- 93 -
Phillips v. Commissioner, 272 F.3d at 1175-1176. The Court of
Appeals and this Court both concluded that the regulation,
properly read as a whole, vests discretion in the IRS to
terminate TMP status of an individual under criminal tax
investigation. See Phillips v. Commissioner, 272 F.3d at 1176
and 114 T.C. at 129, 132-133.
Petitioners next argue that Jay Hoyt, in executing the
extensions in question, was operating under purported disabling
conflicts of interest, requiring this Court, pursuant to 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), to invalidate these extensions and hold these
extensions not binding upon the partners. Petitioners interpret
Transpac as broadly requiring invalidation of a TMP’s extension
of the period of limitations if there is the mere potential for a
conflict of interest on the part of the TMP in executing the
extension. Additionally, petitioners suggest that a TMP also
engaged in serious breaches of his other general partnership
duties cannot execute an extension that binds the partners of the
partnership, even where that TMP’s execution of the extension
itself with the IRS is not established to be in obvious breach or
violation of his fiduciary duty as TMP to the partners.
In Transpac, Phillips v. Commissioner, 272 F.3d 1172 (9th
Cir. 2001), and Madison Recycling Associates v. Commissioner, 295
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