Thomas E. Johnston and Thomas E. Johnston, Successor in Interest to Shirley L. Johnston, Deceased - Page 13

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               Petitioners could have included the NOLs among the                     
          “adjustments at issue in the administrative or court proceeding”            
          by the simple expedient of moving to amend their petitions to               
          claim the NOL deductions before, rather than after, making their            
          qualified offer.  Had that motion been made and granted, which              
          under the postulated conditions would appear to have been likely,           
          cf. Cloes v. Commissioner, 79 T.C. 933 (1982), the NOLs would               
          have become an “adjustment at issue” for purposes of this court             
          proceeding.  Instead of moving to amend the petitions before                
          making the qualified offer, petitioners waited until after                  
          respondent accepted the qualified offer to move to amend their              
          petitions to claim the NOL deductions.  These motions to amend              
          their petitions made after their qualified offer was accepted are           
          obviously too late.  As we stated in Korangy v. Commissioner,               
          T.C. Memo. 1989-2, affd. 893 F.2d 69 (4th Cir. 1990):  “The time            
          for petitioners to make a thorough examination of their case is             
          prior to the date of trial, not subsequent to their execution of            
          a settlement agreement.”                                                    
               Petitioners assert that it would have been premature to                
          raise the issue of the NOLs prior to arriving at the agreement,             
          which included taxable income for the years in issue.  Contrary             
          to this assertion, petitioners could have pleaded the NOL                   
          deductions as an alternative position.  Rule 31(c) allows                   
          pleading in the alternative, and the Court generally requires it.           

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