Billhartz v. Commissioner of Internal Revenue

In action by decedent’s estate for redetermination of IRS disallowance of estate’s claimed $14 million deduction that represented payouts of estate’s property to decedent’s heirs, Tax Court did not err in denying estate’s request to vacate estate’s prior settlement with IRS that would allow estate to take 52.5% of claimed deduction, even though estate asserted that subsequent lawsuit filed by heirs resulted in estate paying heirs more money than what was at issue at time of settlement. By entering into settlement, estate took risk that new information discovered after settlement agreement would be harmful to estate. Moreover, Ct. rejected estate’s argument that: (1) subsequent lawsuit by heirs constituted “mutual mistake” that supported vacatur of settlement under circumstances where claimed deduction was less than what estate had originally agreed to pay heirs; and (2) IRS made misrepresentation during settlement negotiations by failing to inform estate that heirs might initiate new lawsuit against estate.