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the grand jury investigation after receiving permission from the
IRS Regional Commissioner.
CID finished working on both the criminal fraud referral and
the grand jury investigation no later than October 1, 1990. The
U.S. Attorney’s Office ended the grand jury investigation of Mr.
Hoyt on October 2, 1990, without an indictment. The record
before us does not refer to subsequent criminal investigations of
Mr. Hoyt.
On April 17, 1995, petitioners filed a voluntary petition
for bankruptcy in the United States Bankruptcy Court for the
Eastern District of California (bankruptcy court).7 Petitioners'
partnership items in the Hoyt partnerships were converted to
nonpartnership items on that date.8
Respondent mailed notices of deficiency to petitioners on
January 30, 1996. Respondent’s determinations, set forth above,
are based solely on petitioners' involvement in the Hoyt
partnerships.
On April 29, 1996, the bankruptcy court entered an order
granting petitioners' Motion for Relief from the Automatic Stay
7 Petitioners' bankruptcy case, No. 95-23293-A-13, was still
pending at the time the petition was filed.
8 Sec. 301.6231(c)-7T, Temporary Proced. & Admin. Regs., 52
Fed. Reg. 6793 (Mar. 5, 1987), provides that the partnership
items of a partner named as a debtor in a bankruptcy proceeding
become nonpartnership items as of the date the bankruptcy
petition is filed.
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