6
as their distributive share of the partnership's investment tax
credit basis on their Federal income tax return filed for 1978.
Petitioners claimed an investment tax credit of $16,520 for the
year. None of this amount was used to reduce petitioners' tax
liability for the taxable year 1978. Petitioners carried back
the investment tax credit to taxable years 1975, 1976, and 1977,
in the amounts of $4,847, $4,946, and $6,727, respectively.
In the notice of deficiency, respondent determined that
petitioners had not established that they were entitled to the
claimed investment tax credit. Respondent disallowed the credit
and carrybacks.
As an initial matter, on brief petitioners argue that our
findings in Bales v. Commissioner, T.C. Memo. 1989-568, are
binding on the parties to this action under the theory of
collateral estoppel. That case involved certain limited partners
who invested in partnerships formed by Walter J. Hoyt III, to
engage in the business of breeding cattle.
Collateral estoppel is an affirmative defense which must be
specifically pleaded. Rule 39. Collateral estoppel precludes
litigation by parties or their privies, in a later suit on a
different cause of action, of issues of fact and law actually
litigated and necessarily decided by a court in reaching a prior
judgment. United States v. Mendoza, 464 U.S. 154, 158 (1984).
"Collateral estoppel may apply to matters of fact, matters of
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011