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Phillips v. Commissioner, 114 T.C. 115 (2000), affd. 272 F.3d
1172 (9th Cir. 2001), petitioners are not claiming that section
301.6231(c)-5T, Temporary Proced. & Admin. Regs., supra, in whole
or part, is invalid or that the IRS abused its discretion in
failing to issue Jay Hoyt (the TMP) the notice that it would
treat his items as nonpartnership items. Petitioners simply
argue that the temporary regulation in question is mandatory and
not discretionary.
Alternatively, petitioners argue that Jay Hoyt, as the TMP,
could not bind the partners of the partnership because he
suffered from numerous disabling conflicts of interest and could
not properly represent the interests of the partners.
Petitioners maintain that Jay Hoyt’s disabling conflicts of
interest bring the instant case squarely within the Court of
Appeals for the Second Circuit’s holding in Transpac Drilling
Venture 1982-12 v. Commissioner, 147 F.3d 221 (2d Cir. 1998),
revg. and remanding T.C. Memo. 1994-26.
Petitioners maintain that these alleged disabling conflicts
of interest on the part of Jay Hoyt involved other conflicts
besides the criminal tax investigations. Petitioners allege that
these other conflicts include Jay Hoyt’s: (1) Perpetrating an
ongoing fraud upon the partners by misrepresenting the numbers
and values of their livestock, while purporting to act as the
partners’ fiduciary; (2) diverting partner contributions to his
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