- 32 -
is nothing in respondent's settlement offer that was "otherwise
discoverable" within the meaning of rule 408. We agree with
respondent and have not considered the Appeals officer's
settlement proposal for any purpose.
Issue (d). Exhibits J and K, Petitioner's 1992 and 1993 Tax
Returns
Petitioner objects, on the ground of lack of relevance, to
the admission of his 1992 and 1993 Federal income tax returns.
Respondent maintains that petitioner's returns for the years 1992
and 1993 are evidence that petitioner is still earning no revenue
from his drilling activity. This, respondent argues, is relevant
to the determination of whether petitioner carried on a trade or
business. Petitioner maintains that the years covered in this
case include years prior to 1992, and evidence relating to
whether he maintained a trade or business should be limited to
those years.
We agree with respondent. The tax years before this Court
are 1986 and 1991. Respondent seeks admission of the 1992 and
1993 tax returns for the purpose of showing that De Boer Drilling
Co. continued to earn no revenue. This evidence is relevant to
whether petitioner was engaged in a trade or business in 1991,
the immediately preceding year.
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