                       T.C. Memo. 1998-201



                     UNITED STATES TAX COURT


                TIMOTHY S. BRUMLIK, Petitioner v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent

   TIMOTHY S. BRUMLIK AND PATRICIA A. BRUMLIK, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket Nos. 21393-90, 21394-90.           Filed June 2, 1998.




     Burton L. Bruggeman, for petitioners.

     Benjamin A. de Luna, for respondent.




                       MEMORANDUM OPINION


     PARR, Judge:   These consolidated cases are before the Court

on respondent's motions for summary judgment filed on December
                                      - 2 -

18, 1997, pursuant to Rule 121.1          The issue for decision is

whether the doctrine of res judicata applies so as to preclude

petitioners from litigating the deficiencies determined by

respondent in this Court.         Respondent, in the notices of

deficiency, dated June 28, 1990, determined deficiencies and

additions to tax as follows:2


                                          Additions to Tax
                       Sec.       Sec.       Sec.      Sec.     Sec.   Sec.
    Year Deficiency 6651(a)(1)16653(a)(1)26653(a)(2) 6653(b)(1) 6654   6661
    1985   $83,708    $20,927    $4,185    $20,891     ---      ---    $20,318
    1986   846,527       ---     42,326    160,465     ---      ---    210,621
    1987   467,494       ---     23,375     58,891     ---      ---    116,874
    1988 1,578,324     74,581    64,916      ---    $210,000 $86,230   144,581
      1
          For 1986 and 1987, sec. 6653(a)(1)(A).
      2
          For 1986 and 1987, sec. 6653(a)(1)(B).


      On September 24, 1990, petitioners filed petitions for a

redetermination of the deficiencies and additions to tax for the

taxable years in issue.         Respondent filed answers to the

petitions on November 5, 1990.

      On April 9, 1991, petitioners filed a petition in the U.S.

Bankruptcy Court for the Middle District of Georgia.             The case




1
     All section references are to the Internal Revenue Code in
effect for the taxable years in issue, and all Rule references
are to the Tax Court Rules of Practice and Procedure, unless
otherwise indicated.
2
     Docket No. 21394-90 refers to 1985 through 1987, and the
notice of deficiency is asserted against Timothy and Patricia
Brumlik. Docket No. 21393-90 refers to 1988 and the notice of
deficiency is asserted against Timothy Brumlik.
                               - 3 -

was subsequently transferred to the U.S. Bankruptcy Court for the

Middle District of Florida (the Bankruptcy Court).

     On August 14, 1991, respondent filed in petitioners'

bankruptcy proceeding a proof of claim and on August 23, 1991,

respondent filed an amended proof of claim on behalf of the

United States reflecting respondent's determination of

petitioners' Federal income tax liabilities for the years in

issue.3   Respondent notified this Court of the bankruptcy

proceedings, and pursuant to 11 U.S.C. sec. 362(a)(8)(1994)

(Bankruptcy Code), this Court on May 17, 1991, stayed all

proceedings in these cases (the automatic stay).

     On November 13, 1991, petitioners filed with the Bankruptcy

Court an objection to respondent's proof of claim and a complaint

for an adversary hearing regarding respondent's proof of claim.

On January 31, 1992, a chapter 11 trustee (the trustee) was

appointed to replace petitioners as the debtor-in-possession.    On

July 7, 1992, the Bankruptcy Court held an adversarial hearing

(the hearing), inter alia, on petitioners' objection to

respondent's proof of claim.   On July 23, 1992, at the conclusion

the hearing, the Bankruptcy Court announced its oral findings.

On May 7, 1993, based on the evidence submitted to the Bankruptcy

Court at the July 7, 1992, hearing, the Bankruptcy Court entered

3
     The proof of claim filed by respondent included the taxable
years 1985 through 1988, which are the years in issue in the
instant cases, as well as 1984, 1989, and 1990, which years are
not before this Court.
                                - 4 -

an order sustaining in part and overruling in part the objection

to respondent's proof of claim, allowing respondent a claim in

the total amount of $1,357,618.07.      The order was modified and

revised on September 16, 1993, whereby respondent's proof of

claim was sustained in the amount of $1,399,945.07.4

      On September 23, 1993, respondent filed with the U.S.

District Court for the Middle District of Florida (the District

Court) an appeal from portions of the Bankruptcy Court's

September 16, 1993, order which granted the trustee's objections

to respondent's claims for Federal income tax liabilities.

Respondent filed a second notice of appeal on October 12, 1993,

and on October 19, 1993, the trustee cross-appealed.      Petitioners

appealed from an order of the Bankruptcy Court which denied their

motion to alter and amend on the ground that it was made pro se

when they had counsel of record.

     On July 3, 1995, respondent notified this Court that the

Bankruptcy Court had lifted the automatic stay, as a discharge

was granted on June 19, 1995.   On July 7, 1995, we lifted the

stay of proceedings in the instant cases and restored them to the

general docket for trial.   On February 9, 1996, respondent filed

motions to continue the Tax Court proceedings herein on the

ground that petitioners would be precluded from relitigating



4
     Of the $1,399,945.07 total amount, $1,161,430 represents the
amount allowed to respondent for 1985 through 1988.
                                - 5 -

these cases once the Bankruptcy Court's order became final.      We

granted respondent's motion to continue on February 16, 1996.

     On April 5, 1996, the District Court affirmed the Bankruptcy

Court's September 16, 1993, order and the order denying

petitioners' motion to alter and amend.     On May 7, 1996,

petitioners filed a notice of appeal to the Court of Appeals for

the Eleventh Circuit (the Eleventh Circuit).     Respondent filed a

notice of appeal on or about June 7, 1996, which was voluntarily

dismissed on or about June 27, 1996.     On February 12, 1997, the

Eleventh Circuit held that petitioners' appeal from that portion

of the District Court's April 5, 1996, order was timely and could

proceed.    On August 1, 1997, the Eleventh Circuit dismissed

petitioners' appeal for lack of prosecution, and the judgment

became final on October 30, 1997.

     On December 18, 1997, respondent, relying on the doctrine of

res judicata, filed summary judgment motions in these cases.

Pursuant to this Court's orders dated December 22, 1997,

petitioners were directed to file, on or before January 30, 1998,

responses to the summary judgment motions.     At petitioners'

request we extended their time to file responses to April 7,

1998.   On April 16, 1998, petitioners moved for a further

extension of time, which we denied.     Petitioners never filed a

response.

     Summary judgment is proper when the record shows "that there

is no genuine issue as to any material fact and that a decision
                               - 6 -

may be rendered as a matter of law."   Rule 121(b).   On the record

before us, there is no genuine issue as to any material fact, and

summary judgment should be granted.

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

597 (1948), explained that the doctrine of res judicata is one of

judicial economy that, in general, prevents parties involved in

prior litigation from relitigating a cause of action once a final

judgment on the merits of the cause of action is rendered by a

court of competent jurisdiction.   See also Freytag v.

Commissioner, 110 T.C. 35, 44-45 & n.7 (1998) (if the bankruptcy

court first decides the common tax issue, its decision is to be

binding upon this Court under principles of res judicata).

     Petitioners and respondent both were parties in the

litigation before the Bankruptcy Court.   Moreover, on at least

two occasions, petitioners represented to the Bankruptcy Court

that they agreed to be bound by its final order.   The Bankruptcy

Court had jurisdiction to determine petitioners' Federal income

tax liabilities for the years in issue, and it did so.     The

Bankruptcy Court's order, dated September 16, 1993, allowing

respondent's claims and setting out the specific amounts of

Federal income taxes owed by petitioners for each of the years in

issue, constituted a final and appealable judgment.      Florida

Peach Corp. v. Commissioner, 90 T.C. 678, 682-683 (1988).

Petitioners appealed to the District Court and then to the

Eleventh Circuit.   The Eleventh Circuit's dismissal of the appeal
                                 - 7 -

rendered the decision of the Bankruptcy Court final for

essentially all purposes.   McQuade v. Commissioner, 84 T.C. 137,

140 (1985).

     Once the order of the Bankruptcy Court becomes final with

respect to respondent's tax claims, generally neither the amount,

nor the validity of the Bankruptcy Court's order is subject to

review or reconsideration by this Court, McQuade v. Commissioner,

supra at 145.

     Accordingly, the doctrine of res judicata is controlling in

the instant cases, and respondent's motions for summary judgment

will be granted.

     To reflect the foregoing,

                                                Appropriate orders

                                          and decisions will be

                                          entered granting

                                          respondent's motions for

                                         summary judgment.
