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The Examination Division examined many of the returns of the
cattle and sheep partnerships and their partners for the 1980
through 1986 taxable years. During the Bales litigation, the
Examination Division obtained extensions from the partners in the
cattle partnerships to extend the period of limitations for
assessing and collecting income tax liabilities for the 1980,
1981, and 1982 tax years.8 After obtaining the extensions, the
Examination Division temporarily suspended examination activity
with respect to those tax years.
In early 1989, the Examination Division resumed examining
and processing the individual returns filed by partners in the
cattle partnerships for the 1980, 1981, and 1982 tax years.
Shortly thereafter, standard revenue agent reports for those
years were prepared that proposed to disallow all tax benefits
these partners had claimed from the cattle partnerships.
From about 1988 through 1991, an Examination Division team
conducted partnership-level examinations of many of the returns
of the cattle and sheep partnerships for the 1983 through 1986
8 The unified partnership audit and litigation provisions
of secs. 6221-6233, are not applicable to the pre-1983 taxable
years of the cattle and sheep partnerships. These provisions
were enacted as part of the Tax Equity & Fiscal Responsibility
Act of 1982 (TEFRA), Pub. L. 97-248, sec. 402(a), 96 Stat. 324,
648, and are generally applicable to partnership taxable years
beginning after Sept. 3, 1982.
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