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and 9 explain why adjustments were made with respect to
petitioner's tax liability for 1991, and how respondent
calculated the deficiency at issue.
We agree with respondent. A trial before the Tax Court is a
proceeding de novo. Greenberg's Express, Inc. v. Commissioner,
supra at 328. Our decision in this case must be based on the
record of the case, not the record developed at the
administrative level. See O'Dwyer v. Commissioner, 28 T.C. 698,
702-704 (1957), affd. 266 F.2d 575, 581 (4th Cir. 1959).
Inasmuch as petitioner has not shown that respondent's deficiency
determination was arbitrary and erroneous, or that the
determination was not supported by the proper foundation
evidence, see Weimerskirch v. Commissioner, 596 F.2d 358, 362
(9th Cir. 1979) revg. 67 T.C. 672 (1977), it is inappropriate for
us to look behind the deficiency notice to examine the basis for
respondent's determination.
Issue (c). Exhibit 10, IRS Settlement Proposal
Respondent objects to the admission of an offer in
settlement sent by an IRS Appeals officer to petitioner. Rule
408 of the Federal Rules of Evidence renders inadmissible any
evidence of conduct or statements made in negotiations to
compromise a claim. Petitioner relies on the third sentence of
Rule 408, which provides that the rule does not require "the
exclusion of any evidence otherwise discoverable merely because
it is presented in the course of compromise negotiations." There
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