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pursuant to section 6231(c)(2) and (3) and provides for the
treatment of a partnership item of a partner who is the subject
of a criminal tax investigation as follows:
The treatment of items as partnership items with
respect to a partner under criminal investigation for
violation of internal revenue laws relating to income
tax will interfere with the effective and efficient
enforcement of the internal revenue laws. Accordingly,
partnership items of such a partner arising in any
partnership taxable year ending on or before the last
day of the latest taxable year of the partner to which
the criminal investigation relates shall be treated as
nonpartnership items as of the date on which the
partner is notified that he or she is the subject of a
criminal investigation and receives written
notification from the Service that his or her
partnership items shall be treated as nonpartnership
items. The partnership items of a partner who is
notified that he or she is the subject of a criminal
investigation shall not be treated as nonpartnership
items under this section unless and until such partner
receives written notification from the Service of such
treatment.
In Phillips v. Commissioner, supra, this Court dealt with
and rejected the arguments of a taxpayer-partner in several Hoyt
cattle partnerships that the periods of limitations for the
partnership taxable years in question had expired. The argument
was based on the theory that agreements that Jay Hoyt (the TMP of
each partnership) and the IRS executed extending the limitations
periods did not bind the partners of the partnership. In
Phillips v. Commissioner, supra, the taxpayer specifically argued
20(...continued)
investigations applies to partnership taxable years beginning
after Sept. 3, 1982. See 52 Fed. Reg. 6779 (Mar. 5, 1987).
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