defendant's motion for summary judgment which for the reasons set forth below will be granted.
On March 13, 1985, the Pennsylvania State Police arrested the plaintiff and charged him with possession and intent to distribute cocaine. After searching the plaintiff's residence, the police discovered 2,893 grams of nearly pure uncut cocaine with an estimated street value of $2,000,000. During a subsequent search of Levrio's residence, the police discovered $211,331.83 in ten, twenty, fifty and one hundred dollar bills in a briefcase. Levrio subsequently entered a guilty plea to one count of intentionally and unlawfully possessing with the intent to distribute cocaine in violation of 21 U.S.C. § 841(a)(1).
Based on this information and the fact that Levrio was unemployed at the time of the arrest, on March 22, 1985, the IRS made a termination assessment against Levrio in the amount of $323,393.36 for the year 1985. Pursuant to the procedures outlined in 26 U.S.C. § 7429(a), the plaintiff sought administrative review of that determination wherein he alleged that the making of the assessment and the amount of the assessment were unreasonable. On April 29, 1985, the Pittsburgh, Pennsylvania Appeals Office of the IRS ruled that the making of the termination was reasonable under the circumstances. However, the Appeals Office reevaluated the amount of the assessment and determined that $25,600.00 should be abated. Thus, the total of the assessment was redetermined to be $297,793.36.
Under 26 U.S.C. § 7429(b), the plaintiff now seeks judicial review of the termination assessment made against him. The plaintiff, alleging that the assessment was unfair, arbitrary and without any basis, contends that there was no evidence that the cocaine found in his residence belonged to him, and that defendant had no basis for determining that all of the cash seized at plaintiff's residence was current taxable income.
The defendant maintains that under the circumstances, the making of the termination assessment was reasonable since plaintiff's involvement in illegal drug trafficking activities justified the conclusion that the collection of plaintiff's taxes could be jeopardized, that is, that the collection of taxes could be prejudiced by delay. See, Hamilton v. United States, 81-1 U.S.T.C. 9325 (E.D.Va. 1981). With respect to the appropriateness of the amount of the assessments, the defendant asserts that the calculation, based on the plaintiff's assets at the time of his arrest, was reasonable.
Plaintiff limits his response to the reasonableness of that portion of the assessment pertaining to the cocaine. Plaintiff contends that it is improper to treat cocaine as current taxable income. The plaintiff asserts that drugs are often "fronted", i.e. supplied on credit, to customers who do not pay the supplier until they, in turn, have sold the drug and received payment. Plaintiff argues that until the cocaine has been sold and the money turned over to him, he has not received income from the sale of the drug, and therefore, the IRS has no basis for including the drug as the equivalent of cash.
II. Applicable Law
In a motion for summary judgment, the moving party must demonstrate that there is no genuine issue as to any material fact and that he is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). In considering a motion for summary judgment, the court must determine whether the record indicates any issues of material fact, assume the resolution of any issue in favor of the non-movant and determine whether the movant is entitled to judgment as a matter of law. First Jersey National Bank v. Dome Petroleum, Ltd., 723 F.2d 335 (3d Cir. 1983). See, e.g., Hollinger v. Wagner Mining Equipment, 667 F.2d 402, 405 (3d Cir. 1981).
The issues before the court are whether the IRS was reasonable in its belief that its ability to collect income taxes from Levrio was in jeopardy at the time the termination assessment was made and whether the amount assessed was appropriate under the circumstances. Congress enacted § 7429(b) to provide judicial review of an inappropriate termination or jeopardy assessment and prevent any undue hardship to the taxpayer. See, S.Rep.No. 938, 94th Cong., 2d Sess. 363 (1976), reprinted in  U.S.Code Cong. & Admin. News 3439, 3790-93. Section 7429(b)(2) provides in pertinent part:
. . . The district court shall determine whether or not -
(A) the making of the assessment under Section 6851, 6861, or 6862, as the case may be, is reasonable under the circumstances, and