- 11 -
bound by that decision. In sum, conditions (2) and (3) of the
Peck requirements are satisfied.
b. The 1991 Interest Issue
The ultimate issue with respect to the 1991 interest
payments is whether those payments constitute gross income to
petitioners. That issue was not litigated in Monahan I. Thus,
petitioners are not precluded from contesting respondent's
determination that the 1991 interest payments are taxable to
petitioners. Although this Court in Monahan I found that “funds
held in Aldergrove were used by and benefited petitioner
personally”, including funds credited to the Aldergrove account
on December 26, 1991, see infra sec. II.C.4.c., and command over
property or enjoyment of its economic benefits determines the
incidence of taxation, see supra sec. II.C.3.a., the Court did
not find that all interest payments credited to the Aldergrove
account in 1991 are taxable to petitioners. Certainly, this
Court in Monahan I did not decide the 1991 interest issue. The
equitable doctrine of issue preclusion requires that petitioners
be given an opportunity to litigate the 1991 interest issue.2
2 That may simply be a different way of saying that the
doctrine of claim preclusion does not apply. In this context,
the scope of the issue preclusion analysis blurs the distinction
between claim preclusion and issue preclusion. See McClain v.
Apodaca, 793 F.2d 1031, 1033 (9th Cir. 1986) (“The concept of res
judicata embraces two doctrines, claim preclusion and issue
(continued...)
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