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it sold in 1984. Respondent noted that petitioners blamed their
failure to give notice on respondent’s failure to explain the
adjustments in the notices of deficiency. In that regard,
respondent also noted that petitioners were provided, pursuant to
the Court’s requirement, a detailed and specific explanation of
adjustments on October 28, 1996, about 3 months before expert
reports were to be filed with the Court. Petitioners’ claim of
setoff was made on January 31, 1997, at about the time of the
submission of expert reports to the Court.
We agree with petitioners that the regulation should not be
a procedural impediment to any appropriate setoff under these
circumstances. As to respondent’s complaint about the timeliness
of petitioners’ notice, respondent has not argued that he was in
any way specifically prejudiced by the timing of the notice.
Finally, we hold that petitioners are entitled to a setoff
of respondent’s 1984 section 482 adjustments that we have
sustained. The record reflects that DHLI never used the
technology and that the technology did not have the type of value
attributed to it in the 1984 sale of technology transaction
between DHL and DHLI. Petitioners’ expert’s opinion contains
reasonable assumptions and comports with the record in these
cases. Accordingly, we find and hold that the amount of the
setoff for the 1984 tax year equals the $13.05 million difference
between the stated $14.5 million sale price and a $1.45 million
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