DocketNumber: Tax Ct. Dkt. No. 20526-90
Citation Numbers: 74 T.C.M. 834, 1997 Tax Ct. Memo LEXIS 537, 1997 T.C. Memo. 451
Judges: CHABOT
Filed Date: 10/1/1997
Status: Non-Precedential
Modified Date: 4/17/2021
ROBERT D. GROSSMAN, JR., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent / * /
Docket No. 14364-91
Petitioner (P) claims that two of the concessions that the Commissioner made in P's wife's (W's) dockets are applicable to P's dockets for purposes of the Rule 155 computations in his dockets.
HELD: The concessions that the Commissioner made in W's dockets are not applicable to P's dockets.
Stephen L. Braga, Eric F. Horvitz, and Miriam L. Fisher, 1 for petitioner.
John C. McDougal, for respondent.
SUPPLEMENTAL MEMORANDUM OPINION
CHABOT, JUDGE: This matter is before us on the parties' dispute as to entry of decision pursuant to Rule 155, 2 regarding the additions to tax under
Our opinion in these cases,
BACKGROUND
Petitioner and his then-wife, Betsy Grossman (hereinafter sometimes referred to as Betsy), filed joint tax returns for 1985 and 1986. Respondent issued a joint notice of deficiency to petitioner and Betsy for 1985 and several other years, and another joint notice of deficiency for 1986. Petitioner and Betsy filed separate petitions with respect to these notices of deficiency. Petitioner's and Betsy's dockets were consolidated and *539 set for trial. Shortly before the scheduled trial, the Commissioner and Betsy reached settlement agreements. These agreements were filed as stipulations of settled issues. Petitioner's dockets were then reset for trial at a later date; they were tried and briefed; and
Betsy is the only petitioner in docket No. 19143-90. The stipulation of settled issues in that docket includes the following:
With respect to all adjustments in the Commissioner's notice of deficiency for 1986, the parties stipulate to the following terms of settlement:
1. Betsy agrees not to further contest the Commissioner's determination that, during taxable year 1986, Betsy and her husband, Robert D. Grossman, Jr., received additional taxable income in the form of personal travel expenses paid by Markette Corporation in the amount of $11,660.00 which was not reported on the joint income tax return filed by Betsy and her husband for that year.
* * * * * * *
3. In the event it is established or agreed by the parties in Robert D. Grossman, Jr.'s, Tax Court case, Docket No. 20526- 90, that any of the travel expenses referred to in paragraph 1, above, were incurred primarily for the benefit *540 of Markette Corporation and did not constitute income reportable on their joint return, the Commissioner agrees to reduce the deficiency and additions to tax herein agreed to by Betsy by corresponding amounts.
4. Betsy agrees to the imposition of the additions to tax under
5. When the decision in Docket No. 20526-90 becomes final, Betsy and the Commissioner will submit to the Court a stipulated decision giving effect to the above-described settlement.
Betsy is the only petitioner in docket No. 14208-91. The stipulation of settled issues in that docket includes the following:
With respect to all adjustments in the Commissioner's notice *541 of deficiencies for 1983, 1984, 1985, 1987 and 1988, the parties stipulate to the following terms of settlement:
1. Betsy agrees not to further contest the Commissioner's determination that, during taxable years 1983, 1984, and 1985, Betsy and her husband, Robert D. Grossman, Jr., received additional taxable income in the form of personal travel expenses and medical expense reimbursements paid by Markette Corporation in the respective total amounts of $19,119.70, $13,452.26 and $23,069.34 which was not reported on the joint income tax returns filed by Betsy and her husband for those years.
* * * * * * *
4. In the event it is determined or agreed by the parties in Robert D. Grossman, Jr.'s, Tax Court case, Docket No. 14364- 91, that any of the travel expenses referred to in paragraph 1, above, were incurred primarily for the benefit of Markette Corporation and did not constitute income reportable on their joint return, the Commissioner agrees to reduce the deficiencies and additions to tax herein agreed to by Betsy by corresponding amounts.
5. * * * The parties agree to settle the income tax case for said years 1983, 1984, and 1985 for an assessment against Betsy of 65 percent of *542 the deficiencies determined under paragraphs 1 through 4, above.
* * * * * * *
7. The Commissioner agrees to concede the addition to tax under
* * * * * * *
10. When the decision in Docket No. 14364-91 becomes final, Betsy and the Commissioner will submit to the Court a stipulated decision giving effect to the above-described settlement.
DISCUSSION
Petitioner contends that he is entitled to the benefit of two of the concessions that the Commissioner made in the stipulations of settled issues in Betsy's dockets, as follows:
(1) Thirty-five percent of the 1986 addition to tax under
(2) All of the 1985 addition to tax under
These two concessions are hereinafter sometimes collectively referred to as the claimed concessions.
Petitioner maintains that (1) in light of the preambles of the stipulations of settled issues of Betsy's dockets, the literal language of the claimed concessions applies to him, and (2) respondent should be held to the claimed concessions. Respondent contends that the concessions that the Commissioner made in *543 the stipulations of settled issues in Betsy's dockets do not have any bearing on the disposition of the issues in petitioner's dockets.
We agree with respondent. 5
The compromise and settlement of tax cases is governed by general principles of contract law.
a compromise is a contract and thus is a proper subject of judicial interpretation as to its meaning, in the *544 light of the language used and the circumstances surrounding its execution. Citations omitted
In
For almost a century, it has been settled that voluntary settlement of civil controversies is in high judicial favor.
When we examine the language used and the surrounding circumstances, we see that the stipulations of settled issues in *545 Betsy's dockets are styled "Betsy S. Grossman, Petitioner" and show the docket numbers of Betsy's dockets in the headings; they do not show petitioner's name or the docket numbers of his cases in their headings. Although Betsy's petitions result from joint notices of deficiency, Betsy's dockets deal only with Betsy's deficiencies and not with petitioner's deficiencies. The stipulations of settled issues in Betsy's dockets purport to be agreements between the parties in those dockets; petitioner is not and never was a party in those dockets.
In the context of the foregoing, the simplest and most direct interpretation of Betsy's and the Commissioner's stipulations as to the
In
Thus, it is clear that a settlement in a case before the Court can have, as part of the contract, an agreement as to treatment of a different taxpayer in a different dispute. However, in Quinones it was plain from the exchange of letters that constituted the parties' agreement, that resolution of the other dispute was part of the quid pro quo of the agreement. In contrast, we search in vain through the claimed concessions for any reference to petitioner or the instant cases. Indeed, the only references to petitioner or the instant cases that appear in the stipulations of settled issues in Betsy's dockets are those that relate to Betsy's entitlement to the benefit of certain matters if these matters are resolved in petitioner's favor in petitioner's dockets.
The clear textual presence of an agreement to give Betsy the benefit of certain possible successes by petitioner and the clear textual absence of an agreement to give petitioner any benefit of any successes by Betsy *547 bolsters our conclusion that the text of the stipulations in Betsy's dockets does not contain any hidden or implied benefits for petitioner.
Petitioner maintains that:
Here, Respondent, with full knowledge that Petitioner was covered by the same notices of deficiency, entered into the agreements with Betty Grossman which, by their plain and unambiguous terms and without limitation, conceded certain adjustments 'with respect to' Petitioner's deficiency notice.
We read the stipulations of settled issues in Betsy's dockets as dealing with, or providing rules for resolution of, only Betsy's liabilities with respect to the notices of deficiency, with petitioner's liabilities being referred to only insofar as Betsy and the Commissioner agreed was appropriate in determining Betsy's liabilities. Thus, we do not read the stipulations of settled issues in Betsy's dockets as providing any concessions with regard to petitioner's liabilities for the
Petitioner contends that we should prevent respondent from taking inconsistent positions in his and Betsy's cases; petitioner relies on our analysis in
The duty of consistency stops a party from unfairly benefiting from that party's own error or omission under certain circumstances. In Cluck we held that the taxpayer's husband would be precluded, by the duty of consistency, from contending that he had a basis in the inherited property of more than the $355,000 amount used in settling the estate tax litigation.
As a result, Cluck is irrelevant to the instant cases, except by way of contrast.
Finally, petitioner contends that our recent Court- reviewed opinion in
must live with the words he drafted in Stipulations filed with the Court, regardless of his intention unless respondent's counsel can show extreme facts, *550 which would entitle him to avoid a judgment.
Respondent does not seek in these proceedings to repudiate the stipulations of settled issues in Betsy's dockets; we do not, in our determination herein, relieve respondent of any of those stipulations. We merely conclude that, under the language of those stipulations petitioner is not entitled to the claimed concessions.
We so hold. 6
Decisions will be entered in accordance with respondent's Rule 155 computations.
*. This opinion supplements our previously filed Memorandum Findings of Fact and Opinion in
1. Miriam L. Fisher was given leave to withdraw as counsel in these dockets after petitioner's first memorandum of law was filed and did not have any responsibility for petitioner's final memorandum of law.↩
2. Unless indicated otherwise, all Rule references are to the Tax Court Rules of Practice and Procedure.↩
3. Unless indicated otherwise, all section references are to sections of the Internal Revenue Code of 1954, or the Internal Revenue Code of 1986, as in effect for the respective years in issue.↩
4. We do not express any view in the instant opinion as to whether the parties' agreement in Betsy's docket, regarding the partial concessions of the fraud addition to tax, can be given effect in precisely the form in which the agreement was made.↩
5. Where petitioner and Betsy are liable for the same item, a payment by one in effect extinguishes the obligation of the other to make the same payment. Thus, Betsy's agreements with the Commissioner may ultimately affect how much petitioner may be called on to pay. However, this consequence of payment of liability by one of the jointly liable taxpayers does not affect the deficiency redeterminations that we enter in the case of the other jointly liable taxpayer.
6. The foregoing resolves the dispute as to both of the claimed concessions. In addition,
Teodore Dorotee Autera v. Manuel Dudley Robinson, Anthony C.... , 419 F.2d 1197 ( 1969 )
Williams v. First Nat. Bank of Pauls Valley , 30 S. Ct. 441 ( 1910 )
St. Louis Mining & Milling Co. v. Montana Mining Co. , 19 S. Ct. 61 ( 1898 )
Spector v. Commissioner , 42 T.C. 110 ( 1964 )
Kroh v. Commissioner , 98 T.C. 383 ( 1992 )