Thomas E. Johnston and Thomas E. Johnston, Successor in Interest to Shirley L. Johnston, Deceased - Page 6

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          was made.  Petitioners argue that because the issue of the NOLs             
          was not in dispute when they made the qualified offer, the                  
          qualified offer was exclusive of the amounts related to the NOLs.           
          Consequently, petitioners contend that they are entitled to                 
          reduce the agreed-upon amounts for the 1989, 1991, and 1992 tax             
          years by applying NOLs from the 1988, 1990, 1993, and 1995 tax              
          III.  Analysis                                                              
               The parties agree that petitioners’ offer, as stated in                
          their January 31, 2003, letter, was a qualified offer within the            
          meaning of section 7430(g).  In now seeking to reduce the agreed-           
          upon settlement amounts for the 1989, 1991, and 1992 tax years by           
          the NOL amounts, petitioners are in effect asking us to treat the           
          settlement amounts as though they resulted from a court decision            
          in which various issues were resolved, but where entry of                   
          decision awaited the availability, if any, of various NOLs.  See,           
          e.g., Gen. Signal Corp. & Subs. v. Commissioner, 104 T.C. 248               
          (1995).  We must therefore decide whether an agreement reached by           
          way of the qualified offer provision may be dealt with in the               
          manner petitioners request, and thus should be treated                      
          differently from the way this Court treats settlement agreements            
          reached outside the parameters of the qualified offer provision.            
               Section 7430 provides for the award under certain                      
          circumstances of administrative and litigation costs to a                   

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