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III. Res Judicata
A. In General
The Supreme Court in Commissioner v. Sunnen, 333 U.S. 591,
597 (1948), summarized res judicata, also known as claim
preclusion, as follows:
The rule provides that 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.” Cromwell v. County of Sac, 94 U.S. 351,
352. The judgment puts an end to the cause of action,
which cannot again be brought into litigation between
the parties upon any ground whatever, absent fraud or
some other factor invalidating the judgment. * * *
As to the application of the doctrine in the context of
income tax litigation the Court stated in Sunnen:
Income taxes are levied on an annual basis. Each year
is the origin of a new liability and of a separate
cause of action. Thus if a claim of liability or non-
liability relating to a particular tax year is
litigated, a judgment on the merits is res judicata as
to any subsequent proceeding involving the same claim
and the same tax year. * * * [Id. at 598.]
As a general rule, where the Tax Court has entered a
decision for a taxable year, both the taxpayer and the
Commissioner (with certain exceptions) are barred from reopening
that year. Burke v. Commissioner, 105 T.C. 41, 47 (1995);
Hemmings v. Commissioner, 104 T.C. 221, 233 (1995). It has also
been held that “the Tax Court’s jurisdiction, once it attaches,
extends to the entire subject of the correct tax for the
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