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Between 1986 and 1988, Revenue Agent Ray Ealy (Ealy)
corresponded with Winer and/or Jacobson regarding the Davenport
audit. Ealy addressed his correspondence to Winer as TMP of
Davenport, and Winer identified himself as TMP in his dealings
with Ealy. Winer testified that he believed the documents from
the IRS were addressed to him as TMP because that was his
"administrative function".
In November 1987, Ealy sent his summary report on the
Davenport audit to Winer. Ealy's summary report disallowed the
deductions and credits attributable to the Sentinel EPS recyclers
on the primary ground that the recycler transactions were a sham
and lacking in economic substance. Winer informed Ealy on
November 26, 1987, that he did not agree with Ealy's summary
report. A closing conference was scheduled for January 10, 1988,
in order to give Winer time to contact the other partners.
Winer disagreed with the IRS's appraisal report, which placed a
value of $200,000, or $50,000 each, on the Sentinel EPS
recyclers. On January 7, 1988, Winer informed Ealy that he had
received no response from any of the partners, and therefore,
there was no need for a closing conference. Winer told Ealy that
as TMP he would prefer to proceed through the IRS Appeals
process.
Respondent issued an examination report to Winer as TMP of
Davenport on May 2, 1988. In the examination report, respondent
disallowed all deductions and credits claimed with respect to
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