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of Shane was transferred to the Danish Breeder's Group of
Copenhagen, Denmark (Danish Breeder's), in the records of the
USTA. An unsigned copy of the partnership agreement attached to
the private placement memorandum was submitted in March 1987 to
the USTA in order to show the source of authority to sell Shane
to Danish Breeder's.
Procedural Background
The partnership filed returns on a calendar year basis and
filed its 1983 return timely on April 15, 1984. In 1986,
respondent was conducting an audit of the partnership's 1983 tax
year.
At all times, Mr. Farley handled the audit with Revenue
Agent James Schrmack. On or about May 12, 1986, Mr. Schrmack and
Mr. Farley met to go over the audit. During this meeting, Mr.
Schrmack advised Mr. Farley that a notice of the beginning of
examination for 1983 had to be sent out to the partnership and
that a tax matters partner (TMP) had to be named for the
partnership. Because it was probable that the period of
limitations would have to be extended, Mr. Schrmack needed
someone with whom he could conduct the examination, and someone
who could sign a consent to extend the period of limitations.
Mr. Schrmack advised Mr. Farley that, in the event a TMP was not
named, Mr. Schrmack would have to get Mr. Jonell to sign such a
consent. Absent a valid extension, the expiration date for the
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