Microsoft Corporation - Page 13

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                  extended by subsequent agreements in writing made before                              
                  the expiration of the period previously agreed upon.                                  
            Sec. 6501(c)(4).                                                                            
                  In analyzing a consent to extend the limitations period, it is                        
            well settled that such a consent is not a contract but rather a                             
            unilateral waiver of a defense by the taxpayer.  Stange v.                                  
            Commissioner, 282 U.S. 270, 276 (1931); Kronish v. Commissioner, 90                         
            T.C. 684, 693 (1988).  Nevertheless, contract principles are                                
            significant because section 6501(c)(4) requires the agreement to be                         
            in writing.  Piarulle v. Commissioner, 80 T.C. 1035, 1042 (1983).                           
            Consequently, we examine the objective manifestations of mutual                             
            assent to determine the terms of the agreement.  Kronish v.                                 
            Commissioner, supra at 693; Piarulle v. Commissioner, supra at                              
            1042.                                                                                       
                  The restricted consent in this case limited the extension of                          
            the limitations period to:                                                                  
                  The Service's proposed adjustment relating to the                                     
                  disallowance of Microsoft's use of the profit split                                   
                  method of computing taxable income for purposes of                                    
                  section 936(h) of the Internal Revenue Code of 1986 with                              
                  respect to its transactions with Microsoft Puerto Rico                                
                  and any transfer pricing adjustments resulting from such                              
                  disallowance; * * *                                                                   
                  Because the 1991 notice of deficiency was issued on May 9,                            
            1996, which was after the expiration of the final general consent                           
            extending the limitations period to March 15, 1996, respondent's                            
            alternative adjustment may be made only if it comes within the                              






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