Jung Sik and Bok S. Lim - Page 5




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          substantially justified until the case was called for trial at              
          the May 18, 1998, calendar.                                                 
               The notice of deficiency was sent to petitioners on May 23,            
          1997.  Respondent’s Appeals officer requested a meeting with                
          petitioners’ representative in a letter dated February 2, 1998.             
          Petitioners’ counsel replied that a meeting was inconvenient at             
          that time but that documents could be provided by mail.  The                
          Appeals officer agreed and provided counsel with a list of needed           
          information.  The requested information was not provided until              
          April 14, 1998.                                                             
               After a timely review of the requested information,                    
          respondent’s Appeals officer concluded on May 1, 1998, that                 
          petitioners were entitled to a refund and forwarded a proposed              
          settlement computation to petitioners’ counsel.  Petitioners’               
          counsel indicated his agreement by return facsimile that same               
          day.4  On May 11, 1998, however, petitioners’ counsel was advised           
          by the Appeals officer that his supervisor refused to approve the           
          proposed settlement.  The case was forwarded to the Internal                
          Revenue Service (IRS) District Counsel on May 11, 1998, 1 week              
          before calendar call.                                                       
               Shortly after being informed that there would be no                    
          settlement with the IRS Appeals Office, petitioners’ counsel                

               4 Although the settlement proposal required petitioners to             
          concede deductions to which they were arguably entitled, the                
          settlement was accepted to avoid the further expense of trial.              




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