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Even though respondent’s position was substantially
justified, petitioner may still be treated as the prevailing
party if he makes a qualified offer. Sec. 7430(c)(4)(E). To
qualify, the written offer must “[designate] * * * it is * * * a
qualified offer for purposes of * * * section [7430(g)]”. Sec.
7430(g)(1)(C). The regulations further establish that “An offer
is not a qualified offer unless it is designated in writing at
the time it is made that it is a qualified offer for purposes of
section 7430(g).” Sec. 301.7430-7T(c)(4), Temporary Income Tax
Regs., 68 Fed. Reg. 74852 (Dec. 29, 2003). In addition, the
offer must specify the offered amount of the taxpayer’s
liability; be made during the qualified offer period (i.e.,
beginning on the date of the first proposed deficiency that
notifies taxpayers of their right to an Appeals conference and
ending on the date 30 days before the date the case is first set
for trial); and remain open from the date it is made until the
earliest of the date trial begins, 90 days after the offer is
made, or when it is rejected. Sec. 7430(g); Johnston v.
Commissioner, 122 T.C. 124, 128 (2004).
During the qualified offer period, petitioner made an offer
to respondent titled “Settlement Issues and Offer of Settlement”,
but it was rejected by respondent. Petitioner’s offer, however,
failed to make any designation that sufficiently satisfies the
requirement that the offer was a qualified offer for purposes of
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