T.C. Memo. 1999-331
UNITED STATES TAX COURT
MICHAEL R. AND SHEILA OLSEN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8282-98. Filed October 1, 1999.
Michael and Sheila Olsen, pro sese.
Daniel J. Parent, for respondent.
MEMORANDUM OPINION
WOLFE, Special Trial Judge: Respondent determined a
deficiency in petitioners' Federal income tax in the amount of
$600 for the taxable year 1996.
This matter is before the Court on respondent's motion for
entry of decision. On April 22, 1999, this case was recalled for
trial in San Francisco, California. After the execution of a
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stipulation of facts and several hours of testimony by petitioner
Sheila Olsen, the Court called a recess. The parties then met to
confer and negotiate in private. When the Court recalled the
case, counsel for respondent announced that the parties had
reached a settlement. Respondent's counsel read the oral
stipulation of settlement into the record as follows:
Following along the notice of deficiency, there was
unemployment compensation of $423, which the
petitioners agree belongs in their income. * * * There
were Schedule C other expenses of $4,071. The
petitioners agree they're not allowed those expenses.
There was a depreciation Schedule C expense allowed of
$881 to the taxpayer's credit. Petitioners agree they
will not take that additional depreciation. And the
petitioners agree that they are not entitled to $5,280
of rent that was previously allowed. This will result
in an increased deficiency.
Respondent's counsel further noted that there was no penalty
in the notice of deficiency, and under the stipulated settlement
there still are no penalties. The Court then asked petitioners
whether the oral stipulation, as read into the record by
respondent's counsel, was satisfactory. Petitioners each
replied, "Yes, your Honor."
The Court then ordered the parties to submit a written
stipulation for decision within 30 days. The Court further
stated that the Court would entertain a motion for entry of
decision if the Court did not receive a stipulation for decision.
The Court again inquired whether petitioners understood the
Court's insistence on a stipulation for decision and its
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willingness to entertain a motion for decision. Petitioners both
responded in the affirmative. The Court then inquired whether
petitioners understood the amount of net tax that would result
from the agreement. Sheila Olsen responded: "Yes. They told
us. He gave us an idea."
Respondent sent petitioners a proposed decision document
supported by a calculation of the deficiency in income tax.
Petitioners refused to execute the decision document.
Consequently, respondent filed a motion for entry of decision on
June 30, 1999. Respondent contends that we should enter a
decision that reflects the terms orally stipulated by the
parties. Respondent submitted a calculation of tax that reflects
the specific terms of the settlement on which the parties orally
agreed.
Rule 91(e), Tax Court Rules of Practice and Procedure,
concerning stipulation for trial, provides in part:
A stipulation shall be treated, to the extent of its
terms, as a conclusive admission by the parties to the
stipulation, unless otherwise permitted by the Court or
agreed upon by those parties. The Court will not
permit a party to a stipulation to qualify, change, or
contradict a stipulation in whole or in part, except
that it may do so where justice requires. * * *
This Court regularly enforces a settlement stipulation
(whether written or orally stipulated into the record) unless for
reasons of justice a party should be relieved from that
stipulation. See Cataldo v. Commissioner, 476 F.2d 628 (2d Cir.
1973), affg. per curiam T.C. Memo. 1971-219; Adams v.
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Commissioner, 85 T.C. 359 (1985); Saigh v. Commissioner, 26 T.C.
171 (1956); Lee v. Commissioner, T.C. Memo. 1993-254.
The record in this case clearly shows that the stipulation
was read into the record and agreed to by petitioners and was
fairly and freely entered into by both parties. When the Court
asked petitioners whether they agreed with the stipulation,
petitioners responded, "Yes, your Honor." Petitioners also
understood the amount of net tax due resulting from the
agreement. The record includes no evidence or reasonable
argument to show that justice requires that petitioners be
relieved of their stipulation. Accordingly, we hold that the
parties' oral stipulation is binding and enforceable. Moreover,
we find that respondent's calculation of tax accurately reflects
the stipulation that was orally read into the record.
Therefore, we grant respondent's motion for entry of
decision and hold that petitioners are liable for a deficiency in
income tax for the year 1996 in the amount of $2,045.
To reflect the foregoing,
An appropriate order and
decision will be entered.