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The trial evidence establishes that the four major agreed
adjustments were resolved in the course of the audits. But the
trial evidence does not establish when, during the course of the
audits, the four major agreed adjustments were resolved, short of
the end of the audits. The mere fact that respondent’s
representatives may, during the course of the audits, have had a
“feeling” for where Exxon’s representatives stood on the major
agreed issues does not rise to the level of an agreement.
In our opinion, the adjustments in question and the related
statutory interest are to be treated as not fully settled, as not
sufficiently fixed and definite, as contested, and as not
resolved until the end of respondent's audits, when assessments
of the tax deficiencies relating thereto were agreed to or when
the assessments occurred, at which point in time deficiency
interest relating to the adjustments is accruable.
We note the following points that, taken together, we regard
as objective evidence that Exxon's liability for the agreed
adjustments was not fixed and definite until the end of the
audits when the Form 870 agreements were entered into without
further protest or litigation by Exxon or when the assessments
occurred:
(1) Exxon’s consolidated corporation income tax returns
reflected amounts different from those reflected in the
agreed adjustments;
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