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alleging irregularities in the assessment of their Federal income
taxes for 1993-96.
If collateral estoppel applies, issues which were litigated
and decided in an earlier case cannot be relitigated by the
parties or their privies. Montana v. United States, 440 U.S.
147, 153 (1979); Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326
n.5 (1979); Commissioner v. Sunnen, 333 U.S. 591, 597 (1948).
Collateral estoppel protects adversaries from the expense and
vexation of multiple lawsuits, conserves judicial resources, and
fosters reliance on judicial action by minimizing the possibility
of inconsistent decisions. Montana v. United States, supra at
153-154; Meier v. Commissioner, 91 T.C. 273, 282-284 (1988).
Collateral estoppel applies if the following requirements
are met: (1) The issue in the second suit is identical to the
issue decided in the first suit, Commissioner v. Sunnen, supra at
599-600; (2) there is a final judgment rendered by a court of
competent jurisdiction, Peck v. Commissioner, 90 T.C. 162, 166
(1988), affd. 904 F.2d 525 (9th Cir. 1990); Gammill v.
Commissioner, 62 T.C. 607, 613 (1974); (3) the parties to the
second suit are the same as the parties to the first suit or in
privity with them, Peck v. Commissioner, supra at 166-167;
Gammill v. Commissioner, supra at 614-615; (4) the parties
actually and necessarily litigated the matters at issue, and the
resolution of those matters was essential to the prior decision,
Commissioner v. Sunnen, supra at 598, 601; (5) the controlling
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