E. Warren Goss v. Commissioner

T.C. Memo. 2007-16
UNITED STATES TAX COURT
E. WARREN GOSS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24227-05. Filed January 25, 2007.
E. Warren Goss, for petitioner.
Virginia L. Hamilton, for respondent.
MEMORANDUM OPINION
LARO, Judge: Respondent moves the Court to enter a decision
consistent with a settlement agreement signed by the parties and
attached to respondent’s motion as an exhibit. We shall grant
respondent’s motion.
Petitioner, a practicing attorney, petitioned the Court to
redetermine a $69,986 deficiency in his 1997 Federal income tax
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and a $17,496.50 addition thereto under section 6651(a)(1).1
This case was set for trial on the Court’s regular session
commencing in Denver, Colorado, on September 11, 2006. On
September 7, 2006, the parties met and reached a basis of
settlement. That settlement was later memorialized in a
September 8, 2006, letter sent from respondent to petitioner and
signed by petitioner and delivered back to respondent. The
letter states that the parties have reached the following
agreement regarding petitioner’s 1997 Federal income tax:
1. Petitioner has $127,000 in Schedule C gross
receipts;
2. Petitioner has $57,000 in Schedule C expenses;
3. Petitioner has $30,000 in rental income;
4. Petitioner’s correct filing status is married
filing separately;
5. Petitioner is entitled to the dependency
exemption for one child;
6. Petitioner is liable for an addition to tax
under section 6651(a)(1);
7. Respondent timely mailed the statutory notice
of deficiency and is not barred by the statute of
limitations from asserting the proposed deficiency.
On September 11, 2006, at the calendar of the referenced
session, respondent’s counsel informed the Court that the parties
1
Unless otherwise indicated, section references are to the
applicable versions of the Internal Revenue Code. Petitioner
resided in Boulder, Colorado, when his petition was filed with
the Court.
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had recently reached a basis of settlement and would like
additional time to submit to the Court a stipulated decision
document reflecting that settlement. Subsequently, after trying
unsuccessfully to secure a stipulated decision document from
petitioner, respondent filed the instant motion with the Court.
The motion states that the computations flowing from the
settlement agreement result in a $33,146 deficiency in
petitioner’s 1997 Federal income tax and a $8,286.50 addition
thereto under section 6651(a)(1). In response to respondent’s
motion, petitioner argues that the settlement agreement is
incorrect in that the $30,000 of rental income shown in the
agreement is already reflected in the $127,000 of gross receipts
also shown in the agreement. Respondent argues that the $30,000
of rental income is in addition to the $127,000 of gross
receipts.
We have consistently held that settlement agreements are
subject to the application of general principles of contract law.
See Robbins Tire & Rubber Co. v. Commissioner, 52 T.C. 420,
435-436, supplemented by 53 T.C. 275 (1969). Absent a showing of
lack of formal consent, fraud, mistake, or some other similar
ground, a settlement agreement that has led to cancellation of
the trial will be upheld. See Dorchester Indus. Inc. v.
Commissioner, 108 T.C. 320 (1997), affd. 208 F.3d 205 (3d Cir.
2000). Petitioner claims that the Court should disregard the
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settlement agreement because he mistakenly signed the agreement
not recognizing that the $30,000 of rental income was listed as a
term thereof. We disagree that we should disregard the signed
agreement for the reason that petitioner states. Even if
petitioner had mistakenly signed the document as claimed, such a
unilateral mistake is not a sufficient ground to set aside an
otherwise enforceable settlement agreement. See Stamm Intl.
Corp. v. Commissioner, 90 T.C. 315 (1988) (holding that a
unilateral mistake by respondent’s counsel, absent
misrepresentation by the other party, was insufficient to set
aside a settlement agreement). Such is especially so given that
petitioner is a practicing attorney and that his signing of the
settlement agreement was on the eve of his trial. See id. at
321-322.
To reflect the foregoing,
An appropriate order and decision
will be entered in accordance with
respondent’s computations.