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We disagree. The parties intended to and did in fact reach
agreement on all essential terms for multiple years when
petitioners accepted respondent's blanket settlement offer in
January 1988. The settlement terms were clear. Cf. Nelson Bros.,
Inc. v. Commissioner, T.C. Memo. 1991-52. The offer included an
understanding that netting would be allowed, whereby taxpayers who
accepted the offer would be allowed to make one payment of the net
amount owed instead of being required to pay earlier year
deficiencies and wait for later year refunds. Although the manner
in which the netting would be accomplished was not finally reduced
to writing until December 1989 (as we held in Manko I), that was
only a matter of implementing the settlement that had been reached
when the blanket settlement offer was accepted in January 1988.4
In sum, we hold that all of the evidence before us indicates
that: (1) The settlement covered all years in which petitioner had
Arbitrage Management investments, docketed and nondocketed,
including the years in issue; and (2) all essential settlement
terms, including the agreement to apply overpayments against
4 The reports Mr. Kletnick sent to the Court after the
Feb. 25, 1988, pretrial conference confirmed his understanding
that settlements had been reached. And Mr. Nolan's letters to
Mr. Kletnick reflected the same understanding. For example, one
letter stated: "Thank you for meeting with us yesterday to
discuss the procedural difficulties that are delaying
implementation of the settlement agreement that we reached in
January and announced to Judge Jacobs in February."
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