Melvin J. Laney and Carolyn A. Laney - Page 27

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            agreement with the Department of Justice in connection with                               
            Laney’s Court of Claims suit.9                                                            
                  We hold for respondent on this issue.                                               
            B. With Respondent                                                                        
                  Petitioners argued at trial that they had entered into a                            
            binding settlement agreement with respondent for the years in                             
            issue.  Petitioners explained that they believed perhaps                                  
            respondent had settled their case without their knowledge.                                
                  Respondent contends that the parties in the instant case did                        
            not enter into a binding settlement agreement.                                            
                  We agree with respondent.                                                           
                  Petitioners were aware that they did not have a binding                             
            settlement agreement with the Appeals officer.  Petitioners’                              
            letter to the Secretary of Treasury illustrates that, when they                           
            wrote that letter, petitioners did not believe that they had a                            
            binding settlement agreement with respondent.                                             
                  Petitioners rely on documents in which one or more of                               
            respondent’s employees refer to binding settlement agreements.                            
            Testimony was presented by respondent’s employees as to how it                            
            came to be that respondent advised the Secretary of the Treasury                          
            that the Secretary could not enter into a closing agreement under                         

                  9     Thus it is not necessary to decide whether, if the                            
            Justice Department had made an agreement with petitioners, that                           
            agreement would be binding on respondent.  See Graff v.                                   
            Commissioner, 74 T.C. 743 (1980), affd. 673 F.2d 784 (5th Cir.                            

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