- 92 -
to the date upon which respondent issued each partnership the
FPAA for that year, but for Jay Hoyt (the TMP) and the IRS’s
having executed timely an extension or a series of extensions
that extended the period of limitations beyond the date upon
which the FPAA was issued.
The parties disagree solely over whether the extensions that
Jay Hoyt executed for the taxable years set forth supra p. 83,
are valid and bind the partners of the partnership. Except for
the extension concerning the 1984 taxable year of RCR #4, these
extensions concern post-1986 partnership taxable years and were
executed by Jay Hoyt and the IRS on various dates from February
1991 through March 1993. Jay Hoyt and the IRS executed the
extension concerning RCR #4’s 1984 taxable year on August 1,
1987.
The Court rejects petitioners’ contention that section
301.6231(c)-5T, Temporary Proced. & Admin. Regs., supra, requires
the IRS automatically to end the partnership treatment of the
items of any TMP whenever a criminal tax investigation of that
TMP is commenced. The Court of Appeals for the Ninth Circuit
affirmed this Court’s determination in Phillips v. Commissioner,
114 T.C. 115 (2000), that such an interpretation of the temporary
regulation is improper, because it would require reading the
first sentence of the temporary regulation in isolation, divorced
from the other two sentences of the regulation as a whole.
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