M.J. Wood Associates, Inc. - Page 9

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            determination is conclusive in subsequent suits based on a                                  
            different cause of action involving a party to the prior                                    
            litigation.”  Id.  The preclusive effect of a prior court’s                                 
            factual determination depends on whether the prior court had                                
            jurisdiction to and did determine the fact at issue.  See Brotman                           
            v. Commissioner, 105 T.C. 141, 153 (1995).                                                  
                  For collateral estoppel to apply, resolution of the disputed                          
            issue must have been essential to the prior decision.  Meier v.                             
            Commissioner, 91 T.C. 273, 282 (1988).  Mr. Christensen was found                           
            guilty of willfully filing false income tax returns for 1988,                               
            1989, and 1990 in violation of section 7206(1).  To sustain its                             
            burden of proof under section 7206(1), the Government must                                  
            establish that the defendant willfully made a false statement on                            
            his return.                                                                                 
                  The indictment did not charge Mr. Christensen or M.J. Wood                            
            with any specific tax liability or amount.  Instead, Mr.                                    
            Christensen was charged with receiving a specific item of income                            
            that he knowingly failed to report on his 1990 return.                                      
            Furthermore, M.J. Wood’s conviction for aiding and assisting in                             
            the preparation of a false corporate tax return was for the tax                             
            year ending September 30, 1989, not September 30, 1990, the year                            
            at issue before this Court.  Establishing petitioners’ specific                             
            tax liabilities is not an element of section 7206(1) or the other                           

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