                          T.C. Memo. 2005-170



                      UNITED STATES TAX COURT



      ROBERT H. GOLDEN AND JUDITH A. GOLDEN, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16694-04L.            Filed July 11, 2005.


     Robert H. Golden and Judith A. Golden, pro sese.

     A. Gary Begun, for respondent.



                          MEMORANDUM OPINION


     DEAN, Special Trial Judge:     This case is before the Court on

respondent’s motion for partial summary judgment filed pursuant

to Rule 121.   All Rule references are to the Tax Court Rules of

Practice and Procedure.    All section references are to the

Internal Revenue Code of 1986, as amended.
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     The motion arises in the context of a petition filed in

response to a notice of determination concerning collection

action under section 6330 sent to petitioners and a notice of

determination concerning relief from joint liability under

section 6015 sent to Ms. Golden.   Respondent moves for partial

summary judgment with respect to collection issues other than Ms.

Golden’s request for spousal relief.     The section 6015 claim will

be dealt with separately at a later date.

                            Background

Origin of the Tax Liabilities

     As alleged in the petition in this case, in 1976 and 1977,

Robert H. Golden (petitioner) invested $29,000 in a partnership

in which he had no management duties and with which he had

minimal contact.   Petitioners claimed tax losses on their joint

Federal income tax returns for the years 1974 through 1981 using

information sent to them in yearly Schedules K-1, Partner’s Share

of Income Deductions, Credits, etc.

     Further, according to the petition, during 1981 petitioners

were advised by the Internal Revenue Service (IRS) that the

partnership was under investigation and that losses generated by

the partnership might be disallowed.     The petition alleges that

for several years petitioners agreed to extend the period of

limitations while IRS investigated the partnership.
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     Attached to respondent’s motion for partial summary judgment

is a partial copy of a statutory notice of deficiency dated June

1, 1990, issued to petitioners for the following years and

amounts:

                    Year      Deficiency

                    1974       $1,551.00
                    1977       16,718.00
                    1978        5,567.00
                    1979        6,706.30
                    1980        4,166.00
                    1981        3,994.00

     Also attached to respondent’s motion is a copy of a

stipulated decision of this Court, entered February 7, 1994, in

the case of Robert H. Golden and Judith A. Golden, docket No.

18777-90, ordering and deciding that there are deficiencies in

income taxes due from petitioners as follows:

                    Year      Deficiency

                    1974       $1,551.00
                    1977        2,218.00
                    1978        5,567.00
                    1979        6,706.30
                    1980        4,166.00
                    1981        3,994.00

Evidence of the Assessments

     Certified copies of Forms 4340, Certificate of Assessments,

Payments, and Other Specified Matters, attached as exhibits to

respondent’s motion, show that the above-stipulated deficiencies

were assessed by the IRS on May 10, 1994.   Petitioners were

subsequently notified of their outstanding tax liabilities by
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letter, and on August 20, 2003, were issued a notice of intent to

levy and advised of their right to a hearing.   On September 16,

2003, respondent received a Form 12153, Request For A Collection

Due Process Hearing, dated by petitioners as September 15, 2003.

Petitioners’ Allegations of Error

     In their petition, petitioners allege a number of “Counts”,

which in essence raise three issues:    (1) That the expiration of

the period of limitations on assessment, and the expiration of

the period of limitations for collections each bar respondent

from collecting liabilities for the years at issue; (2) that the

partnership investments that generated the liabilities were not

tax-motivated transactions warranting increased interest, and (3)

that Judith A. Golden is entitled to section 6015 relief.

Respondent’s motion is directed only to the first two issues.

                           Discussion

     Respondent requests in the motion that the Court determine,

as a matter of law, that petitioners cannot contest the

expiration of the period of limitations on assessment, and that

as a matter of law, the period of limitations on collection of

the tax liabilities at issue here has not expired.

Standard for Granting Summary Judgment

     The standard for granting a motion for summary judgment

under Rule 121 is stated in the rule itself.
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     A decision shall * * * be rendered if the pleadings,
     answers to interrogatories, depositions, admissions,
     and any other acceptable materials, together with the
     affidavits, if any, show that there is no genuine issue
     as to any material fact and that a decision may be
     rendered as a matter of law. * * * [Rule 121(b).]

     Rule 121(d) provides that, when a properly supported motion

for summary judgment is made, the adverse party “must set forth

specific facts showing that there is a genuine issue for trial.”

     Respondent poses two legal bases upon which to rest a

favorable ruling on his motion for partial summary judgment.

Respondent argues that as a matter of law, petitioners’ argument

concerning the period of limitations on assessment and the nature

of their partnership investments, potential issues in the prior

Tax Court litigation, are precluded from litigation in this case

due to statutory and caselaw principles.   Respondent also argues

that he has shown that there remains no material issue of fact

with respect to whether the period of limitations on collection

has expired.   The Court agrees with respondent on both issues.

Timely Notice of Deficiency

     Section 6330 Review

     Taxpayers may present at a section 6330 hearing challenges

to the existence or amount of the underlying tax liability “if

the person did not receive any statutory notice of deficiency for

such liability”.   Sec. 6330(c)(2)(B).

     Petitioners’ claims as to whether the statutory notice of

deficiency was issued within the period of limitations constitute
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challenges to the underlying tax liabilities.    Hoffman v.

Commissioner, 119 T.C. 140, 145 (2002); Rodriguez v.

Commissioner, T.C. Memo. 2003-153;     MacElvain v. Commissioner,

T.C. Memo. 2000-320.

     That petitioners received and contested a notice of

deficiency for 1974, 1977, 1978, 1979, 1980, and 1981, resulting

in the entry of a stipulated decision that there are deficiencies

in their income taxes for those years, is not in dispute.

Petitioners are therefore precluded by section 6330(d)(2)(B) from

challenging the amounts of the deficiencies or the timeliness of

the statutory notice as a matter of law.

     Res Judicata

     Petitioners are precluded not only by operation of section

6330(c)(2)(B) from raising the issue of the period of limitations

on assessment; they are so precluded by the doctrine of res

judicata.   At the hearing on respondent’s motion, the Court

questioned petitioner, a practicing attorney, as to the

application of the doctrine of res judicata to this case.     In

petitioners’ brief in opposition to respondent’s motion,

petitioners assert that the questioning by the Court was a

surprise because “Res Judicata was not mentioned in the written

motion by the Respondent”.   The Court calls petitioners’

attention to pages 16 through 20 of respondent’s motion.      There,

respondent argues that due to the application of the doctrine of
                               - 7 -

res judicata petitioners are precluded from questioning here the

validity of the notice of deficiency that were the subject of the

prior litigation.

     The Supreme Court in Commissioner v. Sunnen, 333 U.S. 591,

597 (1948), summarized the judicial doctrine of 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, 24 L.Ed. 195. 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 tax

litigation the Court stated:

     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.   Hemmings v. Commissioner, 104 T.C. 221, 233 (1995).

It has also been held that “the Tax Court’s jurisdiction, once it
                                 - 8 -

attaches, extends to the entire subject of the correct tax for

the particular year.”   Erickson v. United States, 159 Ct. Cl.

202, 309 F.2d 760, 767 (1962).

     An agreed or stipulated judgment is a judgment on the merits

for purposes of res judicata.     In re Baker, 74 F.3d 906, 910 (9th

Cir. 1996); see also United States v. Intl. Bldg. Co., 345 U.S.

502, 503-506 (1953) (recognizing res judicata effect of

stipulated Tax Court decisions); accord Erickson v. United

States, supra at 768; Krueger v. Commissioner, 48 T.C. 824, 828-

829 (1967).

     Respondent issued to petitioners a notice of deficiency with

respect to the subject taxable years, petitioners petitioned for

redetermination, and the case was concluded without trial by

entry of a stipulated decision on February 7, 1994.    Here,

petitioners would like to argue that the statutory notice of

deficiency was issued outside the period of limitations for the

years involved.   Petitioners could have made this challenge in

their pleadings in the earlier Tax Court proceeding as an

affirmative defense under Rule 39, Pleading Special Matters.

     The validity of the notice of deficiency is a matter that

could have been raised and litigated in connection with the

deficiency proceeding, involving these same petitioners, and the

same tax years.   Because the decision in that case was not

appealed and has since become final, res judicata precludes
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petitioners from now disputing the amounts of the deficiencies or

the timeliness of the statutory notice in this collection action.

See Newstat v. Commissioner, T.C. Memo. 2004-208.

Period of Limitations on Collection

     Petitioners argue that even if the period of limitations on

assessment had not expired when the notice was issued, or the

issue is precluded from dispute here, respondent’s proposed

collection action is outside the period of limitations on

collection.

     Section 6502, Collection After Assessment, provides that

where an assessment has been timely made, the tax may be

collected by levy or proceeding that is begun “within 10 years

after the assessment of the tax”.   The Forms 4340 show that the

stipulated deficiencies entered by the Court’s decision of

February 7, 1994, were assessed by the IRS 92 days later, on May

10, 1994.   After a notice of deficiency is mailed, the running of

the period of limitations on assessment is suspended until the

decision of the Tax Court becomes final, after 90 days without an

appeal, and for 60 days thereafter.    Sec. 6503; see also secs.

7481, 7483.1




     1
      Although not specifically framed by petitioners, their
general argument that “the statute of limitations on assessment
had run” could subsume the argument that the assessments after
entry of decision were untimely. As can be seen from the
pertinent dates, the assessments were in fact timely made.
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     On August 20, 2003, respondent issued a notice of intent to

levy and right to a hearing for the tax years at issue.      On

September 16, 2003, respondent received petitioners’ request for

a hearing under section 6330.    The date petitioners mailed their

request for a hearing under section 6330 was less than 10 years

from the date of the assessments.    Once the request for hearing

was made, the running of the period of limitations on collection

was suspended and remains suspended until the 90th day after the

day on which there is a final determination in this case.      Sec.

6330(e)(1); Boyd v. Commissioner, 117 T.C. 127, 130-131 (2001);

sec. 301.6330-1(g), Proced. & Admin. Regs.

     Petitioners argue that there “must have been” earlier

assessments for the years at issue.      There “must have been”

earlier assessments because there was an assessment in 1987 for a

year not at issue, 1976,2 that was “from the same source”, the

partnership, according to petitioners.      Indeed, petitioners

sought formal discovery from respondent of any documents that

would show assessments for the years at issue other than those

made after the Court’s entry of decision.      Respondent denied the

existence of any such assessments, offering Forms 4340 as proof.




     2
      In petitioners’ brief in opposition to respondent’s motion
and at oral argument on the motion, petitioners identify the year
as 1977 but a Copy of Form 668, Certificate of Release of Federal
Tax Lien, attached to petitioners’ brief, refers to “Tax Period
Ending” Dec. 31, 1976.
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Petitioners have provided no evidence that any assessments of tax

for the years at issue ever took place prior to May 10, 1994.

     Respondent, after adequate time for discovery, has made a

showing from the record of a complete failure of proof concerning

an essential element of petitioners’ claim, and on which

petitioners would bear the burden of proof at trial.    Rule

142(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-323

(1986).    There can be no genuine issue as to any material fact

with respect to petitioners’ claim that the period of limitations

for collection has expired.    Because petitioners have failed to

set forth specific facts showing that there is a genuine issue

for trial as to the expiration of the period of limitations on

collection, respondent is entitled to a summary disposition in

his favor.    Rule 121(d).

                              Conclusion

     The Court finds as a matter of law that petitioners are

barred from contesting the existence, amounts, and timeliness of

the underlying assessments in this case, and that the period of

limitations on collection of the assessments here has not

expired.


                                     An appropriate order will

                                be issued granting respondent’s

                                motion for partial summary

                                judgment.
