1993 Tax Ct. Memo LEXIS 24">*24 An order will be issued granting petitioner's motion for partial summary judgment in Docket No. 7174-92.
An order will be issued denying petitioner's motion for partial summary judgment in Docket No. 7175-92.
MEMORANDUM OPINION
PANUTHOS,
Additions to Tax | ||||
Sec. | Sec. | Sec. | ||
Year | Deficiency | 6653(b)(1) | 6653(b)(2) | 6661 |
1983 | $ 33,649 | $ 16,825 | 1 | $ 8,412 |
1984 | 18,097 | 9,048 | 4,524 | |
1985 | 34,118 | 17,059 | 8,529 |
Additions to Tax | |||
Sec. | Sec. | ||
Year | Deficiency | 6651(a)(1) | 6653(b)(1) |
1983 | $ 165,498 | ($ 2,242) | $ 104,567 |
1984 | 164,324 | (8,570) | 148,555 |
1985 | 150,708 | -- | 75,354 |
1986 | 95,021 | -- | -- |
Additions to Tax | ||||
Sec. | Sec. | Sec. | Sec. | |
Year | 6653(b)(2) | 6653(b)(1)(A) | 6653(b)(1)(B) | 6661 |
1983 | 1 | -- | -- | $ 41,374 |
1984 | -- | -- | 41,081 | |
1985 | -- | -- | 30,177 | |
1986 | -- | $ 71,266 | 23,755 |
In her answer to the petition in docket No. 7175-92, respondent alleges that petitioner Elvin P. Yarbrough (hereinafter Yarbrough) should be estopped from denying fraud for the 1983 tax year because of Yarbrough's prior criminal conviction under sections 7201 and 7206(2). Further in her answer to the petition in docket No. 7174-92, respondent alleges that petitioner1993 Tax Ct. Memo LEXIS 24">*26 Yarbrough Oldsmobile Cadillac, Inc. (hereinafter Yarbrough Oldsmobile), should be estopped from denying fraud for the 1983 tax year because of Yarbrough's prior criminal conviction under section 7206(2).
At the time the petitions were filed herein, Yarbrough Oldsmobile had its principal office in St. Augustine, Florida, and Yarbrough resided in St. Augustine, Florida.
The parties do not dispute that Yarbrough was convicted under section 7201 with respect to his individual liability for the taxable year 1983 and that Yarbrough was also convicted under section 7206(2) with respect to the liability of Yarbrough Oldsmobile for its 1983 taxable year. The conviction on both charges was the result of an "Alford plea". 2
The motions to strike present two issues: (1) In each docket, petitioners contend that the "Alford" plea1993 Tax Ct. Memo LEXIS 24">*27 should be considered a plea of nolo contendere and that, therefore, collateral estoppel should not apply. 3 (2) In docket No. 7174-92, Yarbrough Oldsmobile also argues that respondent's allegations of collateral estoppel should be stricken with respect to the section 7206(2) conviction of Yarbrough because Yarbrough Oldsmobile was not a party to the criminal proceeding.
In Motions to strike under
We note that the issues raised by the parties involve disputed and substantial questions of law and, accordingly, a motion to strike would not appear to be the appropriate means of resolving1993 Tax Ct. Memo LEXIS 24">*29 the questions. See, e.g.,
We first consider the issue of whether petitioners are collaterally estopped from denying fraud in this proceeding as the result of a prior criminal conviction based on an "Alford plea". In
It is clear that the Court of Appeals1993 Tax Ct. Memo LEXIS 24">*31 for the Eleventh Circuit (the Court to which this case would be appealable) has determined that collateral estoppel applies equally to a conviction based on a guilty plea as to a conviction based on a trial on the merits.
We now consider Yarbrough Oldsmobile's motion insofar as it seeks to prohibit respondent from asserting collateral estoppel against it with respect to the conviction of Yarbrough under section 7206(2). We have considered this very issue previously and held that "a corporation is not collaterally estopped by the conviction of its president and principal stockholder for filing or causing the corporation to file false and fraudulent corporate returns".
Respondent cites We regard as inapposite cases holding that in some circumstances a stockholder may be bound by a prior adjudication in a suit brought by his corporation: The proposition that the corporation's acts may bind the stockholder * * * does not support the converse proposition. * * * [
The controlling case law clearly holds that a corporation is not collaterally estopped by a prior adjudication involving a shareholder. The corporation is entitled to be heard on the question of whether any part of its underpayment was due to fraud. Thus, it is clear that, as a matter of law, respondent is not entitled to rely on the doctrine of collateral estoppel to prove fraud against petitioner Yarbrough Oldsmobile.
To reflect the foregoing,
1. All section references are to the Internal Revenue Code unless otherwise noted. All Rule references are to the Tax Court Rules of Practice and Procedure unless otherwise noted.↩
1. 50 percent of the interest due on the deficiency.↩
1. 50 percent of the interest due on the deficiency.↩
2. An "Alford plea" is a guilty plea entered by a defendant who nevertheless claims to be innocent. See
3.
4. In