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Offer in Compromise Tips for 433 Asset Valuation

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After Checking Out this Video, Click Here to Watch an IRS Solutions Demo on Asset Valuation for an Offer in Compromise


Hello, I’m David Stone from IRS Solutions Software, a tax pro’s best friend. And recently, I was asked by one of our clients: “Why does my client’s $20,000 on his 433 not equal $20,000 in assets?” Well, I went forward and tried to explain to him how this works.

When you say that you have $20,000 in a bank account, the IRS is going to take a look at that. And, there’s a section in the Internal Revenue Manual, that says that I am A) allowed to deduct one month’s living expenses. So, in this case here, we are looking at the client’s monthly income and expenses, and his monthly living expenses total $7,000, his allowable living expenses.

With that $7,000 we are going to go back to his bank and investment, and we are going to take that $7,000 and one month’s living expenses, and subtract it out of his equity in that bank account. On top of that, there’s also a section of the Internal Revenue Manual that says when you are doing an Offer-In Compromise that you will be able to deduct an additional $1,000 from your net equity in that investment.

So, in this case we actually have an account with $20,000 in it, minus one month’s worth of living expenses per the Internal Revenue Manual, that you can see right there.

Also, you get to take an additional $1,000 out of your balance, so that $20,000 in equity, actually becomes $12,000 in equity.

So, whether you are using our software, or you are doing your Offer-In-Compromise on your own, please remember to take into account that these things do exist, and that $20,000 is not always $20,000.

I hope this helps you out, and you are able to use this when you are working with the Internal Revenue Service. With that said, my name is David Stone, I’m with IRS Solutions Software, a tax pro’s best friend.

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