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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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