Richard K. and Marilyn J. Phillips - Page 29




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          the Commissioner had not abused his discretion by failing to                
          terminate a TMP’s status.                                                   
               The taxpayer has the burden of proof when alleging an abuse            
          of discretion.  See Capitol Fed. Sav. & Loan Association v.                 
          Commissioner, 96 T.C. 204, 210 (1991).                                      
               The parties have stipulated that the IRS has no formal                 
          criteria to determine when, or whether, a written notice                    
          notifying a partner that his partnership items will be treated as           
          nonpartnership items is to be sent to a taxpayer who is the                 
          subject of a criminal tax investigation.  The IRS makes each                
          determination upon the particular facts of each case.                       
               As previously indicated, the Transpac decision involved                
          distinguishable facts, and petitioners have not alleged the facts           
          that the Court of Appeals for the Second Circuit found so                   
          disquieting.  Here, petitioners are unable to show that                     
          respondent's actions in continuing to recognize Mr. Hoyt as TMP             
          were unlawful or arbitrary.  Accordingly, we find that                      
          petitioners have not established that respondent abused his                 
          discretion by not notifying Mr. Hoyt that his partnership items             
          would be treated as nonpartnership items pursuant to section                
          301.6231(c)-5T, Temporary Proced. & Admin. Regs., supra.                    
          8.  Expiration of Period of Limitations With Regard to TBS J.V.             
               As a supplemental matter, we address the parties’                      
          contentions regarding TBS J.V.’s 1989 and 1990 taxable years.               
          Respondent contends that TBS J.V. failed to file partnership                
          returns for both the 1989 and 1990 taxable years and that                   




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