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AVA has failed to prove that, on September 30, 1988, when
Mr. Schreiber signed the AVA Form 872-P for 1985, he had a
conflict of interest with the limited partners such that he was
prevented from acting as a representative of those limited
partners. Compare Transpac Drilling Venture 1983-12 v.
Commissioner, 147 F.3d 221, 227-228 (2d Cir. 1998) (“In sum, the
criminal investigation created an overwhelming pressure on TMPs
to ignore their fiduciary duties to the limited partners. As
such, we cannot let them bind these partnerships"), revg. and
remanding T.C. Memo. 1994-26 (fn. ref. omitted) with Phillips v.
Commissioner, 114 T.C. 115 (2000) (distinguishing Transpac
Drilling Venture on the grounds that, in Phillips (1) the limited
partners had not refused to sign extensions, (2) the general
partner had not been indicted or convicted of a tax felony and
was not cooperating with the Government as a witness, and (3) the
IRS had not misled partners about the existence of a criminal
investigation or instructed the general partner to say nothing
about it). This case is governed by Phillips and not Transpac
Drilling Venture. AVA has not claimed that any limited partners
refused to sign any consent. Also, as stated, AVA professes
that, when Mr. Schreiber signed the AVA Form 872-P for 1985, he
was unaware of any criminal investigation. Given that
representation, it is unlikely that he was cooperating with the
Government as a witness in a criminal investigation. Indeed, the
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