-8-
(2) There must be a final judgment rendered by a court
of competent jurisdiction.
(3) Collateral estoppel may be invoked against parties
and their privies to the prior judgment.
(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.
[Citations omitted.]
In the instant case, it is the conviction of Anthony, a
stockholder of petitioner, and not the conviction of petitioner,
which respondent contends acts to collaterally estop petitioner
from denying that there was a willful omission of income.
In American Lithofold Corp. v. Commissioner, 55 T.C. 904,
923-924 (1971), we set forth the controlling analysis as follows:
Respondent determined that a part of the deficiency for
each of the years 1950 and 1951 was due to fraud with intent
to evade tax within the meaning of section 293(b). He
contends that since Robert J. Blauner, a principal
stockholder, officer, and virtual alter ego of petitioner,
was convicted of attempted evasion of the corporate income
taxes for the year 1951 and for conspiring to defraud the
United States of income taxes due and owing to it by
American Lithofold Corp. for 1951, petitioner is
collaterally estopped from proving that some part of the
1951 deficiency was not due to fraud. We cannot agree with
this contention. In C.B.C. Super Markets, Inc., 54 T.C. 882
(1970), we held that a corporation is not collaterally
estopped by the conviction of its president and principal
stockholder for filing or causing the corporation to file
false and fraudulent corporate returns; the corporation
itself is entitled to be heard on the question whether any
part of its underpayments was due to fraud. That case is
controlling here on the collateral estoppel issue for the
year 1951 and we follow it.
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