On Nov. 17, 1983, U.S. Customs agents seized $ 359,500 in cash from P as he and his wife were attempting to enter Canada from the United States. On the same day, R made a termination assessment against P under sec. 6851, I.R.C. On Oct. 11, 1984, after P failed to file an income tax return, R mailed P a notice of deficiency for P's 1983 taxable year, which P timely petitioned to this Court on Jan. 9, 1985. The proceedings in this Court were stayed pending a criminal tax evasion charge being prosecuted against P and a forfeiture proceeding against the seized funds. R brought suit in U.S. District Court to reduce the termination assessment to judgment, obtaining summary judgment against P. P appealed to the U.S. Court of Appeals for the Second Circuit, which affirmed the District Court. In the instant case, R contends that the District Court judgment is res judicata which prevents P from contesting his 1983 tax liability in the instant case. Held, the District Court judgment is not res judicata in the instant case.
Murray Appleman, for petitioner.
Catherine Chastanet, for respondent.
Wells, Judge.
WELLS
*531 OPINION
*79 WELLS, Judge: The instant case is before us on respondent's motion for summary judgment Additions to tax
*533 Separately, a forfeiture case was proceeding in the U.S. District Court for the Western District of New York with respect to the $ 359,500 in cash seized from petitioner by the U.S. Customs agents on November 17, 1983. United States v. $ 359,500 in United States Currency, 638">645 F. Supp. 638 (W.D.N.Y. 1986), revd. and remanded 828 F.2d 930">828 F.2d 930 (2d Cir. 1987) (the forfeiture case). In the forfeiture case, the District Court held that a civil forfeiture, based on a failure to declare currency prior to transporting it out of the country, requires that the owner of the currency have actual knowledge of an obligation to report the currency. The District Court held that even if the statute does not require actual knowledge, some notice must be provided as a matter of due process, and because it was undisputed that no signs or other form of notice existed, the owner could*83 not be deprived of the currency. The Court of Appeals reversed, holding that actual knowledge of an obligation to report the currency was not required. Additionally, the Court of Appeals remanded the forfeiture case for a decision as to whether the notice required by due process could be satisfied by charging petitioner with constructive knowledge of an obligation to report. Petitioner's response to the instant motion states that the District Court has not, as of filing his response, decided such issue.
Rule 121(b) provides that summary judgment may be rendered if the pleadings and admissions show that no genuine issue exists as to any material fact and that a decision may be rendered as a matter of law. Naftel v. Commissioner, 85 T.C. 527">85 T.C. 527, 529 (1985). The moving party bears the burden of proving that no genuine issue of material fact exists. Marshall v. Commissioner, 85 T.C. 267">85 T.C. 267, 271 (1985). The facts are viewed in a light most favorable to the nonmoving party. Jacklin v. Commissioner, 79 T.C. 340">79 T.C. 340, 344 (1982).
Respondent contends that the doctrine of res judicata prevents petitioner*84 from contesting his Federal income tax liability for his 1983 taxable year. Respondent contends that res judicata applies in the instant case because the District Court decided, on the merits, that petitioner is liable for income taxes for taxable year 1983 in the amount of $ 169,981 plus statutory interest as allowed by law. Petitioner argues that the District Court decision is not res judicata because the Tax Court's jurisdiction to determine a deficiency *534 in the instant case would be usurped and that a decision prior to the conclusion of the forfeiture case would be a duplicative use of judicial resources.
The doctrine of res judicata is founded in the public policy that litigation must end and that the result should bind those who have contested the issue. Shaheen v. Commissioner, 62 T.C. 359">62 T.C. 359, 363 (1974). Generally, res judicata applies to repetitious suits involving the same cause of action. Commissioner v. Sunnen, 333 U.S. 591">333 U.S. 591, 597 (1948). The rule of res judicata provides:
that when a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to*85 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." 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. [Commissioner v. Sunnen, 333 U.S. 591">333 U.S. 591, 597 (1948); citations omitted.]
When a claim of 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." Commissioner v. Sunnen, supra at 598.
When a termination assessment is determined by the Secretary to be justified, the tax is assessed and becomes immediately due and payable. Sec. 6851(a)(1); sec. 1.6851-1(a), Income Tax Regs. The tax so assessed is tax for the period beginning on the first day of the current taxable year and ending on the date of the assessment. Sec. 6851(a)(2); sec. 1.6851-1(a)(2), Income Tax*86 Regs. Consequently, the termination assessment terminates the taxable year for the purpose of computing the amount of tax to be assessed and collected under the expedited termination assessment procedure. In the instant case, that termination occurred on November 17, 1983. It, however, did not terminate the taxable year for all purposes, and it clearly did not cut short the taxable year for the purpose of issuing a notice of deficiency. The termination of the taxable year does not create 2 short taxable years; the taxpayer's taxable year remains the same. Ramirez v. Commissioner, 87 T.C. 643">87 T.C. 643, 647 (1986). Section 6851(b) requires that a notice of deficiency based on the taxpayer's "full taxable year (determined without regard to any *535 action taken under subsection (a))" be sent after the assessment under section 6851.
There is no indication that the District Court decided the merits of petitioner's tax liability for the entire 1983 taxable year when it rendered summary judgment for taxes and interest petitioner owed pursuant to the termination assessment. For example, if petitioner had a loss which he recognized on or after November 18, 1983, and before January 1, 1984, it could affect tax liability for the entire 1983 taxable year. Consequently, it is entirely possible that the amount collected as a result of the termination assessment, which must be treated as a payment of tax for *88 1983 under section 6851(a)(3), could result in an overpayment of tax for 1983. Cf. Ramirez v. Commissioner, 87 T.C. 643">87 T.C. 643, 647 (1986).
Although respondent, for the purpose of the instant motion, conditionally concedes the additional income determined in the notice of deficiency in the event we should decide that res judicata applies, such items nonetheless affect petitioner's final tax liability for 1983. Also in issue are the additions to tax determined in the notice of deficiency. As one of the requirements for the application of res judicata is missing in the instant case, that is, a final judgment on the merits of petitioner's tax liability for his entire 1983 taxable year, the doctrine of res judicata does not apply to the instant case.
Our conclusion is supported by the legislative history of section 6851, which was enacted as a part of the Tax Reform *536 Act of 1976, Pub. L. 94-455, 90 Stat. 1520. The legislative history shows that Congress was concerned about determining a taxpayer's tax liability based upon less than a full taxable year. The Joint Committee report states:
Therefore, the Act revises section 6851 to provide that a termination assessment does not end the taxable year for any purpose other than the computation of the amount of tax to be assessed and collected. Also, the language relating to reopening of a taxable year is eliminated. This has the general effect of treating amounts assessed and collected pursuant to termination assessments in a manner similar to the collection of estimated taxes. Such an enforced collection, however, is subject to the administrative and judicial review described above, but it does not have the effect of terminating the taxpayer's taxable year. Rather, such taxable year continues until its normal end.
Congress believes it is appropriate to allow a taxpayer who has been subjected to a termination assessment to contest the ultimate issue of his tax liability in the Tax Court*91 in the same manner as is provided with respect to a taxpayer who has been subjected to a jeopardy assessment. Consequently, the Act provides that within 60 days after the later of the due date of the taxpayer's return for the full taxable year or the date on which the return is actually filed, the Service must send the taxpayer a notice of deficiency.
[Staff of Joint Comm. on Taxation, General Explanation of the Tax Reform Act of 1976, at 363 (J. Comm. Print 1976); fn. refs. omitted.]
Consequently, we hold that petitioner is not foreclosed from his "day in court" in this Court to have his liability for *537 his entire 1983 taxable year decided. Accordingly, we deny respondent's motion. For the same reasons, we deny respondent's motion for damages under section 6673.
To reflect the foregoing,
An appropriate order will be issued.
Footnotes
1. 50 percent of the interest due on the portion of the deficiency due to negligence.↩
1. Respondent filed a document entitled respondent's motion for an order to show cause why petitioner should not be bound by the District Court's determination of petitioner's 1983 Federal income tax liability, which the Court filed as a motion for summary judgment.↩
2. Absent stipulation to the contrary, venue for any appeal of the instant case would lie in the Second Circuit.↩
3. Laing v. United States, 423 U.S. 161">423 U.S. 161↩ (1976).