Leo N. Levitt and Ruth G. Levitt - Page 39

                                       - 39 -                                         
               2.   Elements of Collateral Estoppel                                   
                    a.   Identity of Matters at Issue                                 
               The first element for collateral estoppel is met because               
          there are identical matters at issue in the bankruptcy trial and            
          in the instant case, such as whether, and if so, how, petitioner            
          diverted Resyn income to Polymer and Chemical Traders from 1963             
          to 1970.  The Government had to prove fraud by clear and                    
          convincing evidence in the bankruptcy case.  To prove fraud,                
          the Government proved that Leo Levitt created two sham entities,            
          Chemical Traders and Polymer, to conceal Resyn's income.  In re             
          Resyn Corp., 81-2 USTC par. 9808 at 88,685-88,686.  The accounts,           
          transactions, and entities in the bankruptcy case are the same as           
          those in the instant case.  The instant case also involves the              
          issue whether petitioners benefited from Resyn's unreported                 
          income.  However, the fact that the instant case has additional             
          matters at issue does not bar collateral estoppel from applying             
          to matters at issue which are the same in both cases.  Bertoli v.           
          Commissioner, 103 T.C. 501, 508 (1994).                                     
               Petitioner points out that the bankruptcy court did not                
          decide whether petitioner committed civil tax fraud.  The fact              
          that the bankruptcy court did not decide whether petitioner was             
          personally liable for additions to tax under section 6653(b) does           
          not help petitioner.  The bankruptcy court found that petitioner            
          used Polymer and Chemical Traders to divert Resyn funds to                  
          himself.  The bankruptcy court found that petitioner withdrew               

Page:  Previous  29  30  31  32  33  34  35  36  37  38  39  40  41  42  43  44  45  46  47  48  Next

Last modified: May 25, 2011