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from the cases of other Arbitrage Management partners, and
respondent did not impose fraud additions on the other Arbitrage
Management partners. Moreover, Mr. Kletnick acknowledged that he
was aware of the Arbitrage Management criminal investigation at the
time of the settlement; nevertheless, respondent chose to settle
with petitioners. As part of the settlement, respondent agreed to
forgo the section 6653 additions to tax. This was a valid
settlement, and once reached, cannot be repudiated by either party.
See Stamm Intl. Corp. v. Commissioner, 90 T.C. 315 (1988). Thus,
we hold that respondent may not assert the fraud additions against
petitioner.
E. District Court's Determination Irrelevant Herein
We reject respondent's contention that petitioners are bound
by the District Court's finding that no settlement was entered into
between respondent and petitioners for 1982 and 1983. The District
Court's decision was superseded by the decision of the U.S. Court
of Appeals for the Second Circuit in Manko v. United States, 87
F.3d 50 (1996), which remanded the case for the District Court to
determine whether the exclusion of settlement evidence deprived
petitioner of a fair trial. The District Court's finding as to the
nonexistence of a settlement has no preclusive effect at this time.
Respondent contends that collateral estoppel applies. We
disagree. Collateral estoppel precludes litigation by parties or
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