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before the United States Tax Court Harold M. Provizer and
Joan Provizer v. Commissioner, Docket No. 27141-86
(hereafter the CONTROLLING CASE). [Fn. ref. omitted.]
According to petitioner, since the TAX SHELTER related to RRA and
RRA’s items of income, deductions, and/or credits were not in
issue in Provizer, he should not be bound by the agreement. The
problem with this interpretation is that it essentially ignores
the operative parts of the agreement.
If there is a conflict between the premises stated and the
operative part of a closing agreement, the parties are bound by
the operative part. As we stated in Zaentz v. Commissioner, 90
T.C. 753, 761-762 (1988):
section 7121 does not bind the parties as to the premises
underlying their agreement, they are bound only as to the
matters agreed upon. Sec. 7121(b). In fact, by excluding
as grounds for rescission mistakes of fact or law, the
statute contemplates that the parties may premise their
agreement upon such a mistake. * * *
See also Estate of Magarian v. Commissioner, 97 T.C. 1, 5 (1991).
Furthermore, by executing the closing agreement petitioner
and respondent obviously intended that the parties would be bound
to something, i.e., as stated by the operative part of the
agreement: “All issues involving the above adjustment [relating
to RRA] shall be resolved as if the taxpayer [petitioner] was the
same as the petitioner in the CONTROLLING CASE.” The controlling
case was Provizer. Petitioner’s reading of the language in the
preamble, therefore, makes little sense. On the other hand, if
the reference to RRA refers generically to the cases involving
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