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 offerin-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 Administration] 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-incompromise 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 offerin-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-incompromise 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-incompromise 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 --