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these deductions. Sands offered no evidence to substantiate that
Lone Star paid the amounts in dispute. Sands submitted a payment
notice addressed to her showing interest due on a loan in which
she was the borrower. Petitioners submitted two other statements
showing interest paid on a loan to Kips Bay Associates, an entity
that Murphy described as an investment of his. There is no
evidence that the interest amounts shown on the loan statements
were Lone Star's obligations or that Lone Star paid those
amounts. There is no evidence that Lone Star paid the "other
deductions" during the years in issue. We sustain respondent's
determination as to these items.
3. Application of Res Judicata or Collateral Estoppel
Sands argues that the terms of two settlements entered into
between Murphy and respondent should apply to her as well. Sands
argues that the doctrines of collateral estoppel and res judicata
bind respondent to this result. We do not agree.
Sands rests her argument on two cases filed by Murphy, which
involved Murphy's taxable years 1985 and 1986: Murphy v.
Commissioner, docket No. 4949-91, and Murphy v. Commissioner,
docket No. 5150-91 (docket Nos. 4949-91 and 5150-91). Those
cases involved Murphy's deductions associated with Lone Star.
Those cases were never tried, and Sands was not a party in either
case. Murphy and respondent settled those cases and agreed that
no deficiencies in income taxes were due and that no addition to
tax under section 6651(a) was due for each of Murphy's taxable
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