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the letter erroneously determined the amount of the tax to be
$9,202, by applying the tax rate schedule for "head of
household", as opposed to petitioner's tax liability as
determined in the statutory notice which used the "single" tax
rate schedule.
Petitioner stipulated that he received the unreported
amounts of income determined by respondent. Respondent concedes
that petitioner is entitled to the additional Schedule A gambling
loss deduction in the amount of $126 allowed in the April 9,
1997, letter. Respondent maintains, however, that petitioner's
proper filing status is single and that as a result of the
increased gambling loss deduction the amount of the "revised
deficiency" is $3,906, based on a Federal income tax liability
for 1994 in the amount of $10,210.3
The first issue for decision is whether respondent is bound
by the report issued on April 9, 1997. Petitioner argues that
the Court should hold that he is liable only for the tax
liability determined in the report. He contends that the report
constitutes a contract between himself and respondent. We
disagree. It is well established that as a general rule the
Commissioner is finally and conclusively bound by an agreement
with a taxpayer only if the parties enter into a closing
3 This amount does not take into account respondent's
forthcoming adjustment to the taxable amount of the annuity
payments received by petitioner during 1994. See supra note 2.
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