OIC 112: Expense Calculation for RCP, Part 2

• Instructor: Attorney Bob Schaller
• Lectures: 18
• Quizzes: 1

Expense Component of RCP Formulas – Part 2.

This course focuses on Part 2 of the “allowable monthly expenses” component of the “Future Income” calculation for the RCP formulas.  The allowable monthly expense analysis determines the “allowability” of a taxpayer’s monthly expenses.   The prior course, Part 1, focused on additional “allowable monthly expenses” topics.

Use of the qualifying adjective “allowable” alerts a taxpayer that not all expenditures are included in the IRS’ definition of “allowable monthly expenses.”  Certain expenses, like a vehicle loan payment on a taxpayer’s fourth car, would not be allowed by the IRS and the RCP’s “Future Income” component would not be reduced as a result of this vehicle loan expense.  Therefore, the RCP would be calculated as if that vehicle loan expense did not exist.

RCP amount for Lump-Sum Payment Offer = “NRE of assets” + “Future Income LSPO.”  “NRE of assets” = quick sale value (QSV) less amounts owed to secured lien holders with priority over the federal tax lien, if applicable, and applicable exemption amounts and other reductions.  “Future Income LSPO” = [(gross monthly income – allowable monthly expenses) * 12].

RCP amount for Periodic Payment Offer = “NRE of assets” + “Future Income PPO.”  “NRE of assets” = quick sale value (QSV) less amounts owed to secured lien holders with priority over the federal tax lien, if applicable, and applicable exemption amounts.  “Future Income PPO” = [(gross monthly income – allowable monthly expenses) * 24].