- 96 -
about such criminal tax investigations. Further, the criminal
tax investigations had ended prior to Jay Hoyt’s execution of all
except one or two of the extensions.
This Court in Phillips further noted that Jay Hoyt, in
executing the extensions, did not try to curry favor or
ingratiate himself with the IRS in relation to the criminal tax
investigations. He continued to promote the partnerships in his
tax shelter program after the initiation of the criminal tax
investigations, continued to defend his legal position throughout
the criminal tax investigations, and continued to maintain that
all partnership items were legitimate, a position consistent with
that of his partners.
In Madison Recycling Associates v. Commissioner, 295 F.3d at
288-289, the Court of Appeals for the Second Circuit
distinguished its earlier Transpac holding as based on the
existence of an obvious and actual serious conflict of interest
on the part of each of the Transpac TMPs in executing the
extensions. It noted that, unlike Transpac, there was no
suggestion that the Madison TMP was a prospective governmental
witness, nor was there any evidence the TMP had given the
extensions in exchange for a grant of immunity or other
inducements relevant to the criminal tax investigation, as
neither the Madison TMP nor his representative apparently was
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