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contract is an objective manifestation of mutual assent to
its essential terms. * * * Mutual assent generally requires
an offer and an acceptance. [Dorchester Indus. Inc. v.
Commissioner, 108 T.C. 320, 330 (1997), affd. 208 F.3d 205
(3d Cir. 2000) (quoting Manko v. Commissioner, T.C. Memo.
1995-10).]
A party cannot accept certain provisions and reject other
provisions of an offer. See Philadelphia & Reading Corp. v.
Beck, 676 F.2d 1159, 1164 (7th Cir. 1982). It is quite clear
here that, while there may have been an offer, petitioners did
not accept that offer. Indeed, they specifically rejected it.
Accordingly, there is no basis for petitioners’ argument that the
case had been settled and that respondent was, therefore,
precluded from asserting the section 72(t) additional tax.3
Petitioners also suggest that respondent should be estopped
from imposing the additional section 72(t) tax. The traditional
elements of estoppel are: (1) A misrepresentation or omission of
a material fact by another party; (2) a reasonable reliance on
that misrepresentation or omission; and (3) a detriment to the
other party. See United States v. Asmar, 827 F.2d 907, 912 (3d
Cir. 1987).
Assuming that Ms. Flanagan did in fact promise to “abate”
the section 72(t) penalty, petitioners may not claim estoppel
against respondent based on that promise. Even if petitioners
3 Respondent also argues that Ms. Flanagan had no authority to
settle the matter, and that, if there was a settlement, a closing
agreement under sec. 7121 was required. We see no reason in
visiting these questions.
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