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these programs had commenced, this investigation was suspended
pending a criminal investigation of Swanton. Ultimately, the
Department of Justice declined prosecution.
Thirty partnerships that were involved in the Swanton
programs were formed prior to 1982, and 20, including Wilshire
West, were formed subsequent to the effective date of TEFRA.
Test cases for litigation of the Swanton coal programs in the Tax
Court were selected. In two cases docketed in 1986, trial
commenced on February 8, 1988. A second trial began in January
1992. An opinion on the merits of the Swanton coal programs for
years prior to the years in issue was filed October 27, 1993.
Both the 1988 trial and the 1992 trial involved pre-TEFRA cases.
After the 1992 trial was concluded, IRS lawyers began processing
the TEFRA cases involving the Swanton coal programs.
On August 14, 1990, the IRS sent to Wilshire West and its
TMP, Kuehne, a Notice of Final Partnership Administrative
Adjustment (FPAA). A petition was filed in response to the FPAA
by Kuehne and was docketed in the Tax Court as No. 24109-90. As
of the time of this opinion, decision still has not been entered
in the Wilshire West case because one or more of the partners has
pursued the litigation. However, on April 15, 1999, a closing
agreement was entered into on behalf of Jackson. The closing
agreement provided, in part:
(5) The portion of the taxpayer’s deficiency for
the taxable years 1983, 1984 and 1985 attributable to
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