Dostal v. Comm'r

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, 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*263 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.

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*264 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:

   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*265 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.

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*266 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*267       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 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, *268 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          *269      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:

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   *270                 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. *271 & 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.

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*272 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 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   *273          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.

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*274 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:

      *275                          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*276 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 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*277 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:

   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*278 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*279 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 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*280 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).

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. Comm'r, 117 T.C. 183, 185 (2001); Nicklaus v. Comm'r, 117 T.C. 117, 120 (2001).

Section 7122(a) authorizes the Secretary*281 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. 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*282 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 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. *283 "

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 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.

*284 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. First, contrary to petitioner's assertion, the Appeals officer did not suspend her consideration of the offer- *285 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. Comm'r, 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, *286 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, 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, *287 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 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*288 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 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. *289 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.

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*290 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   *291    --      --     --    --

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

*292                    ________   ________  ________  ______

  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    --