                        T.C. Memo. 1997-192



                      UNITED STATES TAX COURT



           RICHARD W. KOCHANSKY AND MONICA L. MILLER,
          F.K.A. MONICA L. KOCHANSKY, Petitioners, v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 21791-93.                     Filed April 24, 1997.



     Richard W. Kochansky, pro se.

     Robert S. Scarbrough, for respondent.




                        MEMORANDUM OPINION



     DAWSON, Judge:   This case was assigned to Special Trial

Judge D. Irvin Couvillion pursuant to section 7443A(b)(4)and
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Rules 180, 181, and 183.1    The Court agrees with and adopts the

opinion of the Special Trial Judge, which is set forth below.

                 OPINION OF THE SPECIAL TRIAL JUDGE

       COUVILLION, Special Trial Judge:        This matter is before the

Court on respondent's motion for entry of decision as to which

Richard W. Kochansky (petitioner) has filed an objection.         In two

notices of deficiency, respondent determined the following

deficiencies, additions to tax, and penalties for the years

indicated:2

                                       Additions to Tax
                          Sec.            Sec.      Sec.          Sec.
Year      Deficiency   6651(a)(1)       6653(a)     6654       6662(b)(1)

1988        $8,115      $2,029              $406       $36        --
1989         4,035         967                --        --       $807
1990         2,022         --                 --        --        404

At the time the petition was filed, petitioners were legal

residents of Idaho.

       On the date this case was calendared for trial, the parties

filed with the Court a written stipulation to be bound (the

stipulation).    There was no evidence adduced on that date other

than the stipulation and the exhibits attached thereto.


1
   Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the years in issue. All Rule
references are to the Tax Court Rules of Practice and Procedure.
2
   The deficiencies, additions to tax, and penalty for the years
1988 and 1990 are against Richard W. Kochansky alone. For 1989,
the deficiency, addition to tax, and penalty are against Richard
W. Kochansky and Monica L. Miller.
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       Essentially, the stipulation is an agreement by the parties

to be bound by the outcome of an appellate case involving

petitioner's 1987 tax year, which, at the time this case was

calendared for trial, was pending before the United States Court

of Appeals for the Ninth Circuit.    The litigation in the

appellate case also originated with this Court, the results of

which are set out in Kochansky v. Commissioner, T.C. Memo. 1994-

160.    The appeal in that case was not resolved until sometime

after the stipulation in the instant case was filed.     In

Kochansky v. Commissioner, 92 F.3d 957 (9th Cir. 1996), the Court

of Appeals affirmed in part and reversed in part T.C. Memo. 1994-

160 regarding petitioner's 1987 tax year.     The deficiency in tax

and the imposition of additions to tax under sections 6651(a)(1)

and 6661 were affirmed, and the imposition of the addition to tax

under section 6653(a) was reversed.     The decision, as thus

modified, thereafter became final.

       Following petitioner's failure to execute decision documents

in the instant case in accordance with the stipulation,

respondent filed the motion for entry of decision.

       The decision documents prepared by respondent are in

accordance with the holding of the Court of Appeals for
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petitioner's 1987 tax year.   Kochansky v. Commissioner, supra.

Petitioner does not argue to the contrary.3

     Petitioner objects to respondent's motion for entry of

decision on the ground that the Court of Appeals based its

holding on the theory that petitioner had made an anticipatory

assignment of income to his former spouse and that under the

rationale of Lucas v. Earl, 281 U.S. 111 (1930), such income was

taxable to petitioner when the income was subsequently realized,

even though a portion of this income (one-half) had been paid to

petitioner's former spouse.   The Court of Appeals affirmed this

Court's holding that rejected petitioner's contention that the

portion of the subject income, when realized, was taxable income

to his former spouse and was not taxable to petitioner.   The

instant case involves identical payments of income that were




3
   The proposed decision, which is part of the motion, includes
concessions by respondent of the sec. 6653(a) addition to tax for
the 1988 tax year and the penalty under sec. 6662(b)(1) for the
1989 and 1990 tax years in accord with the Court of Appeals'
opinion. Respondent further concedes the addition to tax under
sec. 6654(a) for the 1988 tax year and that petitioner Monica L.
Miller is exonerated from liability as an innocent spouse under
sec. 6013(e) for the 1989 tax year. As a result of this
concession as to petitioner Monica L. Miller, she executed the
decision documents prepared by respondent and is not a party with
respect to respondent's motion for entry of decision. The
stipulation also includes a reduction of the income adjustment
against petitioner for the year 1988 from $28,800 determined in
the notice of deficiency to $7,200.
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realized during the years 1988, 1989, and 1990.4   Petitioner, in

his objection to respondent's motion, alleges:

          1. The case of Kochansky v. Commissioner, T.C. Memo.
     94-160 at 92 F.3d 957 (1996) was decided by the Court of
     Appeals on the sole issue raised of "assignment of
     anticipatory income".

          2. In those cases pending before this Tax Court,
     Petitioner has other issues to be raised dealing with tax
     liability which were not raised in the Court of Appeals case
     cited above, to wit:

               A.   Community Property issue;

               B.   IRC §1041

          3. Petitioner agreed to be bound on the issue of
     "assignment of anticipatory income" as presented in the
     Court of Appeals, but never intended to waive other issues
     in other cases.



4
   Briefly stated, petitioner is an attorney who had filed a
medical malpractice action in 1984 on a contingent fee basis. At
the time, petitioner was married to Carol A. Kochansky (Carol).
Petitioner and Carol were divorced in 1985. In the property
settlement between them, it was agreed that any fees earned from
this litigation (net of petitioner's out-of-pocket costs) would
be paid one-half to petitioner and one-half to Carol. The
medical malpractice case was settled in 1987, and a portion of
the contingent fee was paid in 1987, of which a portion was paid
to petitioner and the remainder was paid to Carol pursuant to the
property settlement agreement. On his 1987 income tax return,
petitioner reported only the portion of the fee he had received.
This Court and the Court of Appeals for the Ninth Circuit both
held that the property settlement agreement between petitioner
and Carol constituted an anticipatory assignment of income, and,
under Lucas v. Earl, 281 U.S. 111 (1930), the total amount of the
fee paid during 1987 constituted gross income to petitioner. The
instant case involves additional amounts of the contingent fee
from the same medical malpractice case that were paid to
petitioner during 1988, 1989, and 1990, half of which were
remitted to petitioner's former spouse Carol pursuant to the
property settlement.
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Petitioner, in essence, is urging a different theory upon which

his liability as to the income in question for 1988, 1989, and

1990 should be determined.   Petitioner made the same argument in

the Court of Appeals as to his 1987 tax year, and that argument

was addressed as follows:

          Kochansky further argues that under Idaho's community
     property law, Idaho Code 32-906, Carol had a community
     property interest in the contingent fee at the time of the
     divorce. Upon divorce, that interest became her sole and
     separate property, he argues, and therefore she is solely
     responsible for paying tax on her portion of the malpractice
     contingency fee. We decline to consider this argument
     because Kochansky did not raise it in the Tax Court and
     because the necessary facts to support the existence of a
     community property interest have not been developed. See
     United States v. Kimball, 896 F.2d 1218, 1219 (9th Cir.
     1990) ("As a general rule, we will not consider an issue
     raised for the first time on appeal."), vacated in part on
     other grounds, 925 F.2d 356 (9th Cir. 1991). [Kochansky v.
     Commissioner, 92 F.3d at 959.]

     The petition in the instant case contains no allegations

that the income at issue in this case constituted community

property income.   In an amended petition that was subsequently

filed, no allegations were made with respect to the income being

community property income.   No motions have been filed by

petitioner for leave to file an amended petition in order to

allege the character of the income at issue as community property

income.   The stipulation filed by the parties states, in

pertinent part:

          9. The parties hereby agree to be bound to the final
     outcome of the case of Kochansky v. Commissioner, T.C. Memo.
     94-160 (Appeal to 9th Circuit Court of Appeals pending) as
     to the deficiencies and additions to tax raised in the
                               - 7 -


     current proceeding. Specifically, issues that Kochansky v.
     Commissioner, T.C. Memo. 94-160 (Appeal to 9th Circuit Court
     of Appeals pending) would control would be:

               a. If total receipts to petitioner's, Richard
     Kochansky's, trust account from the McNary v. Berghan
     lawsuit are finally determined to be taxable to petitioner
     in the above-referenced appealed case they will be
     additional taxable income to petitioner in this case in the
     amounts set forth in paragraph 2 of this stipulation.

     *        *        *        *        *         *         *

           10. The Tax Court's final opinion in Kochansky v.
     Commissioner, T.C. Memo. 1994-160 (Appeal to 9th Circuit
     Court of Appeals pending) shall for all purposes be
     dispositive of all questions related to the issues in this
     case, and shall specifically operate as an adjudication on
     the merits of the settlement issues in this case, and shall
     specifically operate as an adjudication on the merits of the
     issues herein to the same extent as would a separate opinion
     on the merits of the questions related to the issues in this
     case.

          11. A Decision shall be submitted in this case when
     the Decision in Kochansky v. Commissioner, T.C. Memo. 1994-
     160 (Appeal to 9th Circuit Court of Appeals pending) becomes
     final under I.R.C. § 7481.

There are no provisions in the stipulation allowing petitioner to

place in issue other legal theories that would exonerate him from

liability.   Petitioner, however, contends that, on the date the

stipulation was filed, which was the date the instant case had

been calendared for trial, the Court indicated that petitioner

would be entitled to raise "other issues".   Specifically,

petitioner alleges:

          4. On September 26, 1994, at the time and place
     scheduled for trial in this matter, Special Trial Judge D.
     Irvin Couvillion stated that the case would be continued in
     the event that Petitioner desired to raise other issues not
     before the Court of Appeals. Said statement is a matter of
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     record, but Petitioner does not presently have a transcript
     copy to attach hereto.

          5. In light of Petitioner's intent, the direction of
     Judge Couvillion and Petitioner's right to due process,
     Petitioner desires that this case proceed to trial on other
     issues, and that Respondent's Motion for Entry of Decision
     be denied.

     Petitioner misconstrues what the Court said or indicated at

the time the stipulation was filed.    The Court intended to allow

petitioner the opportunity to litigate other issues in the

instant case, which were unrelated to the issues in the 1987

case, if there were any unrelated issues.   At the time, the Court

had not compared the opinions of this Court and the Court of

Appeals as to the 1987 case with the pleadings in the instant

case for the years 1988, 1989, and 1990.    A review of both court

opinions regarding petitioner's 1987 tax year and the pleadings

in the instant case for the subsequent years indicates that there

are no unrelated issues to be heard.   The instant case involves

the same issue that was decided by this Court and affirmed by the

Court of Appeals.   Kochansky v. Commissioner, T.C. Memo. 1994-

160, affd. in part, revd. in part 92 F.3d 957 (9th Cir. 1996).

The stipulation in the instant case states unequivocally that the

parties agreed "to be bound to the final outcome" of the 1987

case.   There were no qualifying conditions or provisions in the

stipulation of the instant case that would allow petitioner to

assert a different legal theory as to the character of the income

at issue for the years 1988, 1989, and 1990.
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     A controversy before this Court may be settled by agreement

of the parties.   After the parties have entered into a binding

settlement agreement, the actual merits of the settled

controversy are without consequence.       This Court has declined to

set aside a settlement duly executed by the parties and filed

with the Court in the absence of fraud or mutual mistake.          Stamm

Intl. Corp. v. Commissioner, 90 T.C. 315 (1988); Spector v.

Commissioner, 42 T.C. 110 (1964).    Petitioner has not established

any basis for disavowal of the stipulation that he and respondent

mutually assented to.   The stipulation covers all issues before

the Court in the instant case.    Petitioner is bound by that

agreement.   He cannot raise other issues that are not in the

pleadings or pursue other legal theories that are not in the

pleadings and were not allowed in the stipulation.       Respondent's

motion for entry of decision will be granted.



                                              An appropriate order will

                                         be issued and decision will be

                                         entered for respondent.
