                  T.C. Memo. 1996-361



                UNITED STATES TAX COURT



 ESTATE OF LOUISE NEVELSON, DECEASED, MIKE NEVELSON,
               EXECUTOR, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 7754-92.                     Filed August 6, 1996.



     On May 12, 1995, the Court filed a stipulation of
settled issues in this case. In relevant part, the
stipulation provided that: (1) E would provide R with
documentation necessary to substantiate certain
administration expenses on or before Jan. 15, 1996, and
(2) the parties would submit a decision document to the
Court on or before Apr. 15, 1996. R now moves for
entry of decision based on this stipulation. E moves
to defer entry of decision until the earlier of:
(1) June 6, 2001, (2) payment of D’s Federal gift
taxes, or (3) any other date agreed to by the parties.
Held: The Court will grant R’s motion and enter a
decision based on the stipulation.



Richard J. Bronstein, for petitioner.

Meryl Silver, for respondent.
                                 - 2 -

                         MEMORANDUM OPINION


     LARO, Judge:    Respondent moves for entry of decision, and

she has lodged a proposed decision with the Court.    Executor

objects to respondent’s motion, and he moves to defer entry of

decision until the earlier of:    (1) June 6, 2001, (2) payment of

Decedent’s Federal gift taxes, or (3) any other date agreed to by

the parties.   Respondent objects to Executor’s motion.

     As discussed herein, we will grant respondent’s motion and

enter her proposed decision.    Unless otherwise stated, section

references are to the Internal Revenue Code in effect for the

relevant dates.    Rule references are to the Tax Court Rules

of Practice and Procedure.    Dollars, unless otherwise noted, are

rounded to the nearest dollar.    The term “Decedent” refers to

Louise Nevelson.    The term “Executor” refers to Mike Nevelson.

                             Background

     Decedent was an artist until her death on April 17, 1988.

When she died, she resided in New York County, New York.

Decedent’s estate includes thousands of her works of art.

     Executor resided in New Fairfield, Connecticut, when he

petitioned the Court on April 14, 1992, to redetermine

respondent’s determination of a $6,553,148 deficiency in

Decedent's estate's Federal estate tax and a $327,657 addition

thereto under section 6653(a).1    Respondent’s determination was

     1
       Respondent agrees with Executor that the deficiency and
addition to tax will be $5,453,185 and $272,659, respectively, if
                                                   (continued...)
                                - 3 -

reflected in a notice of deficiency issued to petitioner on

January 16, 1992.

     Executor later petitioned the Court on December 30, 1993, to

redetermine respondent’s determination with respect to Decedent’s

Federal gift taxes.   This determination, which appeared in a

notice of deficiency dated October 27, 1993, was as follows:

Taxable                              Additions to Tax
  Year                         Sec.               Sec.
 Ended        Deficiency      6651(a)          6653(a)(1)

12/31/76      $169,765      $42,441                ---
 3/31/77        48,891       12,223                ---
 3/31/79       154,717       38,679                ---
 3/31/80       689,139      172,285                ---
 3/31/81       144,291       36,073                ---
12/31/82       741,731      185,433                ---
12/31/83       482,500        ---                $24,125
12/31/84       178,240       44,560                ---
12/31/85     1,344,795      336,199                ---
12/31/86       142,983       35,746                ---
12/31/87       267,002       66,750                ---
12/31/88      228,353       57,088                 ---

Respondent also determined that Decedent was liable for an

addition to her 1983 gift tax under section 6653(a)(2).

     The two cases resulting from the petitions were consolidated

on July 28, 1994, for purposes of trial, briefing, and opinion.

On May 12, 1995, the resulting case was settled with the

simultaneous execution of a decision document in the gift tax

case and a stipulation of settled issues (the Stipulation) in the

estate tax case.    A decision was entered in the gift tax case on

May 26, 1996, determining deficiencies in Decedent’s gift taxes

     1
      (...continued)
the maximum credit allowable for State death taxes under sec.
2011 is allowed.
                               - 4 -

and additions thereto totaling more than $1 million.   Respondent

assessed these deficiencies on July 28, 1995.   To date, Executor

has not made any payments with respect thereto.

     The Stipulation states as follows:

     THE PARTIES hereby stipulate and agree that:

          1. They have agreed to resolve the above-entitled
     case on the basis that the works of art created by the
     decedent and unsold on the date of her death were not
     transferred by the decedent to Sculptotek, Inc. during
     her lifetime and are therefore includible in her gross
     estate.

          2.   The gross estate is $12,123,455.73.

          3. The total amount of adjusted taxable gifts is
     $2,856,317.00.

          4. (a) The administration expenses claimed on
     petitioner’s Form 706, as adjusted by the statutory
     notice of deficiency issued by respondent, will be
     allowable as deductible expenses.

               (b) Additional administration expenses,
     including statutory executor’s commissions under New
     York law and reasonable legal fees, also will be
     allowable as deductible expenses to the extent such
     expenses are properly claimed as administrative
     expenses and are substantiated.

          5.   (a) The amount of federal gift tax,
     including interest and penalties, that the parties have
     agreed is due in the related proceeding bearing docket
     no. 27393-93 will be allowed as deductions to the
     extent such tax, interest, and penalties are paid.

               (b) The amount of related New York gift tax,
     including interest and penalties, also will be allowed
     as deductions to the extent such tax, interest, and
     penalties are paid.

          6. New York State death taxes in the amount of
     $312,200.51 or such amount necessary to secure the
     maximum credit allowable will be allowed as a credit to
     the extent such taxes are paid.
                               - 5 -

          7. Petitioner shall produce the documentation
     necessary to substantiate the expenses referred to in
     paragraph 4(b) on or before January 15, 1996.

          8. A decision document in the above-entitled case
     shall be filed on or before April 15, 1996.

     Upon mutual agreement of the parties, the Court extended the

last day by which the decision document had to be filed to

June 14, 1996.

                            Discussion

     Respondent moves the Court to enter a decision based on her

decision document lodged with the Court.   The lodged document

reflects the terms of the Stipulation, taking into account only

those administration expenses that Executor had substantiated as

of the date of respondent’s motion herein.   Executor's principal

objection to respondent’s proposed decision is that, in computing

the estate tax deficiency owed by the estate, the proposed

decision fails to allow deductions for expenses that have not yet

been incurred.   Executor asks the Court to defer entry of

decision for up to 5 years so that Decedent’s estate may benefit

from all of the deductions to which the estate allegedly is

entitled.2   Executor alleges that Decedent’s estate will incur

     2
       The length of the requested deferral appears to be based
on a letter that petitioner’s counsel received from a valuation
company in New York, New York. In relevant part, the author of
the letter states:

     In my view the Estate of Louise Nevelson is in a unique
     position to realize, within a period of three to five
     years, very substantial economic rewards from its
     extraordinary collection of work by this major artist.
     * * * It has the ability to bring to market works by
                                                   (continued...)
                                - 6 -

additional administration expenses, such as executor’s

commissions, legal fees, accounting fees, bookkeeping fees, and

expenses relating to sales of art necessary to raise cash for the

payment of taxes and other art-related expenses.   Executor

alleges that he cannot currently pay Decedent’s gift taxes

because the estate is short on cash, and the estate will have to

consummate a “substantial transaction” in order to pay Decedent’s

gift taxes.3   Executor alleges that he cannot sell the estate’s

assets in the near future because he will receive less than fair

value.

     Executor relies primarily on Estate of Bailly v.

Commissioner, 81 T.C. 246, supplemented by 81 T.C. 949 (1983), in

support of his motion.   Executor also asserts that the Court will

be minimally inconvenienced by holding the record open for the

requested period of time.

     We disagree with Executor’s arguments, and we find his

reliance misplaced.   First, Estate of Bailly is clearly

distinguishable on its facts.   In that case, the Commissioner had

no objection to a deferral of the decision, whereas here the


     2
      (...continued)
     the artist in a variety of price levels; and it is in
     the enviable position of being capable of presenting
     for sale to experienced collectors and museums examples
     of the most highly recognizable and prized sculptures
     of her career, as well as more modestly valued works
     that are attractive to beginning collectors and smaller
     museums.
     3
       Executor also claims that Decedent’s Federal gift taxes
remain unpaid because he has yet to receive a bill from the
Internal Revenue Service. We give this argument little regard.
                                - 7 -

deferral sought by the Executor is directly contrary to the terms

of the parties' Stipulation.    Subsequent to that case, Congress

provided an alternative for relief in similar cases.    See sec.

7481(d); Rule 262.

     Executor agreed with respondent to settle the case according

to the terms of that Stipulation.   Two of these terms are that:

(1) “Petitioner shall produce the documentation necessary to

substantiate the [additional administration] expenses referred to

in paragraph 4(b) on or before January 15, 1996," and (2) “A

decision document in the above-entitled case shall be filed on or

before April 15, 1996.”   In entering into these terms, as well as

the Stipulation in general, both Executor and respondent agreed

to concede some rights which each might have asserted against the

other.   See Saigh v. Commissioner, 26 T.C. 171, 177 (1956).    The

Stipulation, like a contract, binds both parties to the terms

thereof, Stamos v. Commissioner, 87 T.C. 1451, 1455 (1986), and

must be enforced by this Court unless justice requires that we do

otherwise, see Adams v. Commissioner, 85 T.C. 359, 375 (1985);

Sennett v. Commissioner, 69 T.C. 694 (1978); Saigh v.

Commissioner, supra.   Under the facts at hand, justice does not

require that we do otherwise.   The Stipulation, voluntarily

entered in to as a settlement of this lawsuit, must be given

binding effect.   The parties struck a bargain in the Stipulation,

and Executor must live with the benefits and burdens of it.

     Accordingly, we will grant respondent’s motion for entry of

decision based on her proposed decision.   We have considered all
                                 - 8 -

arguments made by Executor for a contrary result.       To the extent

that we have not discussed any of his arguments, we have found

them to be without merit.

     To reflect the foregoing,

                                              An appropriate order and

                                         decision will be entered.
