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(4) The parties must actually have litigated the
issues and the resolution of these issues must have
been essential to the prior decision.
(5) The controlling facts and applicable legal
rules must remain unchanged from those in the prior
litigation. [Peck v. Commissioner, 90 T.C. 162, 166-
167 (1988); citations omitted.]
Collateral estoppel is "designed to prevent repetitious
lawsuits over matters which have once been decided and which have
remained substantially static, factually and legally."
Commissioner v. Sunnen, 333 U.S. 591, 599 (1948). By denying
relitigation, judicial energy is conserved, and parties may
reasonably rely on the fact that they will not have to relitigate
issues that have already been determined by a court. See Fink v.
Commissioner, 60 T.C. 867 (1973), affd. 512 F.2d 674 (9th Cir.
1975).
In Beck I, this Court rendered a final judgment. The
parties in Beck I and this case are identical. Since the
decision in Beck I, the controlling facts and applicable legal
rules have not changed. The sole question is whether the issue
decided in Beck I is identical in all respects to the issue in
this case. If the issues are identical, then collateral estoppel
applies because the issue was fully litigated and essential to
the decision in Beck I.
In Beck I, petitioners claimed that their rental income was
exempt from taxation by article 10 of the 1866 Treaty, 14 Stat.
801. In that case, we held:
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