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showing of sufficient cause, we have the power to modify the
agreement. Saigh v. Commissioner, supra. In light of those
considerations, we will not follow the Cole v. Commissioner,
supra, case to the extent it indicates that a party to a
settlement agreement that is not filed as a stipulation may
repudiate that agreement up until (and including) the time the
case is called for trial.
E. Setting Aside the Agreement
Dorchester and Frank Wheaton argue that each was ill-served
because, in addition to representing them, Gilson and Wodlinger
represented Mary Wheaton. Dorchester and Frank Wheaton claim
that Gilson and Wodlinger faced a “blatant” and “nonwaivable”
conflict of interest in representing both Mary and Frank Wheaton.
That conflict, they claim, arises because Mary Wheaton had
available to her an “innocent spouse” defense under section
6013(e), and one element of that defense is that the
understatement of tax on the joint return be attributable to
“grossly erroneous” items of Frank Wheaton. See sec.
6013(e)(1)(B), (e)(2).
Certainly, one spouse’s claim that she (he) is an innocent
spouse can present a conflict of interest to counsel trying to
represent both spouses. If, indeed, the spouses do have
differing interests with respect to any issue in a case, our
rules provide that counsel must secure informed consent of the
client, withdraw from the case, or take whatever other steps are
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