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might be allowable for a subsequent year, but not necessarily for
1999.
When the parties concluded their negotiations, respondent’s
counsel prepared a decision document incorporating the parties’
agreement. The decision document did not contain any reference
to the $5,433 loss's being allowed for 1999. Both parties read
and signed this document in settlement of petitioner’s 1998
taxable year.
Mr. Koll later thought it would be wise to have a written
record of the agreement that he believed existed. Mr. Koll
addressed a letter to respondent’s counsel wherein he listed the
settlement issues that he believed were resolved under the
settlement. In particular, Mr. Koll stated: “The Schedule C
losses of Katy’s Furniture of $5,433 will be disallowed in 1998
but this amount will be allowed in 1999 as a deduction”. Mr.
Koll prepared this document on May 1, 2002, and faxed it to
respondent’s counsel during the morning of May 2, 2002.
Respondent’s counsel filed the stipulated decision document
with this Court on the morning of May 2, 2002. At the time
respondent’s counsel presented the stipulated decision to the
Court, he was not aware of Mr. Koll’s faxed letter. After
submitting the stipulated decision, respondent’s counsel learned
of the faxed letter and on May 2, 2002, he composed a response
and faxed it to Mr. Koll. Respondent’s letter, in pertinent
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