Richard K. and Marilyn J. Phillips - Page 21




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          Admin. Regs., supra, would negate the two notification                      
          requirements listed in the regulation.                                      
               In Transpac Drilling Venture 1982-16 v. Commissioner, T.C.             
          Memo. 1994-26, revd. Transpac Drilling Venture 1982-12 v.                   
          Commissioner, 147 F.3d 221 (2d Cir. 1998), this Court                       
          specifically noted that section 301.6231(c)-5T, Temporary Proced.           
          & Admin. Regs., supra, requires that a taxpayer receive two                 
          different notices from the IRS; specifically, (1) Notify the                
          taxpayer that he is the subject of a criminal tax investigation;            
          and (2) notify the taxpayer in writing that the IRS will treat              
          his partnership items as nonpartnership items.  We further note             
          that the Court of Appeals for the Second Circuit in Transpac                
          Drilling Venture 1982-12 v. Commissioner, supra, in reversing               
          this Court, did not hold section 301.6231(c)-5T, Temporary                  
          Proced. & Admin. Regs., supra, invalid, nor did the Court of                
          Appeals attempt to construe the regulation in the manner in which           
          petitioners urge.  Rather, the Court of Appeals held, on the                
          basis of the facts therein, that where a serious conflict of                
          interest precludes the faithful exercise of the TMP’s fiduciary             
          duties to the limited partners and partnerships, the regulation             
          does not prescribe the sole grounds under which a TMP will be               
          removed following the commencement of a criminal investigation.             
          See id. at 225-227.                                                         









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