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Commissioner v. Sunnen, 333 U.S. 591, 597 (1948); Thurner v.
Commissioner, 121 T.C. 43, 50 (2003). Because Federal income
taxes are determined on an annual basis, each year is a separate
cause of action, and res judicata is applied to bar subsequent
proceedings involving the same tax year. Commissioner v. Sunnen,
supra at 598; Calcutt v. Commissioner, 91 T.C. 14, 21 (1988).
Tax Court decisions reached by agreement constitute a final
judgment on the merits for purposes of res judicata. See United
States v. Shanbaum, 10 F.3d 305, 313 (5th Cir. 1994); Trent v.
Commissioner, T.C. Memo. 2002-285. The Court entered a
stipulated decision in the prior proceeding with respect to the
tax liabilities for 1995 and 1996. The decision is final because
petitioner and Mr. Pacheco did not appeal the stipulated decision
within the requisite time under the statute. See secs.
7481(a)(1), 7483.
Section 6015(g)(2), however, modifies the common law
doctrine of res judicata with regard to claims under section
6015. Section 6015(g)(2) provides in relevant part:
SEC. 6015(g). Credits and Refunds.--
* * * * * * *
(2) Res judicata.-- In the case of any
election under subsection (b) or (c), if a
decision of a court in any prior proceeding
for the same taxable year has become final,
such decision shall be conclusive except with
respect to the qualification of the
individual for relief which was not an issue
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