Thomas E. Johnston and Thomas E. Johnston, Successor in Interest to Shirley L. Johnston, Deceased - Page 12

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          the liabilities set forth in the qualified offer, petitioners               
          should have at least stated that the offered amount was subject             
          to reduction by application of NOLs.  We agree with respondent.             
               Petitioners’ interpretation of the regulation renders the              
          third requirement meaningless.  In order to give effect to the              
          third requirement, an offered amount must be one that will fully            
          resolve a taxpayer’s liability for the type(s) of tax and tax               
          year(s) at issue.  If taxpayers were allowed to reduce the amount           
          of the qualified offer after the qualified offer was made, then             
          the qualified offer would not be one that, if accepted, would               
          fully resolve the taxpayer’s liability, thus giving no effect to            
          the third requirement.  In the current case, petitioners’                   
          qualified offer would not fully resolve their liabilities for the           
          type of tax and tax years at issue if petitioners were now able             
          to apply the NOLs to reduce the offered amount.                             
               Additionally, the fact that the NOLs were not in dispute at            
          the time the qualified offer was made is a matter of petitioners’           
          own doing.  Petitioners admittedly raised the issue of the NOLs             
          for the first time after the agreement was entered into.  In                
          petitioners’ Opposition to Respondent’s Motion for Summary                  
          Judgment, petitioners state that, immediately upon acceptance of            
          the qualified offer by respondent, petitioners “reminded”                   
          respondent that petitioners had several years of tax loss                   
          carryforwards and carrybacks.                                               

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