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covers only specific matters; in this case, the treatment of the
trusts. The closing agreement does not cover other issues or
determine petitioners’ tax liability for the years at issue.
Urbano v. Commissioner, supra. Accordingly, the closing
agreement does not prevent respondent from determining
deficiencies or penalties for the years at issue. In fact, the
parties agreed in the closing agreement that petitioners would
report all income, expenses, and deductions on their individual
returns for the years at issue. The closing agreement also
provides that petitioners will be liable for additional taxes,
penalties, and interest that may arise on their individual
returns by collapsing the trusts. Accordingly, the terms of the
closing agreement provide that petitioners shall be liable for
taxes on their income for the years at issue.
Respondent was therefore not prevented from determining that
petitioners owe taxes on interest income and capital gains they
admitted they received during the years at issue. We find that
petitioners are liable for these taxes.
IV. Whether Petitioners Are Liable for the Accuracy-Related
Penalty
The next issue is whether petitioners are liable for the
accuracy-related penalty under section 6662(a). Respondent
determined that petitioners were negligent and therefore liable
for the penalty.7
7Respondent also asserts that petitioners substantially
understated their tax and are therefore liable. Because we find
that petitioners were negligent, we need not consider whether
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