Richard K. and Marilyn J. Phillips - Page 20




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               For example, in the case of criminal tax investigations,               
          partnership items would not be treated as nonpartnership items              
          unless a partner:  (1) Was notified that he was the subject of a            
          criminal tax investigation; and (2) received written notification           
          that his partnership items would be treated as nonpartnership               
          items.  See sec. 301.6231(c)-5T, Temporary Proced. & Admin.                 
          Regs., 52 Fed. Reg. 6793 (Mar. 5, 1987).  Therefore, the timing             
          of the treatment of a partner's partnership items as                        
          nonpartnership items is specified in each regulation.                       
               Section 301.6231(c)-5T, Temporary Proced. & Admin. Regs.,              
          supra, consists of three sentences.  Petitioners dispute                    
          respondent’s interpretation of the regulation and contend that              
          the second and third sentences solely address:  (1) Which                   
          partnership items become nonpartnership items; and (2) when                 
          partnership items are converted to nonpartnership items.                    
          Petitioners also contend that the last two sentences of the                 
          regulation conflict with the first sentence and with the language           
          of section 6231(c).  In sum, petitioners urge this Court to read            
          the first sentence of section 301.6231(c)-5T, Temporary Proced. &           
          Admin. Regs., supra, in isolation, divorced from the regulation             
          as a whole.                                                                 
               Petitioners' interpretation of the interaction between                 
          section 6231(c) and section 301.6231(c)-5T, Temporary Proced. &             









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