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Of particular relevance to the instant case is section
301.6404-2T(b)(2), Example (3), Temporary Proced. & Admin. Regs.,
supra, which provides the following:
A taxpayer invested in a tax shelter and reported a loss
from the tax shelter on the taxpayer's income tax return.
Internal Revenue Service personnel conducted an extensive
examination of the tax shelter, and the processing of the
taxpayer's case was delayed during such examination.
Because the period of limitations on assessment was about to
expire, the taxpayer executed a consent to extend the period
of limitations. The time required to process the taxpayer's
case was not a result of a delay in performing a ministerial
act; consequently, interest attributable to this period
cannot be abated * * *.
Example 3 was neither incorporated into the final regulations nor
cited by respondent in the instant case, although it appears to
be applicable to the instant case.10
TLP's tax matters partner and its attorney executed a Form
872-O extending the period of limitations indefinitely. Although
the Form 872-O was never revoked or terminated for the duration
of the examination, review, and appeal of the TLP case, we do not
interpret Example 3 so broadly as to conclude that the parties'
extension of the period of limitations means that respondent
could not commit an error or delay in performing a ministerial
act during that period. We conclude that, even where an
extension of the period of limitations is granted, there may be
instances where an error or delay by an officer or employee of
the IRS in performing a ministerial act may present a
10 See supra note 9.
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