                        T.C. Memo. 1999-331



                      UNITED STATES TAX COURT



          MICHAEL R. AND SHEILA OLSEN, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8282-98.               Filed October 1, 1999.




     Michael and Sheila Olsen, pro sese.

     Daniel J. Parent, for respondent.



                        MEMORANDUM OPINION

     WOLFE, Special Trial Judge:   Respondent determined a

deficiency in petitioners' Federal income tax in the amount of

$600 for the taxable year 1996.

     This matter is before the Court on respondent's motion for

entry of decision.   On April 22, 1999, this case was recalled for

trial in San Francisco, California.   After the execution of a
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stipulation of facts and several hours of testimony by petitioner

Sheila Olsen, the Court called a recess.    The parties then met to

confer and negotiate in private.   When the Court recalled the

case, counsel for respondent announced that the parties had

reached a settlement.   Respondent's counsel read the oral

stipulation of settlement into the record as follows:

     Following along the notice of deficiency, there was
     unemployment compensation of $423, which the
     petitioners agree belongs in their income. * * * There
     were Schedule C other expenses of $4,071. The
     petitioners agree they're not allowed those expenses.
     There was a depreciation Schedule C expense allowed of
     $881 to the taxpayer's credit. Petitioners agree they
     will not take that additional depreciation. And the
     petitioners agree that they are not entitled to $5,280
     of rent that was previously allowed. This will result
     in an increased deficiency.

     Respondent's counsel further noted that there was no penalty

in the notice of deficiency, and under the stipulated settlement

there still are no penalties.   The Court then asked petitioners

whether the oral stipulation, as read into the record by

respondent's counsel, was satisfactory.    Petitioners each

replied, "Yes, your Honor."

     The Court then ordered the parties to submit a written

stipulation for decision within 30 days.    The Court further

stated that the Court would entertain a motion for entry of

decision if the Court did not receive a stipulation for decision.

The Court again inquired whether petitioners understood the

Court's insistence on a stipulation for decision and its
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willingness to entertain a motion for decision.    Petitioners both

responded in the affirmative.   The Court then inquired whether

petitioners understood the amount of net tax that would result

from the agreement.   Sheila Olsen responded:   "Yes.   They told

us.   He gave us an idea."

      Respondent sent petitioners a proposed decision document

supported by a calculation of the deficiency in income tax.

Petitioners refused to execute the decision document.

Consequently, respondent filed a motion for entry of decision on

June 30, 1999.   Respondent contends that we should enter a

decision that reflects the terms orally stipulated by the

parties.   Respondent submitted a calculation of tax that reflects

the specific terms of the settlement on which the parties orally

agreed.

      Rule 91(e), Tax Court Rules of Practice and Procedure,

concerning stipulation for trial, provides in part:

      A stipulation shall be treated, to the extent of its
      terms, as a conclusive admission by the parties to the
      stipulation, unless otherwise permitted by the Court or
      agreed upon by those parties. The Court will not
      permit a party to a stipulation to qualify, change, or
      contradict a stipulation in whole or in part, except
      that it may do so where justice requires. * * *

      This Court regularly enforces a settlement stipulation

(whether written or orally stipulated into the record) unless for

reasons of justice a party should be relieved from that

stipulation.   See Cataldo v. Commissioner, 476 F.2d 628 (2d Cir.

1973), affg. per curiam T.C. Memo. 1971-219; Adams v.
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Commissioner, 85 T.C. 359 (1985); Saigh v. Commissioner, 26 T.C.

171 (1956); Lee v. Commissioner, T.C. Memo. 1993-254.

     The record in this case clearly shows that the stipulation

was read into the record and agreed to by petitioners and was

fairly and freely entered into by both parties.       When the Court

asked petitioners whether they agreed with the stipulation,

petitioners responded, "Yes, your Honor."       Petitioners also

understood the amount of net tax due resulting from the

agreement.   The record includes no evidence or reasonable

argument to show that justice requires that petitioners be

relieved of their stipulation.    Accordingly, we hold that the

parties' oral stipulation is binding and enforceable.       Moreover,

we find that respondent's calculation of tax accurately reflects

the stipulation that was orally read into the record.

     Therefore, we grant respondent's motion for entry of

decision and hold that petitioners are liable for a deficiency in

income tax for the year 1996 in the amount of $2,045.

     To reflect the foregoing,

                                              An appropriate order and

                                         decision will be entered.
