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terms that would allow the investors an ordinary loss deduction
for the amount of cash invested in the partnerships. For
partnerships formed in 1979 and 1980, respondent’s offer of
settlement expired on September 5, 1986. By that date,
petitioners did not respond to respondent’s offer of settlement.
On December 27, 1988, petitioners mailed to respondent 10
checks totaling $130,836. On each check, petitioners indicated
whether the amount of each check should be applied to taxes or to
interest owed for each year. No indication appeared on the
checks as to whether the payments were being made in settlement
of all or any portion of the tax liabilities determined by
respondent against petitioners, nor did any indication appear on
the checks as to whether the payments were being made for any tax
liabilities relating to White Rim or to Syn-Fuel, or both.
Over the course of 1989 through 1997, petitioners and their
counsel and respondent exchanged various correspondence and other
documents discussing petitioners’ tax liabilities and that
petitioners on December 27, 1988, had partially paid. The
correspondence makes clear that, except as noted below, no
settlement was entered into by petitioners and respondent for any
of the tax years in dispute herein.
For example, included in the documents petitioners submitted
to respondent are claims for refund that petitioners filed in
1990 and in 1994 seeking refunds from respondent of amounts
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