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As a preliminary matter, we note that respondent’s
determinations as to matters of fact in the notice of deficiency
are presumed to be correct, and petitioner has the burden of
proving otherwise. See Rule 142(a); Welch v. Helvering, 290 U.S.
111 (1933). However, respondent has the burden of proof with
respect to respondent’s claim of res judicata because it is an
affirmative defense. See Rules 39, 142(a); Calcutt v.
Commissioner, 91 T.C. 14, 20-21 (1988).
I. Res Judicata
Respondent contends that the doctrine of res judicata
precludes petitioner from litigating the 1994 tax liability,
except insofar as it is affected by petitioner’s tax filing
status. Petitioner contends that res judicata does not apply,
because special circumstances exist which warrant an exception to
the normal rules of preclusion. Respondent denies that the
claimed special circumstances events occurred.
We agree with respondent.
Under the doctrine of res judicata--
when a court of competent jurisdiction has entered a final
judgment on the merits of a cause of action, the parties to
the suit and their privies are thereafter bound “not only as
to every matter which was offered and received to sustain or
defeat the claim or demand, but as to any other admissible
matter which might have been offered for that purpose.”
Commissioner v. Sunnen, 333 U.S. 591, 597 (1948)(citing Cromwell
v. County of Sac, 94 U.S. 351, 352 (1877)); see Kroh v.
Commissioner, 98 T.C. 383, 398 (1992). The judgment in the first
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