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but dispositive: it shows that the parties meant to treat 1985
differently from 1983 and 1984.”14
Discussion
I. Settlement Agreement Issue
A. Contract Law
This Court applies general principles of contract law to
compromises and settlements of Federal tax cases. We stated in
Robbins Tire & Rubber Co. v. Commissioner, 52 T.C. 420, 435-436
(1969), that “a compromise is a contract and thus is a proper
subject of judicial interpretation as to its meaning, in light of
the language used and the circumstances surrounding its
execution.” See also Brink v. Commissioner, 39 T.C. 602, 606
(1962), affd. 328 F.2d 622 (6th Cir. 1964); Saigh v.
Commissioner, 26 T.C. 171, 177 (1956); Davis v. Commissioner, 46
B.T.A. 663, 671 (1942); Himmelwright v. Commissioner, T.C. Memo.
1988-114. Absent wrongful misleading conduct or mutual mistake,
we will enforce a stipulation of settled issues in accordance
with our interpretation of its written terms. See Stamm Intl.
14 In addition, petitioner also argues that respondent’s
own Internal Revenue Manual instructs its employees not to take
into account tentative refunds (resulting from NOL carrybacks not
in issue) in the computation of a deficiency. See Internal
Revenue Manual, Part XXXV-Chief Counsel Directives Manual Exhibit
(35)(10)00-28 (July 11, 1991). In response, respondent only
argues that “regardless of the interpretation” of the Internal
Revenue Manual, statements “issued to guide the [Internal
Revenue] Service’s employees in performing their duties have a
directory nature and do not bind Respondent.”
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