Richard K. and Marilyn J. Phillips - Page 24




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          6.   Removal of TMP for Violating a Fiduciary Duty                          
               Petitioners contend that Mr. Hoyt should have been removed             
          as TMP by the IRS because of a conflict of interest between Mr.             
          Hoyt's fiduciary duty to petitioners, as partners of the Hoyt               
          partnerships, and his self-interest as the subject of several               
          criminal tax investigations.                                                
               Petitioners rely on Transpac Drilling Venture 1982-12 v.               
          Commissioner, 147 F.3d 221 (2d Cir. 1998), contending that                  
          Transpac holds that the Commissioner has no discretion and must             
          remove a TMP who is under criminal tax investigation.                       
               However, the Transpac decision involved distinguishable                
          facts.  In Transpac, the IRS began a civil tax audit of the                 
          Transpac partnerships in the latter part of 1983.  By November              
          1985, however, the civil audit had uncovered issues which were              
          referred to CID for criminal investigation.  See id. at 223.                
               While the criminal investigation was proceeding, the IRS               
          approached limited partners of the Transpac partnerships and                
          asked them to sign extension agreements for the 1982 taxable                
          year.  Most of the limited partners refused, so the IRS then                
          approached the partnership's TMP's and made the same extension              
          requests.  The TMP's acquiesced and executed the extension                  
          agreements and thereafter continued to execute extension                    
          agreements through March 1988.14  See id. at 224.                           

          14   As the IRS did not issue FPAA's until November 1989, the 3-            
          year period of limitations would have expired but for the signed            
          extensions.                                                                 





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