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she had not attended the settlement conference and may not have
remembered the situation correctly.
Petitioners’ amended return and attachment, the complaint
against the insurance company, and settlement agreement and
accompanying memorandum were sufficient to create substantial
doubt regarding whether petitioners’ settlement included punitive
damages. Even though respondent had the opportunity to consider
the credibility of the witnesses, a witness’ testimony is not
necessarily conclusive as to the outcome of a factual issue. See
Williams v. United States, 26 Cl. Ct. 1031, 1032 (1992). That is
especially so where, as here, there is contradictory evidence.
Respondent could have reasonably decided to go to trial in the
hope that the Court would have found the documentary evidence
supporting respondent’s view more persuasive than the contrary
oral testimony supporting petitioners’ view.
Additionally, there is no indication that the evidence
relied on by respondent was “unusually scanty or unworthy of
belief” or that “respondent had taken his position for any
purpose other than to prevail in the litigation.” VanderPol v.
Commissioner, 91 T.C. 367, 370 (1988). Nor did respondent “offer
a novel or unsupported interpretation of the law or unreasonably
rely upon a statutory interpretation that already had been
rejected by this or another court.” Williams v. United States,
supra at 1031-1032. Respondent’s position was substantially
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