- 94 -
F.3d 280 (2d Cir. 2002), affg. T.C. Memo. 2001-85, affg. T.C.
Memo. 1992-605, the alleged disabling conflict of interest that
purportedly existed during the execution of the extensions was
that each TMP was the subject of an ongoing criminal tax
investigation. In Transpac, the Court of Appeals for the Second
Circuit found a disabling conflict existed on the part of the
TMPs in executing the extensions and invalidated those
extensions. In contrast, in Phillips and Madison, both appellate
courts and this Court determined that the respective TMPs were
operating under no disabling conflict in executing the
extensions, and held the extensions valid and binding upon the
partners of the partnership.
In Phillips, neither the Court of Appeals for the Ninth
Circuit nor this Court viewed and interpreted the Transpac
holding as broadly as petitioners argue for in the instant case.
Further, both courts readily distinguished the facts in Phillips
from those in Transpac. See Phillips v. Commissioner, 272 F.3d
at 1175 and 114 T.C. at 130-132. As the Court of Appeals in
Phillips explained:
Phillips puts particular reliance on Transpac Drilling
Venture 1982-12 v. Commissioner, 147 F.3d 221 (2d Cir.
1998).
Transpac sets out with admirable clarity that a
TMP, although created by statute, owes a fiduciary duty
to his partners, and that, as the TMP’s acts bind his
partners, they “secure their due process protection” by
his faithful discharge of his fiduciary obligations.
Id. at 225. But in Transpac the court could observe,
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