Michael J. Fitzpatrick - Page 20

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                  As to their recovery, petitioner has supplied an explanatory                             
            affidavit.  The affidavit is that of an acquaintance of                                        
            petitioner who attests that he noticed boxes being thrown out by                               
            a new owner of petitioner's home in 1991, petitioner having sold                               
            the home in the mid-1980's. The acquaintance further attests that                              
            he saw many of the papers in the boxes were addressed to                                       
            petitioner, and, knowing of petitioner's incarceration, took the                               
            boxes and placed them in a storage shed. It was further attested                               
            that petitioner visited this acquaintance in the fall of 1993                                  
            when he was given the boxes containing the promissory notes.                                   
                  Newly discovered evidence does not affect the application of                             
            collateral estoppel where it could have been produced in the                                   
            prior proceeding by the exercise of due diligence.  Calcutt v.                                 
            Commissioner, 91 T.C. 14, 25 (1988).                                                           
                  Respondent argues that the documents could have been                                     
            produced by petitioner at the prior trial by the exercise of due                               
            diligence.  We agree.  Given that the documents were recovered                                 
            from the home once owned by petitioner, we cannot understand how                               
            due diligence would have failed to unearth the promissory notes                                
            at the time of the criminal trial.  The notes thus do not                                      
            preclude the application of collateral estoppel.  See Id. at 25.                               
                  In sum, we apply the well established doctrine that a                                    
            conviction under section 7201 collaterally estops the taxpayer                                 
            from denying fraud for purposes of section 6653(b) for the same                                






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