Charles and Martha McHan - Page 12

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          the causes of action are different, where the parties are the               
          same or in privity, where the issue is the same, and when there             
          has been no change in the law intervening between the time of the           
          first case and the time of the second.  Montana v. United States,           
          440 U.S. 147 (1979); Commissioner v. Sunnen, 333 U.S. 591 (1948);           
          Meier v. Commissioner, 91 T.C. 273 (1988); Peck v. Commissioner,            
          90 T.C. 162 (1988), affd. 904 F.2d 525 (9th Cir. 1990).6                    
               The prior forfeiture case before the District Court for the            
          Western District of North Carolina concerned the forfeiture of              
          specific assets.  The District Court made no findings of fact               
          having any relevancy to the instant case in determining the                 
          amount of petitioners' taxable income.  The issue of petitioners'           
          taxable income was not before the District Court.  However, the             
          District Court did hold that Martha was an innocent party under             
          21 U.S.C. sec. 881(a)(7) (1995) (hereinafter the Federal                    
          forfeiture law).7  Nevertheless, such finding is not dispositive            


          6    The Restatement defines collateral estoppel in the following manner:   
          when an issue of fact or law is actually litigated and determined by a valid
          and final judgment, and the determination is essential to the judgment, the 
          determination is conclusive in a subsequent action between the parties,     
          whether on the same or a different claim.  1 Restatement, Judgments 2d, sec.
          27 (1982); see also Meier v. Commissioner, 91 T.C. 273 (1988).              
          7    21 U.S.C. sec. 881(a)(7) (1995) provides for the forfeiture to the     
          United States of the following:                                             
               All real property, including any right, title, and interest            
          (including any leasehold interest) in the whole of any lot or tract of land 
          and any appurtenances or improvements,which is used, or intended to be         
          used, in any manner or part, to commit, or to facilitate the commission of, a
               violation of this title punishable by more than one year's             
          imprisonment, except that no property shall be forfeitedunder this                
          paragraph, to the extent of an interest of an owner, by reason of any act or
          omission established by that owner to have been committed or omitted without
          the knowledge or consent of that owner.  [Emphasis added.]                  



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