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"Collateral estoppel and the related doctrine of res
judicata have the dual purpose of protecting litigants from the
burden of relitigating an identical issue and of promoting
judicial economy by preventing unnecessary or redundant
litigation." Meier v. Commissioner, 91 T.C. 273, 282 (1988).
Issue preclusion, or collateral estoppel, is defined in 1
Restatement, Judgments 2d, sec. 27 (1982), as follows: "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 between the parties, whether on the same or a different
claim."
In Montana v. United States, 440 U.S. 147, 155 (1979), the
Supreme Court established a three-prong test for applying
collateral estoppel: First, the issues presented in the
subsequent litigation are in substance the same as those issues
presented in the first case; second, the controlling facts or
legal principles have not changed significantly since the first
judgment; and third, other special circumstances do not warrant
an exception to the normal rules of preclusion. In Peck v.
4(...continued)
partial summary judgment on the issue of whether petitioner is
collaterally estopped from relitigating his gross income for 1982
through 1988. We now reconsider that issue with the benefit of
the complete record.
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