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adjustments” prohibits taxpayers from including in the offered
amount any items that were not in dispute at the time the
qualified offer was made.
Respondent argues that petitioners misinterpret the
regulatory language. Respondent argues that the plain language
of the third requirement, which provides that the offered amount
be that amount which will fully resolve the taxpayer’s liability,
prevents taxpayers from raising new issues once a qualified offer
is accepted. Hence, respondent argues that petitioners’
interpretation of the second requirement conflicts with the third
requirement. As an alternative to petitioners’ interpretation of
the second requirement, respondent argues that the second
requirement is primarily concerned with the consequences of the
rejection of a qualified offer. As respondent notes, if new
issues are raised after the rejection of a qualified offer, the
amount of liability attributable to those new issues is not
considered when comparing the amount of an eventual judgment to
the amount of the last qualified offer. Sec. 7430(c)(4)(E); sec.
301.7430-7T(b)(3), Temporary Proced. & Admin. Regs., 66 Fed. Reg.
727 (Jan. 4, 2001).
Respondent argues that, in order to comply with the third
requirement, if petitioners wanted to apply the NOLs to reduce
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