                        T.C. Memo. 1998-103



                      UNITED STATES TAX COURT



         PARVIZ LAVI and MADELINE LAVI, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 8023-86.                      Filed March 16, 1998.



     Gary S. Weinick, for petitioners.

     Peggy Gartenbaum and Patricia A. Riegger, for respondent.



                        MEMORANDUM OPINION



     SWIFT, Judge:   This matter is before us under Rule 1551 on

the parties’ disputed computations of the decision to be entered

herein to reflect properly a settlement agreement the parties

1
     Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code in effect for the
years at issue.
                              - 2 -

agreed to with regard to the tax adjustments in dispute and with

regard to increased interest under section 6621(c).   The years

before us in this case are 1979 and 1980.

     Stipulations of settlement were filed by the parties on

October 6, 1992, and July 7, 1995, respectively.   The

computational dispute between the parties involves an

interpretation of the stipulation of settlement filed on July 7,

1995 (the stipulation).

     The stipulation provides, among other things, that

respondent’s adjustments regarding the so-called Arbitrage

Management tax shelter scheme, as those adjustments are set forth

in respondent’s notice of deficiency for 1979 and 1980, are to be

sustained.

     Although petitioners’ 1981 and 1982 tax years are closed for

the filing by petitioners of claims for refund and although those

years are not before us in this case, the stipulation provides,

by way of settlement, that petitioners’ income for 1979 is to be

increased by $645,469, which income relates to the netting into

petitioners’ 1979 tax year adjustments pertaining to Arbitrage

Management that arose in 1981 and 1982.

     For 1979 and apparently for 1980, petitioners now attempt to

offset against the tax adjustments agreed to in the stipulation

alleged net operating losses (NOL's) of $174,176 and $184,972,

respectively, from petitioners' closed 1981 and 1982 tax years,
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which NOL's do not relate to the Arbitrage Management

adjustments.

     The stipulation does not provide that petitioners would be

allowed any NOL deductions carried back from later years

unrelated to the Arbitrage Management adjustments.

     With regard to increased interest under section 6621(c), the

stipulation also states that such interest shall apply to

adjustments relating to the “purchase and sale of U.S. Treasury

bills and options for the 1979 tax year” (i.e., to the

adjustments relating to Arbitrage Management).    Contrary to

petitioners’ contention, the stipulation does not provide for

such increased interest to be applied to only 50 percent of the

1979 income tax deficiency relating to the Arbitrage Management

adjustments.

     Generally, taxpayers and respondent are held to their

written stipulations regarding the manner by which disputed tax

adjustments are to be settled.     Stamm Intl. Corp. v.

Commissioner, 90 T.C. 315, 320-322 (1988).    Petitioners have not

established any justifiable basis for being relieved from the

stipulation regarding the adjustments relating to Arbitrage

Management.

     Further, new issues generally are not to be raised in the

process of making Rule 155 computations.     Harris v. Commissioner,

99 T.C. 121, 124 (1992), affd. 16 F.3d 75 (5th Cir. 1994).

Clearly, in the context of the instant Rule 155 computations, the
                               - 4 -

claimed NOL deductions unrelated to petitioners' investment in

Arbitrage Management constitute an impermissible new issue.

     Petitioners note that certain alternative computations that

respondent made and exchanged with petitioners (of a proposed

settlement of the Arbitrage Management adjustments) reflected

that the NOL's that petitioners now claim might be available as

carryback loss deductions in computing petitioners’ taxable

income for 1979 and 1980.   Petitioners argue therefrom that

respondent was on notice of the claimed NOL's and that

petitioners’ claim, at this time, to such carryback loss

deductions for 1979 and 1980 should not be treated as raising a

new issue.   To the contrary, the record indicates that the 1981

and 1982 claimed NOL's were reflected in respondent’s proposed

alternative settlement computations on the basis and on the

condition that petitioners’ 1981 and 1982 tax years were open for

statute of limitation purposes for the filing of claims for

refund and for audit by respondent.    When it was established that

petitioners had not timely filed claims for refund for 1981 and

1982 and that those years were closed for both the filing of

claims for refund and audit purposes, petitioners’ entitlement to

such claimed NOL's disappeared, and the claimed losses were

properly eliminated from respondent’s proposed computations.

     The mere fact that respondent, in a case, may be aware

generally of claimed NOL's arising in later years not before the

Court does not put respondent, or the Court, on notice that such
                               - 5 -

NOL's are going to be claimed as carryback loss deductions to

years that are in dispute in a case.     Generally, taxpayers are

under an affirmative obligation to raise specifically such

claimed carryback loss deductions as an issue so that respondent

and the Court can timely consider the merits thereof.     Rule

34(b)(4).   Lewis v. Commissioner, 90 T.C. 1044, 1051-1053 (1988).

     After 9 years of negotiating tax adjustments relating to

Arbitrage Management, petitioners and their counsel agreed to the

July 7, 1995, settlement stipulation, and petitioners now are not

entitled to disavow the stipulation and to raise as new issues

for their 1979 and 1980 tax years unrelated claimed NOL's from

1981 and 1982.

     The record is clear that respondent's settlement position,

of which petitioners, through counsel, were aware, provided that

where the settlement reflected a netting in a single year of

adjustments relating to a particular tax shelter from a number of

years, increased interest under section 6621(c) was to apply to

100 percent of the tax deficiency on the net adjustments, not to

just 50 percent of the tax on such adjustments.     Increased

interest under section 6621(c) is to be applied against 100

percent of petitioners' income tax deficiency for 1979.

     For the reasons stated, the Court will enter respondent’s

proposed decision.



                                       Decision will be entered
- 6 -

in accordance with respondent's

Rule 155 computation.
