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The specific statutory language in section 7430(c)(4)(E)
reflecting the settlement limitation to the qualified offer
provision provides as follows:
(ii). Exceptions.--This subparagraph shall not apply to–-
(I) any judgment issued pursuant to a settlement;
Respondent argues that this statutory language means that
the ultimate resolution of a disputed tax adjustment pursuant to
“any” settlement disqualifies a taxpayer’s qualified offer from
being treated as such.
Petitioners contend that the above settlement limitation on
qualified offers should not apply where, as in the instant case,
a disputed tax adjustment is involved in litigation and is
resolved by settlement between the parties only after a court has
decided arguments and issues relating to the adjustment. Here,
petitioners emphasize that the water rights adjustment was
resolved by the parties by settlement only after this Court had
rendered its opinion on the capital asset issues and on the legal
allocation issue and only after the Court of Appeals for the
Ninth Circuit had rendered an opinion on the legal allocation
issue, each of which was part and parcel of respondent’s water
rights adjustment.
In support of their position, petitioners cite the policy
underlying the qualified offer provision and respondent’s
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Last modified: May 25, 2011