                        T.C. Memo. 2010-221


                      UNITED STATES TAX COURT


               WALTER OLIVER MELVIN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 5273-08, 609-09.        Filed October 12, 2010.



     Walter Oliver Melvin, pro se.

     Michael J. Gabor, for respondent.



                         MEMORANDUM OPINION


     COHEN, Judge:   In these consolidated cases, respondent

determined deficiencies in income tax and penalties for 2005 and

2006 as follows:

                                Accuracy-Related Penalties
         Year      Deficiency    Sec. 6662(a) and (b)(1)

         2005        $4,475                $895
         2006        $1,500                $300
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After a concession by petitioner, the issues for decision are:

(1) Whether petitioner is estopped under the doctrine of

collateral estoppel from litigating the validity of the alimony

deductions he claimed for the years in issue; and (2) whether he

is liable for the penalties under section 6662.    All section

references are to the Internal Revenue Code in effect for the

years in issue, and all Rule references are to the Tax Court

Rules of Practice and Procedure.

                             Background

     All of the facts have been stipulated, and the stipulated

facts are incorporated as our findings by this reference.

Petitioner resided in Florida at the time he filed his petition.

     Petitioner was married to Barbara A. Melvin until they

divorced in 1985.    During the marriage, petitioner was a

practicing attorney.    On May 8, 1985, the General Court of

Justice, Cumberland County, North Carolina, issued a judgment of

divorce which ordered petitioner, among other things, to pay his

former wife $500 a month, or $6,000 a year in “permanent

alimony.”   Consequently, the court required petitioner to

transfer significant property and funds to meet his obligation

under the order.    He did not, however, transfer any money or

property to his former wife in 2005 or 2006.

     On each of his 2005 and 2006 Federal income tax returns,

petitioner claimed a $6,000 deduction under section 215 for
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alimony.    The Internal Revenue Service (IRS) sent petitioner a

notice of deficiency for 2005 on January 18, 2008, and for 2006

on October 14, 2008.    The notices:    (1) Determined a deficiency

for each of the years in issue because of improper alimony

deductions; and (2) imposed accuracy-related penalties under

section 6662(a).    The statutory notice for 2005 also determined a

deficiency for home mortgage interest deductions petitioner

claimed which he has since conceded were improper.

     Petitioner previously brought a case in this Court disputing

the IRS’ determination that the alimony deduction he claimed on

his 2003 Federal income tax return was erroneous.      Melvin v.

Commissioner, T.C. Memo. 2008-115 (Melvin I), affd. 303 Fed.

Appx. 791 (11th Cir. 2008).    In that case, this Court ruled in

favor of the IRS because the plain language of section 215 limits

alimony deductions to payments made during the taxable year.       Id.

The Court of Appeals for the Eleventh Circuit affirmed our

decision.

                              Discussion

     Petitioner contests respondent’s determination that he is

not permitted a deduction for alimony in 2005 or 2006.     The

transfers made by way of the State court judgment in prior years

are the only bases petitioner has offered for those deductions.

Respondent contends, among other things, that petitioner’s

argument is precluded by collateral estoppel.
                                - 4 -

Collateral Estoppel

     Once an issue has been litigated, collateral estoppel may

apply.    In Monahan v. Commissioner, 109 T.C. 235, 240 (1997), we

stated:

          The doctrine of issue preclusion, or collateral
     estoppel, provides that, once an issue of fact or law
     is “actually and necessarily determined by a court of
     competent jurisdiction, that determination is
     conclusive in subsequent suits based on a different
     cause of action involving a party to the prior
     litigation.” Montana v. United States, 440 U.S. 147,
     153 (1979) (citing Parklane Hosiery Co. v. Shore, 439
     U.S. 322, 326 n.5 (1979)). * * *

Under the doctrine of collateral estoppel, (1) the issue to be

decided in the second case must be identical in all respects to

the issue decided in the first case, (2) a court of competent

jurisdiction must have rendered a final judgment in the first

case, (3) a party may invoke the doctrine only against parties to

the first case or those in privity with them, (4) the parties

must have actually litigated the issue and the resolution of the

issue must have been essential to the prior decision, and (5) the

controlling facts and legal principles must remain unchanged.

See Hi-Q Pers., Inc. v. Commissioner, 132 T.C. 279, 289 (2009);

Peck v. Commissioner, 90 T.C. 162, 166-167 (1988), affd. 904 F.2d

525 (9th Cir. 1990).

     Respondent argues that petitioner should be estopped under

the doctrine of collateral estoppel from asserting that the

alimony deductions he claimed in 2005 and 2006 were proper
                               - 5 -

because this Court already adjudicated the issue for petitioner’s

2003 tax year.   Although each tax year is a separate cause of

action, collateral estoppel may still apply to preclude a

taxpayer from relitigating identical issues for multiple years.

See Peck v. Commissioner, supra at 165-166; Berry v.

Commissioner, T.C. Memo. 1990-646.

     Petitioner contends that he is not attempting to relitigate

the same issue from Melvin I but offers no coherent argument to

support this assertion.   He does not dispute that he fully

litigated the validity of the alimony deduction he claimed in

2003 under identical circumstances and admits that there has been

no change in law or facts to justify a different outcome.     He

remains a resident of Florida, so appellate venue is unchanged.

Petitioner merely continues to assert the correctness of his

interpretation of the law, relying exclusively on Hawkins v.

Commissioner, 86 F.3d 982 (10th Cir. 1996) (involving the

question of whether a marital settlement agreement incorporated

into a divorce decree constituted a qualified domestic order),

revg. 102 T.C. 61 (1994).   In Melvin I, this Court already held

that case to be inapplicable to these facts.   A party’s

disagreement with a court’s reasoning does not bar the

application of collateral estoppel.    Sydnes v. Commissioner, 74

T.C. 864, 869 (1980), affd. 647 F.2d 813 (8th Cir. 1981).
                               - 6 -

     Collateral estoppel bars petitioner from relitigating the

deductibility of alimony paid in years other than those before

the Court.   Although we need not consider the merits of his

arguments, he is not entitled to an alimony deduction in 2005 or

2006 for the reasons stated in Melvin I.

Section 6662 Accuracy-Related Penalties

     Petitioner contests the imposition of accuracy-related

penalties for the tax years in issue.     Section 6662(a) and (b)(1)

imposes a 20-percent accuracy-related penalty on any underpayment

of Federal income tax attributable to a taxpayer’s negligence or

disregard of rules or regulations.     Section 6662(c) defines

negligence as including any failure to make a reasonable attempt

to comply with the provisions of the Internal Revenue Code and

defines disregard as any careless, reckless, or intentional

disregard.   Disregard of rules or regulations is careless if the

taxpayer does not exercise reasonable diligence to determine the

correctness of a tax return position that is contrary to the rule

or regulation.   Sec. 1.6662-3(b)(2), Income Tax Regs.

     Under section 7491(c), the Commissioner bears the burden of

production with regard to penalties and must come forward with

sufficient evidence indicating that it is appropriate to impose

penalties.   See Higbee v. Commissioner, 116 T.C. 438, 446 (2001).

However, once the Commissioner has met the burden of production,

the burden of proof remains with the taxpayer, including the
                              - 7 -

burden of proving that the penalties are inappropriate because of

reasonable cause or substantial authority.   See Rule 142(a);

Higbee v. Commissioner, supra at 446-447.

     Respondent has met the burden of production.    The plain

language of section 215 expressly limits alimony deductions to

payments made during the taxable year.   See, e.g., Melvin v.

Commissioner, 303 Fed. Appx. 791 (11th Cir. 2008).    Respondent

has shown that petitioner improperly claimed alimony deductions

based exclusively on transfers he made in prior years, contrary

to any reasonable interpretation of the statute.

     The accuracy-related penalty under section 6662(a) is not

imposed with respect to any portion of the underpayment as to

which the taxpayer acted with reasonable cause and in good faith.

Sec. 6664(c)(1); Higbee v. Commissioner, supra at 448.    The

decision as to whether a taxpayer acted with reasonable cause and

in good faith is made on a case-by-case basis, taking into

account all of the pertinent facts and circumstances.    See sec.

1.6664-4(b)(1), Income Tax Regs.   “Circumstances that may

indicate reasonable cause and good faith include an honest

misunderstanding of fact or law that is reasonable in light of

all of the facts and circumstances, including the experience,

knowledge, and education of the taxpayer.”   Id.

     Petitioner does not separately address the penalty issue.

He simply pursues the same arguments previously rejected.    The
                                - 8 -

authorities petitioner relies on are entirely irrelevant and

could not reasonably be considered to support his argument.

Educated as an attorney, petitioner should have recognized that

his claimed deductions were contrary to the express terms of

section 215.   Petitioner has not met his burden of demonstrating

reasonable cause or good faith for the underpayment, and we

sustain respondent’s determination on this issue.

     We have considered the other arguments of the parties, and

they either are without merit or need not be addressed in view of

our resolution of the issues.   For the reasons explained above,


                                        Decisions will be entered

                                  for respondent.
