commissioner, 412 F.3d 819, 821 (7th Cir. 2005),

affg. 123 T.C. 1 (2004), the court stated as follows:

It would not do the Treasury any good if
taxpayers used the money owed for 2004 to pay
taxes due for 1998, the money owned for 2005 to
pay taxes for 1999, and so on. That would spawn
more collection cycles yet leave a substantial
unpaid balance. The Service’s goal is to reduce
and ultimately eliminate the entire tax debt,
 - 20 -

which can be done only if current taxes are paid
while old tax debts are retired. Whether that
goal is best achieved by levy rather than by
allowing second chances is the sort of decision
committed to executive officials. * * *

As the court noted in the above case, a taxpayer’s failure

to keep current on his tax payments suggests that the

taxpayer had decided “to prefer consumption over meeting

[his] legal obligations.” Id.

Second, petitioner’s assertion that the Appeals

officer “summarily rejected” petitioner’s offer-in-

compromise is contradicted by the record. The stipulation

of facts filed by the parties states that the Appeals

officer “reviewed the offer-in-compromise and supporting

information which had been submitted to the Memphis Service

Center.” Furthermore, the Appeals officer’s first letter

to petitioner states as follows:

I have reviewed your offer and the financial
documentation submitted by your representative.
It does not appear, based on upon [sic] the
provisions, conditions, and examples provided
in the Internal Revenue Regulations section
301.7122-1(c)(3) and the Internal Revenue Manual
section 5.8.22.2(4), that you qualify for an
effective tax administration offer in compromise
due to economic hardship.

According to the attachment to the notice of

determination, the Appeals officer also advised

petitioner’s attorney during their conference that
 - 21 -

petitioner had not demonstrated undue hardship as defined

by section 301.6343-1(b)(4)(i), Proced. & Admin. Regs.

At that conference, the Appeals officer suggested that

petitioner consider “an installment agreement and/or

liquidation of your retirement accounts in order to

satisfy the tax liability.” The Appeals officer also sent

petitioner and his attorney a letter setting forth certain

conditions, such as full payment for petitioner’s 2003

tax liability, to continue consideration of collection

alternatives. Our review of the record fails to show any

basis for the assertion that the Appeals officer “summarily

rejected” petitioner’s offer-in-compromise.

Finally, we do not agree with petitioner’s assertion

that collection of the full tax liability for taxable years

2000 and 2001 would cause petitioner and his family

economic hardship within the meaning of section 301.6343-1,

Proced. & Admin. Regs. The financial information

petitioner submitted with his offer-in-compromise

demonstrates that petitioner had a robust earning capacity

through his stock brokerage business. The Form 433-A

submitted with petitioner’s offer-in-compromise suggests

that his income exceeded living expenses by $9,428 per

month before income taxes. Certainly, monthly income in
 - 22 -

that amount is more than enough to finance the payment of

petitioner’s unpaid taxes for 2000 and 2001.

Petitioner’s contention that he faced economic

hardship from collection of his full tax liability for

taxable years 2000 and 2001 appears to be based upon the

assertion that he planned to retire from his stock

brokerage business. In that event, as we understand

petitioner’s contention, he would have no business income,

and collection of his full tax liability for 2000 and 2001

would deprive him of those assets and a means of support

for himself and his family. We note that petitioner’s

retirement is not required for health reasons or any

external cause. Petitioner’s complaint boils down to the

fact that if collection of his full tax liability for

taxable years 2000 and 2001 is required, then petitioner

will have to delay his retirement plans. We agree with

the Appeals officer that petitioner has not shown that

requiring full payment would cause economic hardship.

To reflect the foregoing,

Decision will be

entered for respondent.
 - 23 -

APPENDIX

Taxable Year 2000 2001 2002 2003

7 Wages -- $27,000 $48,600 $16,200
8 Taxable interest $401 421 143 34
Tax-exempt interest
9 Ordinary dividends -- 150 -- 1
10 Taxable refunds, etc. -- -- -- --
11 Alimony received -- -- -- --
12 Business income or (loss) 140,997 -- -- --
13 Capital gain or (loss) 279,089 -1,500 -1,500 -1,500
14 Other gains or (losses) -- -36,535 -- --
15 Total IRA distributions 53,400 110,035 29,000 --
16 Total pensions and annuities -- -- -- --
17 Rental real estate, royalties, -- 120,954 78,408 96,881
partnerships, S corps., etc.
18 Farm income or (loss) -- -- -- --
19 Unemployment compensation -- -- -- --
20 Social Security benefits -- -- -- --
21 Other income _______ _______ _______ _______

22 Total income 473,887 220,525 154,651 111,616

23 IRA deduction -- -- -- --
24 Student loan interest deduction -- -- -- --
25 Medical savings account deduction -- -- -- --
26 Moving expenses -- -- -- --
27 One-half of self-employment tax 8,501 -- -- --
28 Self-employment health ins. deduction 2,784 -- -- 1,776
29 Self-employed SEP, SIMPLE, and 25,500 -- -- 6,480
qualified plans
30 Penalty on early withdrawal of savings -- -- 1,243 --
31 Alimony paid _______ _______ _______ _______

32 Total adjustments 36,785 -- 1,243 8,256

33 Adjusted gross income 437,102 220,525 153,408 103,360

Itemized deductions 84,239 52,748 82,016 38,382
Exemptions -- –- 540 6,100

Taxable income 352,863 167,777 70,852 58,878

Tax 120,464 51,622 16,468 11,575
Self-employment tax 17,001

Total tax 137,465 51,622 16,468 11,575

Federal income tax withheld from -- 10,692 19,246 6,415
Forms W-2 and 1099

Estimated payments -- -- -- –

Total payments -- 10,692 19,246 6,415

Amount owed, not including 137,728 40,930 -- 5,160
estimated tax penalty

Amount overpaid -- -- -2,778 --