- 3 -
Swanton cofounded the Swanton Corp., a Delaware corporation
headquartered in New York, which promoted the Swanton programs.3
On July 14, 1986, respondent issued a notice of beginning of
administrative proceeding (NBAP) to Asher with respect to
respondent’s examination of Wilshire under the audit procedures
of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA),
Pub. L. 97-248, secs. 402-407(a), 96 Stat. 648. As a result of
respondent’s examination of the Swanton programs, respondent
recommended that the Department of Justice (DOJ) criminally
prosecute Mr. Swanton. During the criminal investigation,
respondent suspended civil activity with respect to the Swanton
programs. Eventually, the period of limitations for criminal
prosecution of Mr. Swanton expired.4
On June 29, 1990, petitioner’s income tax returns were
identified by respondent and placed in “suspense” mode, pending
the outcome of the Swanton program litigation. This was done in
accordance with Internal Revenue Service (IRS) procedures
regarding taxpayers involved with a TEFRA partnership under
examination. On August 14, 1990, respondent issued Wilshire a
3 For a more detailed discussion of the Swanton programs,
see Kelley v. Commissioner, T.C. Memo. 1993-495.
4 Respondent’s records of the Swanton programs were
destroyed in the terrorist attack on the World Trade Center on
Sept. 11, 2001. We have accepted the uncontradicted testimony
from an Internal Revenue Service (IRS) attorney who worked on the
cases regarding certain details of the events surrounding the
litigation and settlement of the Swanton programs.
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