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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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