The IRS properly rejected a married couple’s offer in compromise because they had a nominee interest in real property that was held in trust for their adult sons. The IRS’s determination that the couple’s interest in the property would enable it to collect more than the amount they offered was reasonable. Although there was little guidance regarding nominee ownership under applicable state (Maine) law, the couple’s transfer of the property to the husband’s father, who then transferred it to a trust for the couple’s children, was made in anticipation of a liability. The couple continued to reside in and enjoy possession of the property, were responsible for its maintenance and upkeep, paid rent for an amount that covered the mortgage and real estate taxes, continued to hold themselves out as owners of the property, the trust beneficiaries were the couple’s children and the couple and the trust did not maintain any records of their asserted relationship. Therefore, the equity in the property was properly considered when the IRS evaluated the offer.
Finally, the Tax Court’s award of attorney fees to the couple was reversed because the IRS’s rejection of the offer in compromise was unimpugnable. Consequently, the couple was not a prevailing party entitled a fee award.
Reversing the Tax Court, Dec. 58,341, 135 TC 393.
A. Dalton Jr., CA-1, 2012-1 USTC ¶50,411
Code Sec. 6330
CCH Reference – 2012FED ¶38,184.50
Code Sec. 6331
CCH Reference – 2012FED ¶38,187.73
CCH Reference – 2012FED ¶38,187.804
Code Sec. 7122
CCH Reference – 2012FED ¶41,130.29
Code Sec. 7430
CCH Reference – 2012FED ¶41,743.68
Tax Research Consultant
CCH Reference – TRC IRS: 48,106.10
CCH Reference – TRC IRS: 51,056.25
CCH Reference – TRC LITIG: 3,154.05
CCH Reference – TRC LITIG: 6,136.25