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We have held that the existence or validity of parties’
settlements may be interpreted under general contract principles.
Robbins Tire & Rubber Co. v. Commissioner, 52 T.C. 420, 435-436
(1969), supplemented by 53 T.C. 275 (1969). In that regard, as
expressed in Bankamerica Corp. v. Commissioner, 109 T.C. 1, 11
(1997):
It is clear that we may reopen an otherwise valid
settlement agreement based on the existence of mutual
mistake. Callen v. Pennsylvania R. Co., 332 U.S. 625,
630 (1948); Dorchester Indus. Inc. v. Commissioner, 108
T.C. 320, 334 (1997). We may also relieve a party of a
stipulation where justice requires. Cf. Rule 91(e);
Adams v. Commissioner, 85 T.C. 359, 375 (1985); Shaw v.
Commissioner, T.C. Memo. 1991-372 n.3. On the other
hand, unilateral mistake is generally not a ground for
reforming a settlement or stipulation. Stamm Intl.
Corp. v. Commissioner, 90 T.C. 315, 320 (1988); see
Markin v. Commissioner, T.C. Memo. 1989-665. * * *
Petitioners do not contend that a basis for settlement was
not reached or that a settlement was not agreed to. Accordingly,
the parties entered into a contract to settle, but petitioners
contend that there was a mutual mistake as to respondent’s
position in this case. Respondent counters that his position was
set forth in his trial memorandum, and that position was in
accord with respondent’s litigation position expressed in his
reply brief in Estate of Davis v. Commissioner, supra. We agree
with respondent.
Although petitioners allege that respondent’s counsel orally
precluded the possibility that capital gains tax could be taken
into account in this case, the written documents in this case do
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