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Appeals officer told him that “closed does not mean closed” but
that it could mean “abandoned for the time being”. This
conversation should have been an indication to petitioners that
their disability payment exclusions were at least questionable.
Mr. Wright’s actions demonstrate no ignorance of the facts.
On the contrary, Mr. Wright testified that he decided to exclude
portions of his disability retirement payments after talking with
family and friends and after his own investigation of IRS
publications. Petitioners’ actions were initiated before any
examinations. Petitioners’ exclusion of 40 percent of Mr.
Wright’s disability payments was based not on respondent’s
decision to forgo adjustment of petitioners’ returns; rather, it
was the result of petitioners’ own notions of exclusions to gross
income. Therefore, equitable estoppel does not apply.
C. Doctrine of Collateral Estoppel
Collateral estoppel is used for 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). In collateral estoppel, or issue preclusion, the
judgment in the prior suit precludes, during the subsequent
second suit, the litigation of issues that were actually
litigated and necessary to the outcome of the first suit.
Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979). Furthermore,
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