Thomas L. Freytag and Sharon N. Freytag - Page 15

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          (1952); American Equitable Assur. Co. of New York v. Helvering,             
          68 F.2d 46 (2d Cir. 1933), affg. 27 B.T.A. 247 (1932); Eversole             
          v. Commissioner, 46 T.C. 56 (1966).                                         
               In sum, this Court still has jurisdiction over this case,              
          and the period of limitations on making an assessment has not               
          run.  We turn next to the proper disposition of the case.                   
          Res judicata                                                                
               For purposes of our discussion here, the term "res judicata"           
          encompasses total res judicata or claim preclusion and partial              
          res judicata or issue preclusion.  See Hemmings v. Commissioner,            
          104 T.C. 221, 231 (1995), and cases cited therein.  "[C]laim                
          preclusion prevents a party from asserting a claim that has been,           
          or should have been, the subject of prior litigation."  Id. at              
          231.  Issue preclusion is "When an issue of fact or law is                  
          actually litigated and determined by a valid and final judgment,            
          and the determination is essential to the judgment, the                     
          determination is conclusive in a subsequent action * * *."  Id.             
          at 235 (quoting 1 Restatement, Judgments 2d, sec. 27 (1982)).  We           
          need not differentiate between the two concepts here since all of           
          the issues were before the bankruptcy court.7                               

               7    The meaning and scope of the doctrine of res judicata             
          has been described by the Supreme Court as follows:                         
               The general rule of res judicata applies to repetitious                
               suits involving the same cause of action.  It rests upon               
               considerations of economy of judicial time and public policy           
               favoring the establishment of certainty in legal relations.            
                                                             (continued...)           




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