Thomas H. Scott and Lynn D. Scott, Transferees - Page 28

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          Pursuant to the closing agreement that was signed by, inter alia,           
          the Service, MSSTA, and the Scotts, MSSTA was not liable for any            
          penalties.  In any event, the first sentence of stipulation 25 is           
          not "Evidence of (1) furnishing or offering or promising to fur-            
          nish, or (2) accepting or offering or promising to accept, a                
          valuable consideration in compromising or attempting to compro-             
          mise a claim which was disputed as to either validity or amount".           
          Fed. R. Evid. 408.  Nor is it "Evidence of conduct or statements            
          made in compromise negotiations".  Id.  Consequently, we do not             
          find the first sentence of stipulation 25 to be inadmissible                
          under FRE 408.8  Accordingly, we unconditionally admit that sen-            
          tence into evidence and make it a part of the record in this                
               With respect to respondent's objection to Mr. Callison's               
          letter and certain of his testimony regarding that letter and his           
          recollection of his discussions with the revenue agent who was              
          auditing MSSTA's 1989 return, the record establishes that Mr.               
          Callison's letter was written at a time when there were ongoing             
          settlement negotiations between the Scotts and MSSTA and the                

          had preliminarily proposed.  We think that it is reasonable to              
          conclude that Mr. Scott so informed Mr. Callison.                           
          8  In addition, we reject respondent's contention that the first            
          sentence of stipulation 25 should be excluded from evidence be-             
          cause it is an attempt to go behind the notices.                            

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