- 12 -
modify the meaning of his written agreement, except in limited
circumstances, holding:
a party [to an agreement] can challenge the tax consequences
of his agreement as construed by the Commissioner only by
adducing proof which in an action between the parties to the
agreement would be admissible to alter that construction or
to show its unenforceability because of mistake, undue
influence, fraud, duress, etc. * * *
The Danielson rule has been adopted by the Court of Appeals for
the Fifth Circuit, see Spector v. Commissioner, 641 F.2d 376 (5th
Cir. 1981), revg. 71 T.C. 1017 (1979), to which appeal of this
case would lie absent stipulation to the contrary, and so we are
bound to apply the Danielson rule in the instant case, see Golsen
v. Commissioner, 54 T.C. 742, 756-757 (1970), affd. 445 F.2d 985
(10th Cir. 1971).
Petitioner argues that the Danielson rule would not operate
to exclude extrinsic evidence in this case because such evidence
would tend to show mistake. We agree. There is ample evidence
to support the proposition that the failure to include a covenant
not to compete in the Purchase Agreement constituted a mutual
mistake or scrivener’s error. Cf. Woods v. Commissioner, 92 T.C.
776 (1989); State Pipe & Nipple Corp. v. Commissioner, T.C. Memo.
1983-339. The record establishes that arrangements for the
buyout were made hurriedly against a yearend deadline, without
the assistance of an attorney who had previously provided
services to petitioner. Both parties to the agreement testified
Page: Previous 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 NextLast modified: May 25, 2011