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petitioner was the former common parent of the prespinoff
affiliated group when it was paid the tentative refunds. Under
the bankruptcy court’s interpretation of Interlake Corp. v.
Commissioner, 112 T.C. 103 (1999), a tentative refund paid to the
former common parent of an affiliated group is a nonrebate refund
as to the former common parent.
The problem with petitioner’s theory is that it fails to
acknowledge that the bankruptcy court’s nonrebate conclusion is
premised on respondent’s stipulation that Interlake was the
common parent of the affiliated group at the time the tentative
refunds were paid to petitioner. This is neither a fact nor a
legal conclusion we are bound to accept. It is well settled that
collateral estoppel does not apply where the issue sought to be
precluded was determined in a stipulation. Levinson v. United
States, 969 F. 2d 260, 264 (7th Cir. 1992). The rationale behind
the rule is that stipulated matters have not been adjudicated on
the merits. Id.; see also In re Cassidy, 892 F.2d 637, 640 n.1
(7th Cir. 1990) (citing United States v. Intl. Bldg. Co., 345
U.S. 502, 506 (1953) (observing that judgments based on
stipulated facts have no collateral estoppel effect, especially
in tax cases, because facts so determined are not actually
litigated as the doctrine requires)). In the case at hand,
petitioner’s status at the time the tentative refunds were paid
has not been adjudicated. We therefore disagree with
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