T.C. Memo. 2009-183



                       UNITED STATES TAX COURT



                STEPHEN E. O’NEIL, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17460-07L.              Filed August 11, 2009.



     Kevin M. Flynn, for petitioner.

     Shawna A. Early, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Pursuant to section 6330(d),1 petitioner

seeks review of respondent’s determination to proceed with

collection of his unpaid 1980, 1981, 1993, 1996, 1997, 2002,

2003, and 2004 income tax liabilities.    The issue for decision is


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code.
                                 - 2 -

whether respondent may proceed with collection of the above-

mentioned unpaid income tax liabilities.    We must decide whether

petitioner submitted an offer-in-compromise (OIC) to respondent

during the collection hearing.

                         FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.    At the time he filed the

petition, petitioner resided in New York.

Background

     In 1954 petitioner graduated Phi Beta Kappa from Princeton

University.   In 1957 petitioner graduated from Harvard Law

School.   After law school, petitioner was employed by the law

firm of Cravath, Swaine & Moore, L.L.P.

     In 1978 petitioner became a member of the board of directors

of Brown Forman Corp. (Brown Forman).    Petitioner served as a

member of the board of directors of Brown Forman from 1978 until

April of 2007.

     As part of his role as a director of Brown Forman,

petitioner was awarded Brown Forman stock options each July from

1997 through 2006.   Petitioner’s right to exercise each Brown

Forman option expires 10 years after the date of grant.    If

petitioner fails to timely exercise an option, it lapses.     Each

option granted petitioner the right to purchase a particular
                               - 3 -

number of shares of Brown Forman common stock.     Each option had a

different exercise price based on the fair market value (i.e.,

the stock exchange trading price) of the stock on the date of the

award.   Petitioner’s per-share exercise prices for the Brown

Forman stock options from 1997 through 2006 are as follows:

         Stock Option            Petitioner’s Option
          Award Year                Exercise Price

              1997                       $24.56
              1998                        30.63
              1999                        31.13
              2000                        25.22
              2001                        34.17
              2002                        32.11
              2003                        39.23
              2004                        46.58
              2005                        59.18
                                        1
              2006                        72.40
     1
       Respondent notes that although Exhibit 23-J indicates that
the exercise price for the 2006 options is $72.40 per share,
there apparently is an error in this calculation. The exercise
price should be $63.87 per share ($148,565 (total option purchase
price)/2,326 (number of shares) equals $63.87 option exercise
price, not $72.40).

Petitioner is not required to pay cash up front in order to

exercise the Brown Forman options.     Rather, petitioner can “net

exercise” the options, receiving cash equal to the excess of the

fair market value of the stock at the time of exercise over the

option exercise price.
                               - 4 -

Collection Notices

     On June 16, 2005, respondent sent petitioner a Notice of

Federal Tax Lien Filing and Your Right to a Hearing under I.R.C.

6320 (lien notice) with respect to petitioner’s outstanding

income tax liabilities for the taxable years 1993, 1996, 1997,

2002, and 2003.

     On July 1, 2005, respondent sent petitioner a Final Notice--

Notice of Intent to Levy and Notice of Your Right to a Hearing

(levy notice) relating to petitioner’s outstanding income tax

liabilities for the taxable years 1993, 1996, 1997, 1998, 1999,

2000, 2001, 2002, and 2003.

     On or about July 15, 2005, petitioner submitted to

respondent a Form 12153, Request for a Collection Due Process

Hearing, in response to the lien notice and the levy notice

(hearing request).   Respondent treated the hearing request as a

timely request for a collection hearing for all the taxable years

in both the lien notice and the levy notice with the exception of

1998, 1999, 2000, and 2001.2

     On August 29, 2005, respondent sent petitioner a Final

Notice--Notice of Intent to Levy and Notice of Your Right to a

Hearing relating to petitioner’s outstanding income tax



     2
        Petitioner was granted an equivalent hearing relating
to taxable years 1998, 1999, 2000, and 2001 as he received prior
lien and levy notices for those years and did not timely request
a collection hearing.
                              - 5 -

liabilities for the taxable years 1980, 1981, and 2004 (second

levy notice).

     On September 14, 2005, respondent received petitioner’s Form

12153 for taxable years 1980, 1981, and 2004 relating to the

second levy notice.

     With respect to taxable years 1993, 1996, 1997, 2002, and

2003, as of July 1, 2005, petitioner’s outstanding income tax

liabilities were $265,060.77, $272,029.71, $151,259.14,

$48,769.89, and $51,518, respectively.    With respect to taxable

years 1980, 1981, and 2004, as of August 29, 2005, petitioner’s

outstanding income tax liabilities were $6,234,617.69,

$3,880,264.45, and $8,826.11, respectively.3       Accordingly, as of

September 2005 petitioner’s outstanding income tax liabilities

for the years at issue totaled approximately $11 million:

          Year                            Amount

          1980                        $6,234,617.69
          1981                         3,880,264.45
          1993                           265,060.77
          1996                           272,029.71
          1997                           151,259.14
          2002                            48,769.89
          2003                            51,518.00
          2004                             8,826.11
            Total                     10,912,345.76

Petitioner did not challenge the amount of his underlying tax

liabilities during the collection hearing.



     3
        The tax liabilities relating to 1980 and 1981 stemmed
from petitioner’s involvement in tax shelters.
                                 - 6 -

Petitioner’s Desire To Enter Into an Offer-in-Compromise

     From the time that petitioner received the collection

notices from respondent, it was petitioner’s intention to resolve

his tax liabilities at issue through an OIC.    In 2005 petitioner

was generally familiar with OICs, and he believed that an OIC was

the only way for him to satisfy the liabilities at issue.

     On December 8, 2005, petitioner submitted to respondent a

Form 433-A, Collection Information Statement for Wage Earners and

Self-Employed Individuals.    Petitioner reported that his gross

monthly income was $10,337.    Petitioner claimed monthly living

expenses of $8,635.

     On the Form 433-A petitioner listed 25,275 options in Brown

Forman stock as an investment.    Form 433-A requests the current

value (the amount the asset could be sold for that day) of the

investments listed.   Petitioner did not list the current value of

the Brown Forman options.    Instead, petitioner stated that “The

value of the options is indeterminate because their value is

contingent upon the market price of the underlying stock which

fluctuates daily.”

     On March 22, 2006, a face-to-face collection hearing was

held between petitioner’s counsel and Settlement Officer Robert

J. Fernandez (SO Fernandez).    During the face-to-face hearing the

parties first discussed petitioner’s desire to submit an OIC, and
                                 - 7 -

petitioner’s counsel indicated that petitioner was willing to

exercise his Brown Forman stock options to fund an OIC.

     After the March 22, 2006, face-to-face collection hearing,

petitioner’s counsel and SO Fernandez continued the collection

hearing via telephone and correspondence.   SO Fernandez requested

documents and information from petitioner to determine whether

petitioner was eligible to submit an OIC (e.g., proof that

petitioner was current with his filing and payment requirements).

     By a letter dated April 13, 2006, petitioner’s counsel sent

information to SO Fernandez in response to his requests,

including copies of (1) petitioner’s Form 1040, U.S. Individual

Income Tax Return, for 2004; (2) canceled checks in payment of

petitioner’s Federal, State and local estimated taxes for 2005;

and (3) a letter from Brown Forman confirming that petitioner’s

position as a director of the company would end on April 30,

2007.

     On July 14, 2006, petitioner’s counsel sent SO Fernandez a

letter which contained, inter alia, a detailed discussion of the

grant, terms, and operation of petitioner’s Brown Forman stock

options.   Petitioner was heavily involved in the preparation of

the July 14, 2006, letter.   The letter proposed exercising some

of the options to fund an OIC.

     In the July 14, 2006, letter, petitioner proposed to

exercise his Brown Forman options for years 1997 through 2003.
                               - 8 -

The closing price of Brown Forman stock on July 13, 2006 (the day

before the letter), was approximately $70 per share.4    Using a

price of $70 per share, petitioner calculated that the exercise

of these options would result in ordinary income of approximately

$776,500.   Petitioner estimated that he would owe Federal income

taxes of $271,775 and State and local income taxes of $93,180 on

this income.   Thus, petitioner determined that the net proceeds

from the exercise of the options for 1997 through 2003, after all

taxes were paid, would be approximately $412,000.

     In the July 14, 2006, letter, petitioner suggested that he

pay respondent $125,000 from the exercise of the Brown Forman

options for 1997 through 2003 in order to settle his outstanding

$11 million debt.   Further, petitioner stated that respondent

should accept this amount to account for the fact that

     (i) the Options are nothing more than a potential asset
     that are valueless to both Mr. O’Neil and the IRS if he
     does not exercise them; (ii) the Options are not
     marketable and can be only exercised by Mr. O’Neil;
     further, the Options cannot be seized, sold, pledged or
     hypothecated; (iii) the value of the Options in the
     future is wholly unknown and unknowable; the price of
     the [Brown Forman stock] could go down in the years to
     come, thereby rendering it uneconomical for Mr. O’Neil
     to exercise the Options; and (iv) the receipt of tax
     dollars today from the exercise of the Options has a
     present value to the IRS.




     4
        At the time the collection hearing was conducted, and as
of the date of trial, the fair market value for the Brown Forman
stock still was approximately $70 per share.
                               - 9 -

Petitioner, rather than his counsel, established the figure of

$125,000.   However, petitioner was willing to negotiate this

figure with respondent and pay a greater amount in order to reach

an agreement on an OIC.

     The July 14, 2006, letter was signed by petitioner’s

counsel, not petitioner.   This letter was not signed under

penalties of perjury and was not accompanied by a $150 check for

the application fee.

     While petitioner and SO Fernandez were discussing a possible

OIC, Congress enacted the Tax Increase Prevention and

Reconciliation Act of 2005, Pub. L. 109-222, sec. 509(a) and (d),

120 Stat. 362, 364 (2006), which amended section 7122 by adding a

new subsection (c) requiring a 20-percent downpayment for a lump-

sum OIC made on or after July 16, 2006.

     As of December 7, 2006, petitioner had not filed an OIC.

That same day petitioner’s counsel informed SO Fernandez that he

would “check his records to be sure, but he feels he did not send

[an OIC] in.”   SO Fernandez indicated that because petitioner had

not yet submitted an OIC, petitioner would be required to include

a 20-percent deposit with an OIC.

     On March 8 and 13, 2007, SO Fernandez informed petitioner’s

counsel that a 20-percent deposit was required for all OICs under

the new section 7122(c)(1)(A)(i).   SO Fernandez requested that
                              - 10 -

petitioner provide him with a copy of one of the Brown Forman

option agreements.

     On March 23, 2007, petitioner’s counsel informed SO

Fernandez that petitioner was willing to make a payment of

$25,000--i.e., 20 percent of $125,000 (petitioner’s estimate of

an acceptable OIC).   Petitioner’s counsel also sent SO Fernandez

a copy of the Brown Forman “Non-Employee Director’s Nonqualified

Stock Option Award” granted to petitioner on July 22, 2004.     All

of the Brown Forman options that had been awarded to petitioner

were substantially similar in form to the 2004 option except for

the grant dates, expiration dates, number of shares, and the

prices per share, which varied.   These options could not be sold,

transferred, pledged, assigned, or otherwise hypothecated.

     On May 9, 2007, SO Fernandez acknowledged receipt of the

2004 option agreement and requested that petitioner provide SO

Fernandez by May 31, 2007, with a schedule of all of the options

that petitioner was awarded for 1997 through 2006.   SO Fernandez

requested that the schedule include the number of shares and the

exercise price (price per share) covered by each option contract.

SO Fernandez stated in this letter that a schedule of the

options, rather than the individual option contracts, was

sufficient for him to evaluate the merits of petitioner’s

proposed OIC.
                               - 11 -

     On May 10, 2007, petitioner’s counsel sent SO Fernandez the

requested schedule of petitioner’s Brown Forman options.      The

schedule included, inter alia, the number of shares per option

award and the exercise price (price per share).5

     After reviewing the schedule of options, SO Fernandez’s

preliminary finding was that petitioner’s net realized equity

(NRE) in all of petitioner’s Brown Forman options was $617,524.

He found that the 25,275 Brown Forman shares for which petitioner

had options had a fair market value of $1,769,250, using the $70-

per-share fair market value petitioner’s counsel asserted in the

July 14, 2006, letter.    In reaching the NRE, SO Fernandez

calculated that petitioner’s cost of exercising the options (the

exercise price times the number of shares) would be $680,331 and

subtracted that amount from the $1,769,250 fair market value of

the Brown Forman stock.    In reaching his NRE amount, SO Fernandez

also deducted petitioner’s estimated Federal, State, and local

taxes of $471,395 from the $1,769,250 fair market value of the

Brown Forman stock.   SO Fernandez found no legal authority or

administrative guidance to support petitioner’s counsel’s

argument that the NRE should be discounted.



     5
        This schedule lists a total of 27,601 options. However,
the parties consistently referred to there being 25,275 options
(with the exception of the stipulation of facts, where the total
of 25,274 appears to be a typo). For convenience, we presume
that petitioner had the option to purchase 25,275 shares of Brown
Forman stock at the time of the collection proceedings.
                               - 12 -

     On May 22, 2007, SO Fernandez told petitioner’s counsel that

he could find no basis under the Internal Revenue Manual (IRM)

for reducing the NRE of the options below $617,524.

     On June 8, 2007, SO Fernandez called petitioner’s counsel

and left a voice mail message, the substance of which SO

Fernandez recounted in his activity records as follows:    “Called

the rep. and left a voice mail message on his voice mail to the

effect that I did not believe that an offer could succeed if the

taxpayer did not offer his complete equity minus the tax

consequences.    I mentioned that I had discussed this concept with

the ATM [Appeals Team Manager].”

     On June 18, 2007, SO Fernandez spoke with petitioner’s

counsel, the substance of which SO Fernandez recounted in his

activity records as follows:   “Rep. called and I finally spoke to

him in person.   He agreed that there is no support in the IRM for

reducing the value of the options outside of the tax

consequences”.   SO Fernandez advised petitioner’s counsel that

petitioner had sufficient income to meet his monthly expenses and

that he could liquidate the Brown Forman options and make

payments to reduce his balance.

     Throughout the 15 months when petitioner’s case was assigned

to SO Fernandez, petitioner’s counsel and SO Fernandez had

several serious, focused, and meaningful discussions regarding

petitioner’s desire to enter into an OIC and how petitioner
                               - 13 -

proposed to fund one.   Petitioner’s intention to submit an OIC

for the years at issue was the only collection alternative

discussed by petitioner’s counsel and SO Fernandez at the March

22, 2006, face-to-face collection hearing and in the 15 months

thereafter (i.e., during the collection hearing) until the notice

of determination was issued.

     Petitioner understood and agreed that, if and when required,

he would need to pay a $150 processing fee and submit a Form 656,

Offer in Compromise.    He did neither, nor did he submit a 20-

percent nonrefundable deposit.    Petitioner considered the Form

656, the 20-percent deposit, and the $150 processing fee to be

ministerial aspects (procedural formalities) of an OIC that could

be addressed if and when petitioner and respondent reached an

agreement as to the amount of the OIC.

Notice of Determination

     On or about July 5, 2007, SO Fernandez issued the notice of

determination to petitioner, stating his position that the NRE of

the options was $617,524.    The notice of determination further

stated in relevant part:

     The Internal Revenue Manual provides no support for
     reducing the value of an asset of this type merely
     because of the inherent difficulty in collection from
     it. The starting point for determining whether an
     offer can be accepted is the taxpayer’s net equity in
     all of the assets. There is no provision for taxpayers
     to retain part of their equity outside of an Effective
     Tax Administration offer. The facts and circumstances
     in this case would not justify an offer under Effective
     Tax Administration. Therefore, in order for an offer
                               - 14 -

       to be seriously considered, the net equity in the
       options must be the starting point.

Under the heading of “Collection Alternatives Offered by

Taxpayer” the notice of determination also stated:    “You

expressed a desire to offer $125,000, but you have not formally

submitted an offer.”

                               OPINION

       Section 6320(a)(1) provides that the Secretary shall furnish

the person described in section 6321 with written notice (i.e.,

the hearing notice) of the filing of a notice of lien under

section 6323.    Section 6320(a) and (b) further provides that the

taxpayer may request administrative review of the matter (in the

form of a hearing) within a 30-day period.    The hearing generally

shall be conducted in a manner consistent with the procedures set

forth in section 6330(c), (d), and (e).    Sec. 6320(c).

       Section 6330(a) provides that the Secretary shall furnish

taxpayers with written notice of their right to a hearing before

any property is levied upon.    Section 6330 further provides that

the taxpayer may request administrative review of the matter (in

the form of a hearing) within a 30-day period.    Sec. 6330(a) and

(b).

       Pursuant to section 6330(c)(2)(A), a taxpayer may raise at

the section 6330 hearing any relevant issue with regard to the

Commissioner’s collection activities, including spousal defenses,

challenges to the appropriateness of the Commissioner’s intended
                              - 15 -

collection action, and alternative means of collection.      Sego v.

Commissioner, 

, 609 (2000); Goza v. Commissioner, 

, 180 (2000).   Where the validity of the underlying tax

liability is not at issue, we review the Commissioner’s

determination for abuse of discretion.     Sego v. 

at 610.

     An OIC was the only issue petitioner’s counsel and SO

Fernandez discussed during the collection hearing.    Accordingly,

the crux of this case is whether petitioner submitted an OIC to

respondent during the collection hearing.    To decide this we look

to the relevant statute and regulations.

     Section 7122(a) authorizes the Commissioner to compromise a

taxpayer’s outstanding liabilities.    The regulations and

procedures under section 7122 provide the exclusive method of

effecting a binding nonjudicial compromise.     Laurins v.

Commissioner, 

, 912 (9th Cir. 1989), affg. Norman v.

Commissioner, T.C. Memo. 1987-265; Shumaker v. Commissioner, 

, 1199-1200 (9th Cir. 1981) (citing Botany Worsted Mills

v. United States, 

, 288-289 (1929)), affg. in part,

revg. in part and remanding per curiam on other grounds T.C.

Memo. 1979-71.

     Section 301.7122-1(d), Proced. & Admin. Regs., provides:

     An offer to compromise a tax liability pursuant to
     section 7122 must be submitted according to the
     procedures, and in the form and manner, prescribed by
     the Secretary. An offer to compromise a tax liability
                              - 16 -

     must be made in writing, must be signed by the taxpayer
     under penalty of perjury, and must contain all of the
     information prescribed or requested by the Secretary.
     * * *

See Nash v. Commissioner, T.C. Memo. 2008-250; Harbaugh v.

Commissioner, T.C. Memo. 2003-316; see also Wagner v.

Commissioner, T.C. Memo. 1990-443 (“compromise agreements under

section 7122 are required to be in writing”); Prakash v.

Commissioner, T.C. Memo. 1990-106 (same); Foulds v. Commissioner,

T.C. Memo. 1989-29 (same).

     An OIC must be submitted on a special form prescribed by the

Secretary.   Riederich v. Commissioner, 

(9th Cir.

1993), affg. without published opinion T.C. Memo. 1991-164;

Laurins v. 

at 912.   Section 601.203(b),

Statement of Procedural Rules, identifies Form 656 as the form

required for an OIC:

     Offers in compromise are required to be submitted on
     Form 656, properly executed, and accompanied by a
     financial statement on Form 433 (if based on inability
     to pay). Form 656 is used in all cases regardless of
     whether the amount of the offer is tendered in full at
     the time the offer is filed or the amount of the offer
     is to be paid by deferred payment or payments. * * *

See also Godwin v. Commissioner, T.C. Memo. 2003-289 (“Taxpayers

who wish to propose an offer in compromise must submit a Form

656, Offer in Compromise”), affd. 

(11th Cir.

2005); Ringgold v. Commissioner, T.C. Memo. 2003-199 (“settlement

of tax liabilities for less than the amount owed requires the

completion of Form 656”).
                               - 17 -

     Petitioner did not submit a Form 656 or any other writing

made under penalties of perjury to compromise his tax

liabilities.    Furthermore, petitioner admitted that he did not

submit the 20-percent downpayment required by section

7122(c)(1)(A)(i).    As petitioner’s counsel stated, SO Fernandez

and petitioner’s counsel were discussing, considering,

evaluating, and negotiating an OIC.     Petitioner’s counsel further

stated that once an amount was agreed to, if it was agreed to,

the “formalities” would have been accomplished.    This never

happened, and the “formalities” of submitting an OIC were never

accomplished.

     As petitioner did not submit a written OIC to respondent, we

cannot find that a valid compromise was made.    See Harbaugh v.

; Ringgold v. 

(“petitioners did not submit an offer in compromise on the

appropriate form (i.e., Form 656)”).    Administrative negotiations

regarding compromise of a tax liability are not binding against

either party and not enforceable without compliance with section

7122.   Rohn v. Commissioner, T.C. Memo. 1994-244.

     Petitioner’s intention to submit an OIC for the years at

issue was the only collection alternative proposed by petitioner

and discussed by petitioner’s counsel and SO Fernandez at the

conference on March 22, 2006, and in the 15 months thereafter

(i.e., during the collection hearing) until the notice of
                              - 18 -

determination was issued.   Accordingly, the settlement officer

did not abuse his discretion in failing to consider an OIC that

petitioner never made.6   See Kindred v. Commissioner, 

        First, we note that SO Fernandez was not obligated to
propose a counteroffer. See Fargo v. Commissioner, 

,
712-713 (9th Cir. 2006), affg. T.C. Memo. 2004-13. Second,
assuming arguendo that petitioner had submitted an OIC for
$125,000 on Form 656 and the 20-percent downpayment, it would not
have been an abuse of discretion for the settlement officer to
reject such an OIC.

     We do not conduct an independent review of what would be an
acceptable OIC. Murphy v. Commissioner, 

, 320
(2005), affd. 

(1st Cir. 2006). Instead, the extent
of the Court’s review is to determine whether the decision to
reject the OIC was arbitrary, capricious, or without sound basis
in fact or law.

see Woodral v. Commissioner, 

, 23 (1999).

     Regulations implementing sec. 7122 set forth three grounds
for the compromise of a liability: (1) Doubt as to liability,
(2) doubt as to collectibility; and (3) promotion of effective
tax administration. The validity of the underlying tax liability
is not at issue; accordingly, petitioner could not have sought an
OIC for doubt as to liability. Petitioner could not pay his
liability in full; accordingly, petitioner could not have sought
an OIC to promote effective tax administration. See sec.
301.7122-1(b)(3), Proced. & Admin. Regs.

     Generally, an OIC based on doubt as to collectibility will
be acceptable only if the offer reflects the reasonable
collection potential (RCP). Murphy v. 

at
309. A taxpayer’s RCP is calculated by adding together the
taxpayer’s NRE and future income. Lemann v. Commissioner, T.C.
Memo. 2006-37.

     SO Fernandez computed that petitioner’s NRE was $617,524.
Petitioner determined that the NRE of the options for 1997
through 2003 was approximately $412,000. Both of these figures
are considerably more than $125,000.

     Because an OIC for $125,000 was less than the RCP, an OIC
for $125,000 would be unacceptable under the Commissioner’s
                                                   (continued...)
                             - 19 -

688, 696 (7th Cir. 2006) (stating that “Without an actual offer

in compromise to consider, it would be most difficult for either

the Tax Court or this court to conclude that the appeals officer

might have abused his discretion”); Kendricks v. Commissioner,

, 79 (2005) (holding that because “there was no offer

in compromise before Appeals, there was no abuse of discretion in

Appeals’ failing to consider an offer in compromise”); Huntress

v. Commissioner, T.C. Memo. 2009-161 (citing Nelson v.

Commissioner, T.C. Memo. 2009-108, which held that Appeals did

not abuse its discretion in sustaining a lien when a taxpayer

requested an OIC generally but had not prepared one); Williams v.

Commissioner, T.C. Memo. 2009-159.

     In reaching all of our holdings herein, we have considered

all arguments made by the parties, and to the extent not

mentioned above, we find them to be irrelevant or without merit.




     6
      (...continued)
procedures and it would not have been an abuse of discretion to
reject such an OIC. See Murphy v. 

at 321;
Lemann v. 

; see also McClanahan v.
Commissioner, T.C. Memo. 2008-161. When a settlement officer has
followed the Commissioner’s guidelines to ascertain a taxpayer’s
RCP and rejected the taxpayer’s collection alternative on that
basis, we have found no abuse of discretion. Lemann v.

(and cases cited therein). Furthermore, it
is not an abuse of discretion to reject an OIC that bears no
relationship to a taxpayer’s ability to pay according to his own
calculations. Hubbart v. Commissioner, T.C. Memo. 2007-26, affd.
in part and vacated in part sub nom. Keller v. Commissioner, 

(9th Cir. 2009); Hawkins v. Commissioner, T.C. Memo.
2005-88.
                        - 20 -

To reflect the foregoing,


                                  Decision will be entered

                             for respondent.