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(5) The controlling facts and applicable legal
rules must remain unchanged from those in the prior
litigation. [Citations omitted.]
See also Clark v. Bear Stearns & Co., 966 F.2d 1318, 1320 (9th
Cir. 1992) (highlighting conditions (1) and (4) above).
4. Discussion
a. Preliminary Matters
By order of this Court dated April 8, 1996, respondent's
motion for leave to file an amended answer to raise the
affirmative defense of collateral estoppel in this case was
granted. Respondent now bears the burden of proving the
applicability of that defense. Rule 142(a).
The jurisdictional competency of this Court in Monahan I is
not contested by the parties in this case. In addition, decision
in Monahan I was entered by this Court on August 29, 1994, and
was affirmed on appeal without modification by the Court of
Appeals for the Ninth Circuit on May 31, 1996. Cf. Hudson v.
Commissioner, 100 T.C. 590, 593-594 (1993) (refusing to apply the
doctrine of collateral estoppel when an appellate court affirms a
trial court's judgment on different grounds). No petition for
certiorari having been duly filed, decision in Monahan I has
become final under section 7481(a)(2)(A). Lastly, there is
complete identity of parties between Monahan I and this case.
Both petitioners and respondent were parties in Monahan I and are
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