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25. Respondent did not assert the accuracy-related
penalty for a substantial underpayment, pursuant to
I.R.C. � 6662(a), against MSSTA. Attached hereto as
Petitioners' Exhibit 11 is a letter written by J.
William Callison concerning his request that Respondent
not assert such penalty. The stipulation is expressly
limited to the existence of this letter, and is not
intended as a stipulation to the truth of the matters
asserted therein. Respondent specifically reserves the
right to object to this stipulation, including the
referenced exhibit, as inadmissible pursuant to Fed. R.
Evid. 408.
Respondent objects to the admission into evidence of (1) the
first sentence of stipulation 25, (2) petitioners' exhibit 11,
the letter written by Mr. Callison (Mr. Callison's letter) that
is referenced in stipulation 25, and (3) certain testimony of Mr.
Callison regarding that letter and his recollection of his
discussions with the revenue agent who was auditing MSSTA's 1989
return. The principal ground for respondent's objections to
those matters is that they are inadmissible under rule 408 of the
Federal Rules of Evidence (FRE 408) because they constitute "evi-
dence of conduct or statements made in compromise negotiations".6
As we understand their position, petitioners contend that
the evidence to which respondent objects is not excluded by FRE
408 because (1) respondent "had not yet asserted" that MSSTA was
6 Respondent also objects to the evidence in question on rele-
vancy grounds and on the ground that the evidence in question is
an attempt to go behind the notices. As for the relevancy ob-
jection, we indicated at trial that, assuming arguendo that we
were to find the evidence to which respondent objects to be
otherwise admissible, we shall give it whatever weight we deem
appropriate.
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