T.C. Memo. 2005-117



                         UNITED STATES TAX COURT



                 SYLWESTER A. SLOJEWSKI, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 2761-04.               Filed May 19, 2005.


        William E. Taggart, Jr., for petitioner.

        Anthony J. Kim, for respondent.



                           MEMORANDUM OPINION


        HAINES, Judge:   This case is before the Court on

petitioner’s motion to vacate order and decision pursuant to Rule

162.1



        1
        Unless otherwise noted, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code in effect at all
relevant times.
                                 - 2 -

For the reasons stated below, we shall deny petitioner’s motion

to vacate.

                            Background

     On November 13, 2003, respondent issued a notice of

deficiency to petitioner that determined a deficiency in

petitioner’s 2000 Federal income tax and a penalty under section

6662(a).   On February 17, 2004, petitioner timely filed a

petition with the Court disputing respondent’s determination.

At the time he filed the petition, petitioner resided in San

Francisco, California.

     This case was calendared for trial at the Court’s trial

session in San Francisco, California, that began on November 29,

2004.   When the case was called from the calendar on December 3,

2004, the parties informed the Court that a basis of settlement

with respect to all issues had been reached.   In the stipulation

of settlement submitted to the Court on December 3, 2004, the

parties stipulated as follows:

           1. Petitioner and respondent agree that
     petitioner should not have reported dependent’s W-2
     income of $4,589.00 on his tax return for taxable year
     2000.

          2. Respondent concedes that petitioner does not
     have to include in taxable income the $23,242.00 that
     was reported on the Form 1099-MISC issued by Robert
     Leslie in taxable year 2000.

          3. Respondent concedes that petitioner may
     deduct, as car and truck expenses, $2,925.00 of the
     $4,560.00 of claimed deductions that petitioner
     erroneously listed as mortgage expenses on his 2000 tax
                                - 3 -

return. Petitioner concedes that he may not deduct the remaining
$1,635.00 of claimed deductions.

     4. Petitioner concedes that he may not deduct the remaining
$19,925.00 of Schedule C expenses that he claimed on his 2000 tax
return. Those disallowed deductions are as follows:

          (a)   $750.00 of advertising expenses;
          (b)   $4,000.00 of commissions and fees expenses;
          (c)   $1,250.00 of insurance expenses;
          (d)   $8,000.00 of legal expenses;
          (e)   $3,000.00 of office expenses;
          (f)   $600.00 of repair expenses;
          (g)   $525.00 of taxes and licenses expenses; and
          (h)   $1,800.00 of travel and entertainment expenses.

          5. Respondent concedes that, as a result of
     respondent’s concession in paragraph 2, petitioner is
     not liable for an accuracy-related penalty under I.R.C.
     § 6662(a) for the taxable year 2000.

The Court ordered the parties to submit a decision document by

January 18, 2005.

     On January 6, 2005, respondent mailed to petitioner’s

counsel a proposed decision document.    On January 10, 2005,

respondent received from petitioner’s counsel a letter dated

January 7, 2005, in which petitioner’s counsel stated that he

anticipated prompt approval by petitioner of the proposed

decision document.

     On the next day, January 11, 2005, respondent received a

letter from petitioner’s counsel dated January 8, 2005, in which

petitioner’s counsel stated:

          I also have completed my review of your
     computation of the income tax liability that flows from
     the settlement of this case. I do not entirely agree
     with your computation.
                              - 4 -

          It is my impression from the information that I
     have available that Mr. Slojewski is entitled to a
     Child Tax Credit in the amount of $500 based on the
     information in the administrative file. It also is
     possible Mr. Slojewski is entitled to claim Child Care
     Expense credit or Education credit. * * * I have
     asked Mr. Slojewski to advise me whether he is entitled
     to claim credits for Child Care Expenses or Education,
     and whether he has any documentation to support such
     claims.

          * * * I believe the proper procedure for making
     such an adjustment would be to pay the deficiency that
     flows from our settlement, and then file an amended
     return to claim the refund that flows from any credits
     to which Mr. Slojewski may be entitled for Child Care
     Expenses or Education. * * *

          It is my impression it is unlikely that we will
     agree on a decision document prior to January 18, 2005.
     I suggest that you advise the court that we have
     encountered some unexpected issues in agreeing on a
     decision document, and that you request an additional
     30 days for the submission of a mutually agreeable
     decision document. * * *

     On January 12, 2005, respondent mailed a letter to

petitioner’s counsel stating that respondent would not request

additional time to file the decision document.   Respondent

explained that the record was closed and that petitioner’s

counsel did not appear to object to the decision document as it

pertained to the issues covered by the stipulation of settlement.

Respondent informed petitioner’s counsel that if the decision

document was not signed and returned by January 17, 2005,

respondent would file a motion for entry of decision.
                               - 5 -

     On January 14, 2005, petitioner filed a motion to withdraw

agreement to stipulation of settlement.    The Court denied

petitioner’s motion to withdraw on February 14, 2005.

     On January 18, 2005, the Court filed respondent’s motion for

entry of decision asking the Court to enter a decision in

accordance with the proposed decision document.    Paragraph 15 of

respondent’s motion for entry of decision states:    “Counsel for

petitioner objects to the granting of this motion.”    On February

25, 2005, the Court granted respondent’s motion for entry of

decision and entered a decision that there is a deficiency of

$3,492 in petitioner’s 2000 Federal income tax and that there is

no penalty due from petitioner for the taxable year 2000 under

section 6662(a).

     On March 3, 2005, petitioner filed a timely motion to vacate

order and decision pursuant to Rule 162.    On March 18, 2005,

respondent filed an objection to petitioner’s motion to vacate

order and decision and a memorandum of points and authorities in

support of his objection.

                            Discussion

     Rule 162 allows a party to file a motion to vacate or revise

a decision, with or without a new or further trial, within 30

days after the decision has been entered, unless the Court shall

otherwise permit.   The disposition of a motion to vacate or
                               - 6 -

revise a decision rests within the Court’s discretion.     Vaughn v.

Commissioner, 

, 166-167 (1986).

     The Court has applied a stringent standard in evaluating

motions to vacate settlement agreements where, shortly before

trial, the parties have agreed to a settlement and caused the

trial date to be vacated.   In such cases, we have held the

settlements to be enforceable unless the moving party can show a

lack of formal consent, mistake, fraud, or some similar ground.

See Dorchester Indus., Inc. v. Commissioner, 

, 335

(1997), affd. 

(3d Cir. 2000); Stamm Intl. Corp. v.

Commissioner, 

, 321-322 (1988).   Moreover, a

settlement is generally binding irrespective of whether it is

correct on the merits.   See, e.g., Lamanna v. Commissioner, T.C.

Memo. 2003-110, affd. in part, vacated and remanded in part 

(9th Cir. 2004).

     We believe that petitioner should be held to this stringent

standard.   Here the parties reached a settlement shortly before

trial, and the trial date was vacated as a result of that

settlement.

     Petitioner argues that Rule 155 applies to this case and

therefore alleges that the Court should not have entered its

decision because the Clerk of the Court did not serve petitioner

with a notice of the filing of respondent’s motion for entry of

decision.   Petitioner alleges that respondent was aware that
                                - 7 -

petitioner disagreed with respondent’s computation of

petitioner’s deficiency on the basis of the items addressed in

the stipulation of settlement on the date respondent filed his

motion for entry of decision.   Petitioner also argues that

respondent misled the Court by filing his motion for entry of

decision without disclosing, as required by Rule 50(a), that

petitioner disagreed with respondent’s computation of

petitioner’s deficiency on the basis of items addressed in the

stipulation of settlement.   We disagree.

     Rule 155 is the mechanism whereby the Court is enabled to

enter a decision in a case where the dollar amounts of the

deficiency, liabilities, and/or overpayment cannot readily be

determined.   Cloes v. Commissioner, 

, 935 (1982).    In

accordance with the computations in respondent’s motion for entry

of decision, we entered a decision that there is a deficiency of

$3,492 in petitioner’s 2000 Federal income tax and that there is

no penalty due from petitioner for the taxable year 2000 under

section 6662(a).

     Petitioner does not show that he disagreed with respondent’s

computation of petitioner’s tax liability in accordance with the

stipulation of settlement, nor does petitioner allege that there

was lack of consent, mistake, or fraud as the basis for his

motion to vacate order and decision.    Instead, petitioner raises

new issues involving possible entitlement to a child tax credit,
                               - 8 -

a child care expense credit, or an education credit.     New issues

raised after a stipulation of settlement has been executed which

are not based on lack of consent, mistake, or fraud are not

sufficient grounds to vacate the stipulation of settlement, nor

to vacate an order and decision entered as a result of the

stipulation of settlement.   See Brewer v. Commissioner, T.C.

Memo. 2005-10.

     Finally, we conclude that respondent properly advised the

Court that petitioner objected to respondent’s motion for entry

of decision as provided in Rule 50(a).     Paragraph 15 of

respondent’s motion for entry of decision states:     “Counsel for

petitioner objects to the granting of this motion.”

     In summary, petitioner has not shown that there was a lack

of formal consent, mistake, fraud, or some similar ground for

vacating the stipulation of settlement, nor has he cited any

ground or precedent that would support his motion to vacate our

order and decision.   Consequently, we shall deny petitioner’s

motion to vacate order and decision.

     In reaching our holding herein, we have considered all

arguments made, and, to the extent not mentioned above, we

conclude that they are irrelevant or without merit.



                                            An order will be issued

                                       denying petitioner’s motion to

                                       vacate order and decision.