- 90 -
that: (1) The second and third sentences of section 301.6231(c)-
5T, Temporary Proced. & Admin. Regs., supra, were invalid, so
that initiation of a criminal tax investigation of Jay Hoyt (the
TMP of the partnership) automatically converted his partnership
items into nonpartnership items as a matter of law, thereby
effectuating Jay Hoyt’s removal as TMP; (2) the criminal tax
investigation of Jay Hoyt (the TMP) created a conflict of
interest between Jay Hoyt’s duties as a fiduciary of the
partnership and his self-interest as the subject of a criminal
tax investigation, and such conflict necessitated his removal as
TMP based on the rationale of the Court of Appeals for the Second
Circuit in Transpac Drilling Venture 1982-12 v. Commissioner, 147
F.3d 221 (2d Cir. 1998); and (3) the Commissioner abused his
discretion by not issuing a written notice informing Jay Hoyt
(the TMP) that his partnership items would be treated as
nonpartnership items.
This Court, however, held that the extensions in Phillips v.
Commissioner, supra, were valid and that the periods of
limitations for those partnership taxable years thus had not
expired. In so holding, this Court concluded that: (1) Section
301.6231(c)-5T, Temporary Proced. & Admin. Regs., supra, was a
valid regulation; (2) the facts of Phillips were distinguishable
from those of Transpac, since the criminal tax investigation of
Jay Hoyt (a) did not create a disabling conflict of interest on
Page: Previous 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 NextLast modified: May 25, 2011