- 8 - 301.7430-7T(a), Temporary Proced. & Admin. Regs., 66 Fed. Reg. 726 (Jan. 4, 2001), provides, in part, as follows: The provisions of the qualified offer rule do not apply if the taxpayer’s liability under the judgment * * * is determined exclusively pursuant to a settlement * * * [Emphasis supplied.] We agree with petitioners. The purpose underlying the qualified offer provision of section 7430(c)(4)(E), like that of rule 68 of the Federal Rules of Civil Procedure, is to encourage settlements by imposing litigation costs on the party not willing to settle. Herein, legal issues integral to the water rights adjustment were litigated and decided by this Court and by the Court of Appeals for the Ninth Circuit. Only after those legal issues were litigated and decided was the bottom-line substantive tax adjustment resolved by way of settlement between the parties. The ultimate settlement entered into by the parties herein can in no way be viewed as entered into exclusively pursuant to a settlement. To treat the instant water rights adjustment as resolved pursuant to the parties’ settlement would require us to ignore the threshold legal issues relating thereto that were resolved by way of litigation, not settlement, and would require us to treat the related factual allocation issue eventually settled by the parties as controlling for purposes of the settlement limitation of section 7430(c)(4)(E)(ii)(I). Further, it would require usPage: Previous 1 2 3 4 5 6 7 8 9 10 Next
Last modified: May 25, 2011