Thomas E. Johnston and Thomas E. Johnston, Successor in Interest to Shirley L. Johnston, Deceased - Page 9

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               As the very purpose of the qualified offer provision is to             
          encourage settlements, we conclude that there is no persuasive              
          reason why a settlement reached by way of the qualified offer               
          provision should be treated any differently from the way this               
          Court treats settlement agreements reached outside the parameters           
          of the qualified offer provision.                                           
               As contracts, settlements are governed by general principles           
          of contract law.  Dorchester Indus. Inc. v. Commissioner, 108               
          T.C. 320, 330 (1997), affd. without published opinion 208 F.3d              
          205 (3d Cir. 2000).  Settlement of an issue before the Court does           
          not require any particular method or form and can be accomplished           
          by letters of offer and acceptance.  Id.  Settlement agreements             
          are effective and binding once there has been an offer and an               
          acceptance; filing the agreement with the Court is not required             
          for the agreement to be effective and binding.  Id. at 338.                 
               We are convinced that the proposed figures conveyed to                 
          respondent’s counsel by way of the January 31, 2003, letter from            
          petitioners’ counsel constitute the definite and material terms             
          of an offer to settle the docketed cases, and we so hold.  The              
          terms of that offer were accepted by respondent, as evidenced by            
          the February 10, 2003, letter.  We believe that the parties                 
          entered into a contract to settle the docketed cases, and we so             

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