                        T.C. Memo. 2011-125



                     UNITED STATES TAX COURT



                  MARK N. SHEBBY, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18841-08L.           Filed June 7, 2011.



     Benjamin C. Sanchez and Martin J. Tierney, for petitioner.

     James A. Whitten, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MORRISON, Judge:   The petitioner, Mark N. Shebby, filed a

petition to challenge the determination of the IRS Office of

Appeals to sustain a levy to collect section 6672 penalties.1     We

have jurisdiction to review the determination under section


     1
      All section references are to the Internal Revenue Code, as
amended.
                                 -2-

6330(d).    Mr. Shebby resided in Morgan Hill, California, at the

time he filed the petition.

                          FINDINGS OF FACT

      Mr. Shebby and his wife were married in 1999.   They jointly

owned their residence on Mill River Lane in San Jose, California.

On June 14, 2004, the IRS assessed section 6672 penalties against

Shebby for the following six quarterly tax periods:   the second,

third, and fourth quarters of 2002 and the first, second, and

third quarters of 2003.   On December 30, 2005, Shebby and his

wife signed a separate-property agreement.   The agreement

provided that Shebby and his wife each gave up any claim to the

other’s earnings.   The agreement provided that each of them held

an undivided one-half interest in the Mill River Lane property as

a separate property interest.

     On November 1, 2006, Shebby started a business called Pro Se

Legal Document Service.

     In 2007 Shebby and his wife sold the Mill River Lane

property.   They received the proceeds in the form of an

$87,890.91 check from a title company, dated August 31, 2007.

     On September 20, 2007, the IRS mailed Shebby a notice that

it intended to levy on Shebby’s property unless Shebby paid

$314,378.86, an amount that comprised (1) his unpaid section 6672

penalties for the six quarterly tax periods listed above and (2)

accrued interest.   On September 28, 2007, Shebby requested an
                                -3-

administrative hearing with the IRS Office of Appeals.2   In his

request, Shebby stated that he wished to propose an offer-in-

compromise because he was unable to pay the penalties.

     In October 2007 Shebby and his wife used $57,481.11 of the

proceeds from the sale of the Mill River Lane property to pay the

balance due on their joint federal income tax liabilities for tax

years 2001, 2002, and 2004.

     On December 31, 2007, Shebby ceased doing business as Pro Se

Legal Document Service and started a law practice under the name

Law Office of Mark N. Shebby.

     On April 29, 2008, Raymundo Jacquez, a settlement officer

with the San Francisco office of the Office of Appeals, sent a

letter to Shebby scheduling a face-to-face meeting on May 29,

2008, to take place at an IRS office in San Jose.   In the letter,

Jacquez requested that Shebby submit some financial documents

within 14 days; that is, by May 12, 2008.   Among the documents

that Jacquez requested was an appraisal of each business in which

Shebby had an ownership interest.

     In a letter of May 23, 2008, Shebby requested a 30-day

postponement of the upcoming May 29 conference.   In a letter of

May 27, 2008, Jacquez agreed to postpone the conference to 2 p.m.

on June 19, 2008.   Jacquez noted that he had not received any of



     2
      Shebby states that the request was dated Sept. 27, 2007,
but the date on the form was Sept. 28, 2007.
                                  -4-

the financial information requested in his April 29, 2008,

letter.   He agreed to extend the May 12 deadline for submitting

the requested documents to June 12.

     On June 3, 2008, Shebby sent a letter to Jacquez with some

documents.   In the letter, Shebby explained that he had operated

the business Pro Se Legal Document Service from November 1, 2006,

until December 31, 2007, and that on December 31, 2007, Shebby

had started a law practice under the name Law Office of Mark N.

Shebby.   Shebby declined Jacquez’ request that he supply an

appraisal of his law practice.    He said an appraisal of a new law

practice was unnecessary.   He asked Jacquez to advise him if he

was incorrect.

     On June 9, 2008, Shebby sent a letter to Jacquez with

additional documents.   One of the documents was a Form 433-A,

Collection Information Statement for Wage Earners and Self-

Employed Individuals.   Shebby did not disclose his wife’s income

on the form.   Also included with Shebby’s letter was a Form 656,

Offer in Compromise, in which Shebby offered to compromise his

penalty liabilities for $5,000.    The form contained boxes for the

person filling out the form to indicate the reason for the offer.

Shebby checked the box “Doubt as to Collectibility”.   The form

required the person filling out the form to check a box to

indicate whether the offer was a “Lump sum cash offer”, a “Short

Term Periodic Payment Offer”, or a “Deferred Periodic Payment
                                 -5-

Offer”.    Shebby did not check any of the three boxes.   The form

advised that if a “Lump sum cash offer” was being made, 20

percent of the amount of the offer had to be sent along with the

form.   However, Shebby did not include any payment.

     In a June 11, 2008, letter to Shebby, Jacquez listed several

inadequacies he had found in the information that Shebby provided

to him on June 3 and 9.    According to Jacquez’ letter, the Form

433-A was incomplete because it did not disclose the income of

Shebby’s wife.    Jacquez confirmed that he required an appraisal

of Shebby’s law practice.    Jacquez implied that the sale of the

Mill River Lane property appeared to involve dissipated assets,

meaning that Shebby had dissipated the proceeds without paying

the IRS.    Jacquez acknowledged that he had received a telephone

message from Shebby’s lawyer requesting that the face-to-face

conference be changed to a telephone conference.

     Shebby responded to the June 11 letter with a letter dated

June 16, 2008.    In his letter, Shebby requested--again--that the

upcoming June 19 meeting be changed from a face-to-face meeting

to a telephone conference.    The letter said that the income of

Shebby’s wife was irrelevant because Shebby had signed a

separate-property agreement with her.    The letter asserted that

it was unreasonable to require an appraisal of the law practice.

The letter claimed that the proceeds from the sale of the Mill

River Lane property were used to pay attorney’s fees and the
                                 -6-

Shebbys’ past due joint federal income tax liabilities.   In a

letter dated June 17, 2008, Shebby supplemented his response to

Jacquez of June 16, 2008.   The supplementary response is not

relevant to the errors that Shebby alleges were made by the

Office of Appeals.

     On June 18, 2008, Jacquez sent a letter responding to the

June 16 and 17 letters.   In the letter, Jacquez asserted that the

income of Shebby’s wife was relevant and asked Shebby whether the

separate-property agreement had been created in order to avoid

collection of the section 6672 penalties.   He also asked for

proof that the remainder of the proceeds from the Mill River Lane

property sale was consumed by attorney’s fees, as Shebby had

claimed in his June 16 letter.   Jacquez also advised Shebby that

the offer-in-compromise could not be processed without a 20-

percent payment.

     In a letter that he faxed to Jacquez at 9:58 a.m. on June

19, 2008, Shebby responded to Jacquez’ letter of June 18.

Shebby’s letter did not answer Jacquez’ question about the reason

for the separate-property agreement because, Shebby claimed, a

separate-property agreement cannot be considered a fraudulent

conveyance.   Shebby’s letter did not supply proof that the

remainder of the proceeds of the Mill River Lane property sale

was consumed by attorney’s fees.   In the letter, Shebby explained

that he had not made the 20-percent payment because he thought no
                                 -7-

payment was necessary until the Office of Appeals accepted the

offer-in-compromise.    However, Shebby said, he would make the

payment “if you so require.”

       On June 19, 2008, Jacquez (the settlement officer) conducted

a telephone conference with Shebby’s lawyer.    Shebby summarized

the telephone conversation in a letter sent to Jacquez the same

day.    According to the letter, Shebby’s counsel had told Jacquez

that Shebby was willing to make a “down payment”, but Jacquez had

said it was too late.    Shebby’s letter enclosed a check for

$5,000, which was the entire amount of Shebby’s offer-in-

compromise, but the letter stipulated that the check could be

applied by the IRS only if the IRS accepted the proposed offer-

in-compromise.    On June 19, Jacquez returned the $5,000 check to

Shebby.

       On June 30, 2008, the IRS Office of Appeals issued a notice

of determination.    The determination stated that Shebby’s offer-

in-compromise could not be processed because Shebby had not

provided an original, signed, offer-in-compromise containing

terms.    (The offer submitted by Shebby on June 9, 2008, did not

indicate a payment plan.)    It also stated that Shebby had not

submitted a payment with the offer-in-compromise.    The

determination recounted that Jacquez generally found Shebby’s

documentation inadequate.    It noted that Shebby had refused to

supply an appraisal of his law practice.    The determination
                                -8-

stated that there was a disparity between the $2,740 in gross

monthly income Shebby reported on the Form 433-A and the fact

that, during 2007, $112,239 was deposited into a personal bank

account Shebby had with his wife to pay household expenses.       The

determination stated that Shebby had dissipated escrow funds of

$87,890 without documenting how the money was spent.     The notice

determined that the levy on Shebby’s property should be made.

                              OPINION

     Before the IRS can levy on property, it must afford the

taxpayer the opportunity for a hearing.     Sec. 6330(a)(1).   At the

hearing, the taxpayer may raise any relevant issue relating to

the unpaid tax or to the proposed levy, including an alternative

to collection such as an offer-in-compromise.     Sec.

6330(c)(2)(A)(iii).   Any issue so raised by the taxpayer

must be considered by the Appeals officer.     Sec. 6330(c)(3).

     Shebby’s sole complaint about the determination by the

Office of Appeals concerns his $5,000 offer-in-compromise.

Settlement Officer Jacquez, who served as the Appeals officer,

rejected the offer-in-compromise.     A rejection of an offer-in-

compromise is reviewed by the Tax Court for abuse of discretion.

Keller v. Commissioner, 568 F.3d 710, 716 (9th Cir. 2009), affg.

in part and vacating in part T.C. Memo. 2006-166, Barnes v.

Commissioner, T.C. Memo. 2006-150, Clayton v. Commissioner, T.C.

Memo. 2006-188, Blondheim v. Commissioner, T.C. Memo. 2006-216,
                                  -9-

Lindley v. Commissioner, T.C. Memo. 2006-229, McDonough v.

Commissioner, T.C. Memo. 2006-234.      An abuse of discretion occurs

when a decision is based on (1) an erroneous view of the law or

(2) a clearly erroneous assessment of facts.      Id.   As we explain

below, we find that Jacquez did not abuse his discretion in

rejecting Shebby’s $5,000 offer-in-compromise.     First, the offer-

in-compromise was not accompanied by a payment of tax.      Second,

Shebby refused to supply Jacquez with an appraisal of his law

practice, thus impairing Jacquez’s ability to evaluate the amount

that the IRS could reasonably collect from Shebby.      Third, Shebby

thwarted Jacquez’ attempts to determine whether his separate-

property agreement with his wife was a fraudulent conveyance.

Fourth, Shebby failed to establish whether he had dissipated the

proceeds of the sale of his residence.

1.   Shebby’s Offer-in-Compromise Was Not Accompanied by a
     Partial Payment of Tax.

     On June 9, 2008, Shebby furnished a Form 656 to Jacquez.      On

the form Shebby indicated that he wished to compromise his

penalty liabilities for $5,000.    Shebby did not check a box to

indicate whether the payment would be made in a lump sum or in

periodic payments.   The form contained a preprinted explanation

that a payment of 20 percent of the lump-sum offer had to be sent

with the Form 656.   Shebby did not enclose a check with the form.

On June 18, 2008, Jacquez sent a letter to Shebby warning him

that the offer-in-compromise could not be processed without the
                               -10-

20-percent payment.   In a letter of June 19, 2008, Shebby

explained that he had thought the 20-percent payment was not

necessary until the Appeals Office accepted the offer-in-

compromise.   However, Shebby stated he would still make the

payment “if you so require.”   After the telephone conference on

June 19, 2008, Shebby wrote a letter to Jacquez stating that at

the conference Jacquez had advised that Shebby’s offer-in-

compromise could not be processed because he had failed to make

the 20-percent payment; and that Shebby’s counsel had told

Jacquez that Shebby was willing to remit the 20-percent payment,

but only if Jacquez provided the “established Appeals Office

protocols and administrative procedures” requiring such a

payment.   (On the basis of Jacquez’ notes of the telephone

conversation, it appears that Shebby’s letter was an accurate,

but incomplete, summary of the telephone conversation.)   A check

for $5,000 was attached to Shebby’s postconference letter.

Instructing the IRS not to cash the check until the offer-in-

compromise had been accepted, Shebby’s letter said:   “in order to

protect our position we advised you that we would remit the

enclosed amount of $5000 to be applied by the IRS only upon

acceptance of our proposed offer in compromise, and returned to

us upon your refusal to accept our offer.”   Later in the day,

Jacquez returned the $5,000 check to Shebby.   In a letter,

Jacquez explained:
                               -11-

     we cannot accept the check drawn from you [sic] bank
     account, which does not state anywhere on the check how
     it is to be applied, particularly under the terms you
     have stated. You state that you want the check
     “returned to us upon refusal to accept our offer.”
     Since we cannot return funds submitted in an offer your
     check is being returned as not processable as well. We
     cannot accept such a check, under such conditions.

In the June 30, 2008, notice of determination, the Office of

Appeals explained that Shebby’s offer-in-compromise could not be

processed.

     Because of Shebby’s failure to unconditionally remit the 20-

percent payment, the Office of Appeals did not err in determining

that the offer-in-compromise could not be processed.   Section

7122(c)(1)(A)(i) provides:   “The submission of any lump-sum

offer-in-compromise shall be accompanied by the payment of 20

percent of the amount of such offer.”3   The $5,000 check was

conditioned upon the IRS’ accepting the offer, and therefore it

was not a payment but a refundable deposit.   The Office of

Appeals did not err in returning the $5,000 check and in deeming

the offer-in-compromise not processable.



     3
      The 20-percent downpayment requirement, which was added by
the Tax Increase Prevention and Reconciliation Act of 2005, Pub.
L. 109-222, sec. 509(a) and (d), 120 Stat. 362, 364 (2006),
applies to all lump-sum offers-in-compromise made after July 16,
2006. According to the report of the Committee on Conference:
“The provision requires a taxpayer to make partial payments to
the IRS while the taxpayer’s offer is being considered by the
IRS.” H. Conf. Rept. 109-455, at 234 (2006). The report said
that offers “submitted to the IRS that do not comport with [this
requirement] are returned to the taxpayer as unprocessable and
immediate enforcement action is permitted.” Id.
                                -12-

2.     Shebby Refused To Provide an Appraisal of His Law Practice.

       Shebby operated a sole proprietorship called Pro Se Legal

Document Service.    Apparently, this business ended in December

2007, when Shebby began his legal practice under the name Law

Office of Mark N. Shebby.    On April 29, 2008, Jacquez asked

Shebby for an appraisal of each business in which Shebby owned an

interest.    In a letter of June 3, 2008, Shebby stated that an

appraisal of a new law practice was not necessary.    Shebby

stated:    “If I am incorrect in this assumption, please so advise

me.”    In a letter of June 11, 2008, Jacquez confirmed to Shebby

that an appraisal of the law practice was required.    On June 16,

2008, Shebby wrote a letter to Jacquez claiming that it was

unreasonable to require an appraisal of his law practice.      The

notice of determination of June 30, 2008, in which the Office of

Appeals explained that Shebby’s offer-in-compromise could not be

processed, cited Shebby’s refusal to supply an appraisal of his

law practice.

       Shebby continues to argue that it was unreasonable for

Jacquez to demand an appraisal of Shebby’s law practice.    He says

that because the law practice had been in existence only since

January 2008, it would have had no goodwill a few months later.

The IRS argues that the Office of Appeals acted reasonably in

requesting an appraisal and, when Shebby refused to provide the
                                -13-

appraisal, in determining that the offer-in-compromise could not

be processed.

     Section 7122(a) authorizes the IRS to “compromise any civil

or criminal case arising under the internal revenue laws.”

Section 7122(d)(1) authorizes the Treasury to prescribe

guidelines for IRS employees to use to determine whether an

offer-in-compromise should be accepted.   Regulations issued

pursuant to section 7122(d)(1) set forth three grounds for an

offer-in-compromise:    (1) doubt as to collectibility, (2) doubt

as to liability, and (3) promotion of effective tax

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

Shebby’s offer-in-compromise was based on doubt as to

collectibility.   Under IRS guidelines, an offer-in-compromise

based on doubt as to collectibility is generally justified if the

amount of the offer is reasonably near the amount the IRS could

collect through other means.   Rev. Proc. 2003-71, sec. 4.02(2),

2003-2 C.B. 517, 517.   This latter amount, referred to as the

“reasonable collection potential”, takes into account the

taxpayer’s reasonable basic living expenses.    Id.   Section

301.6330-1(e), Proced. & Admin. Regs., provides that during a

levy hearing, “Taxpayers will be expected to provide all relevant

information requested by Appeals, including financial statements,

for its consideration of the facts and issues involved in the

hearing.”   When an Appeals officer refuses to consider an offer-
                               -14-

in-compromise because of a taxpayer’s failure to provide

financial information, courts have held that there was no abuse

of discretion.   See, e.g., Lance v. Commissioner, T.C. Memo.

2009-129, 97 T.C.M. (CCH) 1670, 1672.

     Shebby’s business at the time of the hearing was apparently

a newly formed law practice.   To say that Jacquez should have

assumed that the practice had no value would inappropriately

substitute our judgment for his.   Perhaps the legal practice was

some sort of continuation of Shebby’s prior business.   Or perhaps

Shebby had just landed a big client.    The Office of Appeals did

not abuse its discretion by requiring an appraisal of Shebby’s

law practice.

3.   Shebby Refused To Supply Information to Jacquez Necessary To
     Determine Whether the Separate-Property Agreement Was a
     Fraudulent Conveyance.

     On June 14, 2004, the IRS assessed large section 6672

penalties against Shebby.   Shebby and his wife signed a separate-

property agreement on December 30, 2005.   Section 9 of the

agreement stated that all income earned after they were married

would be considered the separate property of the party earning

the income “as though the marriage had never occurred.”    Thus,

Shebby purported to give up any claim to his wife’s earnings.      On

June 9, 2008, Shebby submitted a Form 433-A that did not disclose

his wife’s income.   On June 11, 2008, Jacquez notified Shebby

that the Form 433-A was incomplete because it failed to include
                                 -15-

his wife’s income.    On June 16, 2008, Shebby wrote Jacquez that

the income of his wife was not relevant because of the separate-

property agreement.   On June 18, 2008, Jacquez sent a letter to

Shebby asserting that the income of his wife was indeed relevant,

and asked Shebby whether the separate-property agreement had been

created to avoid collection of Shebby’s section 6672 liabilities.

On June 19, 2008, Shebby sent a letter to Jacquez reiterating

that the income of his wife was not legally relevant, arguing:

“The Office of Chief Counsel has litigated, and lost, the issue

of whether a post nuptial separate property agreement amounts to

a fraudulent conveyance of future income.   The courts have

rejected this position.”    The notice of determination issued by

the Office of Appeals on June 30, 2008, recounted Shebby’s

refusal to supply documentation to Jacquez.

     Shebby continues to argue that because he had disavowed any

claim to his wife’s income in the 2005 separate-property

agreement, his wife’s income was not relevant to what the IRS

could collect from him.    Shebby argues that the record is devoid

of any proof adduced by the IRS that the purpose of the separate-

property agreement was to defraud creditors.   We reject Shebby’s

arguments, as explained below.

     The regulations provide that in determining whether to

accept an offer-in-compromise, the IRS should consider whether

the taxpayer made a fraudulent transfer of property to the
                               -16-

taxpayer’s nonliable spouse.   Section 301.7122-1(c)(2)(ii),

Proced. & Admin. Regs., provides:

     (ii) Nonliable spouses —(A) In general. Where a
     taxpayer is offering to compromise a liability for
     which the taxpayer's spouse has no liability, the
     assets and income of the nonliable spouse will not be
     considered in determining the amount of an adequate
     offer. The assets and income of a nonliable spouse may
     be considered, however, to the extent property has been
     transferred by the taxpayer to the nonliable spouse
     under circumstances that would permit the IRS to effect
     collection of the taxpayer's liability from such
     property (e.g., property that was conveyed in fraud of
     creditors), property has been transferred by the
     taxpayer to the nonliable spouse for the purpose of
     removing the property from consideration by the IRS in
     evaluating the compromise, or as provided in paragraph
     (c)(2)(ii)(B) of this section. The IRS also may
     request information regarding the assets and income of
     the nonliable spouse for the purpose of verifying the
     amount of and responsibility for expenses claimed by
     the taxpayer.

          (B) Exception. Where collection of the taxpayer's
     liability from the assets and income of the nonliable
     spouse is permitted by applicable state law (e.g.,
     under state community property laws), the assets and
     income of the nonliable spouse will be considered in
     determining the amount of an adequate offer except to
     the extent that the taxpayer and the nonliable spouse
     demonstrate that collection of such assets and income
     would have a material and adverse impact on the
     standard of living of the taxpayer, the nonliable
     spouse, and their dependents.

Under California law, a separate-property agreement between a tax

debtor and the debtor’s spouse can constitute a fraudulent

transfer.4   In an attempt to determine whether Shebby’s separate-


     4
      In State Bd. of Equalization v. Doreen H.Y. Woo, 98 Cal.
Rptr. 2d 206, 207 (Ct. App. 2000), James Ho owed over $37,000 in
taxes to the State of California. The state tax authority
                                                   (continued...)
                                 -17-

property agreement with his wife was a fraudulent transfer,

Jacquez asked Shebby why the agreement had been signed.    Shebby

refused to answer the question.    Having thus thwarted Jacquez’s

inquiry, Shebby cannot now argue that Jacquez failed to prove

that the agreement was a fraudulent transfer.    The Office of

Appeals determined that the earnings of Shebby’s wife were

potentially relevant to the reasonable collection potential.       We

find no abuse of discretion in this determination.

4.   Dissipation of Mill River Lane Property Sale Proceeds

     Shebby and his wife jointly owned a residence at Mill River

Lane in San Jose.   On June 14, 2004, the IRS assessed section

6672 penalties against Shebby.    In December 2005 Shebby and his

wife signed a separate-property agreement leaving each of them an

undivided one-half interest in the Mill River Lane property as a

separate property interest.   In 2007 Shebby and his wife sold the

Mill River Lane property.   They received $87,890.91 in proceeds.

They used $57,481.11 of the money to pay their joint federal

income tax liabilities for tax years 2001, 2002, and 2004.    On



     4
      (...continued)
notified Ho’s wife that it would seek an earnings-withholding
order against her to pay her husband’s tax debt. Id. Four
months later, Ho and his wife entered into a separate-property
agreement. Id. The wife subsequently became employed by Wells
Fargo Bank, earning approximately $500,000 per year. Id. The
state court held that Ho had had a present interest in his wife’s
earnings at the time he executed the marital agreement and that
his attempt to transmute the community-property earnings into her
separate property constituted a fraudulent transfer. Id.
                               -18-

June 16, 2008, Shebby wrote a letter to Jacquez claiming that the

rest of the proceeds had been “used to cover attorneys fees”.      On

June 18, 2008, Jacquez sent a letter to Shebby asking for proof

that this was the case.   Shebby never responded to this inquiry.

The notice of determination of June 30, 2008, stated that Shebby

had dissipated the $87,890 and had failed to document how the

money was spent.   The Office of Appeals determined that the

reasonable collection potential should be increased by

$87,890.91.5

     Shebby argues that the Office of Appeals erred.   First,

Shebby argues that his share of the $87,890.91 in proceeds was

$43,945 and that he used his entire $43,945 share to pay part of

the delinquent joint income taxes.    Thus, Shebby maintains, he

did not dissipate the proceeds but rather paid his entire share

of the proceeds to the IRS.   This argument presumes, incorrectly,

that the Shebbys’ income-tax liabilities were paid with the

$43,945 belonging to Shebby and not the $43,945 that belonged to

his wife.   In fact, the $57,481.11 in checks that paid the joint

income-tax liabilities came from the lawyer who represented both

Shebby and his wife.   It would have been reasonable to assume


     5
      Internal Revenue Manual pt. 5.8.5.5(5) (Sept. 23, 2008)
directs that the Appeals officer should add the value of
dissipated assets to the reasonable collection potential. In
this context, the term “dissipated assets” means assets that have
been sold, given as gifts, transferred, or spent on nonpriority
items or debts and are no longer available to pay the tax
liability. Id. pt. 5.8.5.5(1).
                                 -19-

that the $57,481.11 was paid out of both spouses’ property.

Under this assumption, of Shebby’s $43,945 share of the proceeds,

only $28,741 (that is, one-half of the $57,481.11 income-tax

payment) was paid by Shebby toward the joint income tax

liabilities; the remainder--$15,204--was unaccounted for.   It may

have been a dissipated asset.6

     As a fallback argument, Shebby argues that the difference

between the proceeds ($87,890.91) and the income tax payments

($57,478.11), a difference of approximately $30,000, was paid to

“attorneys”.   But Shebby declined to substantiate this.   In the

absence of information about the remaining $30,000, the Office of

Appeals did not abuse its discretion in finding that at least a

portion of the $87,890.91 in proceeds was dissipated.7



     6
      The IRS concedes in its brief that Jacquez calculated that
the entire share of the proceeds ($87,890.91) should be included
in reasonable collection potential. One might argue that the
amount included should have been limited to $15,204, the
unaccounted portion of Shebby’s share of the proceeds. But the
error Shebby complains of is greater; he believes that Jacquez
should have included zero in reasonable collection potential. We
decline to consider whether a lesser error (not including $15,204
in reasonable collection potential) would constitute an abuse of
discretion.
     7
      Besides the four reasons discussed here, the notice of
determination also relied on the disparity between Shebby’s
monthly gross income and the amounts of deposits into the joint
checking account that was maintained by Shebby and his wife for
household expenses. Because the notice supplied other
independent reasons for rejecting Shebby’s offer-in-compromise,
we need not consider whether it was an abuse of discretion for
the settlement officer to consider the disparity between Shebby’s
reported income and the deposits into the checking account.
                                 -20-

     The Appeals Office did not abuse its discretion when it

refused to accept Shebby’s offer-in-compromise and decided that

the levy should proceed.

     To reflect the foregoing,


                                             Decision will be entered

                                        for respondent.
