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Decision and overpayment Stipulation. Petitioners did not sign
the proposed Decision and overpayment Stipulation.
Nearly 2 years after the Computations had last been revised
by the parties, petitioner advised respondent by letter that he
believed the proposed Decision document and related Computations
did not accurately reflect the terms of the Closing Agreement and
consequently were unacceptable. In essence, petitioner claimed
for the first time that the Closing Agreement did not mandate
inclusion of the guaranteed payments petitioners actually
received in 1980 and 1981.
Section 7121(a) authorizes the Commissioner to enter into an
agreement in writing with any person relating to such person's
liability in respect of any internal revenue tax for any taxable
period. A closing agreement is binding on the parties as to the
matters agreed upon, and the agreement may not be annulled,
modified, set aside, or disregarded in any suit, action, or
proceeding, except upon a showing of fraud, malfeasance, or
misrepresentation of a material fact. Sec. 7121(b).
Neither respondent nor petitioners ask us to set aside the
Closing Agreement. Both assert that the Closing Agreement is
unambiguous. They disagree, however, with respect to the proper
interpretation of the agreement.
Ordinary principles of contract law govern the
interpretation of closing agreements. Rink v. Commissioner, 100
T.C. 319, 325 (1993), affd. 47 F.3d 168 (6th Cir. 1995).
Contract law principles generally direct that we look within the
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