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OPINION
In this case, it is apparent from the allegations of their
petition and from their correspondence that petitioners knew they
were not entitled to the deduction of $99,000 claimed on their
1995 return. As early as December 1991, petitioner had written a
letter acknowledging that the disputed deductions, first taken on
his return for 1990, were contrary to legal precedent. (From
petitioner's correspondence and his statements at trial, it
appears that the dispute involved whether certain payments must
be capitalized rather than deducted in the years paid.) On the
1995 return, filed early in 1996, they claimed the erroneous
deduction expressly for the purpose of securing a hearing before
the Court, in which they would attack the settlements for 1990
and 1991 into which they had entered in 1994. They neither
appealed nor directly attacked by motion the decisions in the
earlier cases.
Approximately a year after the filing of petitioners' return
for 1995, an IRS Problem Resolution Specialist sent to
petitioners a letter dated February 12, 1997, ambiguously stating
that the deduction claimed on petitioners' 1995 return was being
allowed. Petitioners claim that the IRS thereby "forfeited" the
right to disallow the deduction. Their position has no merit.
See Dixon v. United States, 381 U.S. 68, 75 (1965); Automobile
Club v. Commissioner, 353 U.S. 180, 183-184 (1957); Warner v.
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