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The Secretary of the Treasury is authorized to enter into
written closing agreements with respect to the tax liability of
any person for any taxable period. Sec. 7121(a). Such closing
agreements are binding on the parties as to the matters agreed
upon and may not be annulled, modified, set aside, or disre-
garded in any suit or proceeding unless there is a showing of
fraud, malfeasance, or misrepresentation of a material fact.
Sec. 7121(b); Rink v. Commissioner, 100 T.C. 319, 324 (1993),
affd. 47 F.3d 168 (6th Cir. 1995). A closing agreement is
binding only as to matters agreed upon for the taxable period
stated in the agreement. Estate of Magarian v. Commissioner, 97
T.C. 1, 4 (1991). Ordinary principles of contract law govern the
interpretation of closing agreements. Rink v. Commissioner,
supra at 325. These principles generally direct courts to look
within the "four corners" of the agreement, unless it is
ambiguous as to essential terms. Id.
Petitioner's own witnesses at trial were unable to discern
the method used for calculating the income in the 1979 closing
agreement by merely reviewing the agreement. The words "cost
recovery method" are not present in the 1979 closing agreement.
Further, not one word of the 1979 closing agreement is devoted to
the purportedly agreed upon method for reporting income in future
years.
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