                       T.C. Memo. 2000-284



                     UNITED STATES TAX COURT



    THOMAS J. FISHER AND ANN M. FISHER, ET AL.,1 Petitioners
         v. COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 27394-86, 5879-89, Filed September 5, 2000.
                 25436-90, 1321-92.



     A. John P. Mancini, for petitioners.

     Thomas L. Fenner and Marion S. Friedman, for respondent.




1
     This case has been consolidated by order with those of White
Rim Oil & Gas Associates, 1980, Raymond Phillips, Tax Matters
Partner, docket Nos. 5879-89, 25436-90, and 1321-92, each of
which is a TEFRA proceeding involving the same partnership.
                               - 2 -

                        MEMORANDUM OPINION

     SWIFT, Judge:   These consolidated cases are before us on

motions for entry of decisions.2   An evidentiary hearing was held

on December 9, 1999, with regard to these motions.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

     The underlying tax liabilities involved in the instant

motions for entry of decisions of Thomas J. and Ann M. Fisher

(who are petitioners in docket No. 27394-86 and who are

hereinafter referred to as petitioners) relate to two tax shelter

limited partnerships (the White Rim partnerships and the Syn-Fuel

partnerships) in which petitioners in the early 1980's invested.

Both of these tax shelters and the claimed tax benefits

associated therewith have been the subject of test case opinions

adverse to the investors.   See Peat Oil & Gas Associates v.

Commissioner, 100 T.C. 271 (1993) (relating to the Syn-Fuel


2
     In docket No. 27394-86, petitioners Thomas J. and Ann M.
Fisher move for entry of decision. In docket Nos. 5879-89,
25436-90, and 1321-92, respondent moves for entry of decisions
under Rule 248, to which motions the Fishers, as participating
partners, object. Also, in the latter three dockets, the
Fishers, as participating partners, cross move, as to themselves
only (not as to other partners) for entry of decisions, for
abatement of interest, for innocent spouse relief, and for
attorney’s fees. In those three dockets, the tax matters partner
filed no response to the pending motions.
                               - 3 -

partnerships), affd. sub nom. Ferguson v. Commissioner, 29 F.3d

98 (2d Cir. 1994); Krause v. Commissioner, 99 T.C. 132 (1992),

(relating to the White Rim partnerships), affd. sub nom.

Hildebrand v. Commissioner, 28 F.3d 1024 (10th Cir. 1994).3

     The instant motions focus primarily on whether petitioners

should be treated as having entered into binding settlement

agreements of the taxes and penalties pertaining to their

investments in the White Rim and Syn-Fuel partnerships on a basis

more favorable than that available to other partners in the same

partnerships.   Petitioners’ counsel complains vigorously of

respondent’s general handling of the above tax shelters and of

respondent’s particular treatment of petitioners.    Whatever may

be the explanation for petitioners’ financial and other problems

relating to their investments in the above partnerships, the

evidence herein does not establish that petitioners entered into

binding settlement agreements with respondent of their tax

liabilities, additions to tax, and increased interest in a manner

inconsistent with respondent’s proposed decisions.   For the

reasons set forth below, in docket No. 27394-86, we shall deny


3
     For other opinions relating to the White Rim partnerships,
see Hill v. Commissioner, 204 F.3d 1214 (9th Cir. 2000); Copeland
v. Commissioner, T.C. Memo. 2000-181; Marinovich v. Commissioner,
T.C. Memo. 1999-179; Acierno v. Commissioner, T.C. Memo. 1997-
441, affd. without published opinion 185 F.3d 861 (3d Cir. 1999);
Karlsson v. Commissioner, T.C. Memo. 1997-432; Vanderschraaf v.
Commissioner, T.C. Memo. 1997-306, affd. without published
opinion 211 F.3d 1276 (9th Cir. 2000).
                                     - 4 -

   petitioners’ motion for entry of decision.      In docket Nos. 5879-

   89, 25436-90, and 1321-92, we shall grant respondent’s motions

   for entry of decisions, and we shall deny the motions for entry

   of decisions filed by petitioners as participating partners.


                                 Background

           At the time the petitions were filed, petitioners resided in

   and the relevant partnerships maintained their offices in New

   York State.

           On their Federal income tax returns for the years 1980

   through 1985, petitioners claimed loss deductions relating to

   their limited partnership investments in White Rim and Syn-Fuel

   as follows:


                                    Claimed Loss Deductions
Partnership        1980      1981        1982      1983        1984      1985

White Rim        $39,925   $45,479     $50,880   $13,665       ---        ---

Syn-Fuel           ---      40,392      38,319    40,890      $33,414   $6,927


           Respondent disallowed the above-claimed loss deductions

   relating to petitioners’ investments in the White Rim and Syn-

   Fuel partnerships for the tax years 1980 through 1982 and the

   partnerships’ loss deductions for 1983 through 1985.

           At a Court hearing on April 22, 1986, respondent’s counsel

   announced that respondent would accept settlement offers from

   investors in the White Rim and related limited partnerships on
                               - 5 -

terms that would allow the investors an ordinary loss deduction

for the amount of cash invested in the partnerships.    For

partnerships formed in 1979 and 1980, respondent’s offer of

settlement expired on September 5, 1986.   By that date,

petitioners did not respond to respondent’s offer of settlement.

     On December 27, 1988, petitioners mailed to respondent 10

checks totaling $130,836.   On each check, petitioners indicated

whether the amount of each check should be applied to taxes or to

interest owed for each year.   No indication appeared on the

checks as to whether the payments were being made in settlement

of all or any portion of the tax liabilities determined by

respondent against petitioners, nor did any indication appear on

the checks as to whether the payments were being made for any tax

liabilities relating to White Rim or to Syn-Fuel, or both.

     Over the course of 1989 through 1997, petitioners and their

counsel and respondent exchanged various correspondence and other

documents discussing petitioners’ tax liabilities and that

petitioners on December 27, 1988, had partially paid.    The

correspondence makes clear that, except as noted below, no

settlement was entered into by petitioners and respondent for any

of the tax years in dispute herein.

     For example, included in the documents petitioners submitted

to respondent are claims for refund that petitioners filed in

1990 and in 1994 seeking refunds from respondent of amounts
                              - 6 -

petitioners had paid for the years 1981 through 1985 -- including

the $130,836 that petitioners had paid on December 27, 1988.

     On May 2, 1995, petitioners and respondent submitted to the

Court an agreed and signed decision document in docket No.

11904-88, involving petitioners’ Federal income tax liability for

1982, in which petitioners agreed to a tax deficiency for that

year of $44,693.

     On April 26, 1995, one of respondent’s Appeals officers

wrote a letter to petitioners to explain the allocation by

respondent of the total $130,836 in payments that had been

received from petitioners on December 27, 1988.   In that letter,

a misleading statement was made by respondent’s Appeals officer

relating to petitioners’ Federal income tax liabilities that


     There remains no balance on the 1984 account, but each
     of the other years show a balance in your favor which
     will be refunded when this matter is closed.


     At a Court hearing in petitioners’ case at docket No. 27394-

86 in New York City on December 9, 1997, the parties orally

settled issues relating to petitioners’ investment in White Rim

for 1980 and 1981, and the parties filed their stipulation of

settled issues therein on December 9, 1999.
                               - 7 -

                            Discussion

     The evidence in these cases is clear that (except for the

May 2, 1995, and the December 9, 1999, settlements relating to

petitioners’ 1980, 1981, and 1982 tax liabilities that are

mentioned above) no settlements were entered into between

petitioners and respondent with regard to petitioners’ Federal

income tax liabilities for the years 1980 through 1985.

Petitioners’ attempt to have the $130,836 in payments that they

made on December 27, 1988, treated as a binding and final

settlement of all of petitioners’ Federal income tax liabilities

relating to the White Rim and Syn-Fuel partnerships for the years

1980 through 1985, or for any portion thereof, is rejected.

     Binding settlement agreements may be entered into between

taxpayers and respondent.   To constitute, however, a binding

settlement agreement of a Federal tax controversy, the taxpayers

and respondent’s representatives, among other things, must comply

generally with contract principles such as offer and acceptance

and must objectively manifest mutual assent to the essential

terms of the purported settlement agreement.   See Dorchester

Indus. v. Commissioner, 108 T.C. 320, 329-330 (1997), affd. 208

F.3d 205 (3d Cir. 2000).

     As we have found, with regard to the amounts in controversy,

petitioners never accepted the terms of any pending settlement

from respondent.   To the contrary, after making the payments
                               - 8 -

totaling $130,836 in December of 1988, petitioners filed two sets

of claims for refund therefor -- the first in 1990 and the second

in 1994.   The filing by petitioners of the claims for refund in

1990 and 1994 is inconsistent with and disproves petitioners’

contention that they had settled the related tax liabilities in

December of 1988.

     The total amount of petitioners’ December 27, 1988, payments

(and the amount of the various separate checks designated for

taxes and interest), with one exception for 1 year, do not match

the calculations of what would have been due under any of

respondent’s settlement offers.   Further, in context, the

April 26, 1995, letter from respondent’s Appeals officer clearly

did not constitute an offer or acceptance of any settlement

agreement.

     Petitioners’ various alternative arguments (e.g., that

petitioners’ December 27, 1988, payments and respondent’s receipt

thereof should be treated as an accord and satisfaction of the

tax liabilities then asserted against petitioners relating to

White Rim and/or to Syn-Fuel, or that petitioners’ investments in

Syn-Fuel should be treated as giving rise to loss deductions for

fraud) are rejected.   No credible evidence supports petitioners’

alternative arguments.   Other arguments made by petitioners that

are not specifically addressed herein have been considered and

are rejected.
                                 - 9 -

     Petitioner Mrs. Fisher’s claims for innocent spouse relief

for 1983 and later years and petitioners’ claims for abatement of

interest and for attorney’s fees are all premature and therefore

will be denied.   Any innocent spouse relief available to

Mrs. Fisher relating to partnership items under the Tax Equity

and Fiscal Responsibility Act of 1982, Pub. L. 97-248, 96 Stat.

324 (such as the White Rim and Syn-Fuel investments for 1983,

1984, and 1985), would be governed by the separate and

independent proceedings described in section 6230(a)(3).

     Any abatement of interest that might be available to

petitioners would be governed by the separate proceedings

described in section 6404(e).    See Bourekis v. Commissioner,

110 T.C. 20, 26 (1998).

     In light of our denial of petitioners’ motions for entry of

decisions, petitioners do not qualify as prevailing parties, and

we deny petitioners’ motions for attorney’s fees.       See sec. 7430.

     To reflect the foregoing,


                                         An appropriate order will

                                 be issued in docket No. 27394-86;

                                 and orders and decisions will be

                                 entered in docket Nos. 5879-89,

                                 25436-90, and 1321-92.
