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default on the project indebtedness. On September 10, 1986, the
IRS issued Private Letter Ruling 8649051 (the September 1986
letter ruling). In this 28-page ruling, the IRS concluded that,
as of May 22, 1986 (the date of the ruling request), the
partnership had not abandoned the project or made other
disposition of the project. The ruling stated:
There are two facts involved here that negate the
argument that * * * [the partnership] has abandoned the
Project. First, * * * [ANR] and * * * [Transco] are
continuing to seek a solution to the financial
difficulties facing the Project by negotiating an
agreement with * * * [DOE] that would permit * * * [the
partnership’s] continued participation in the Project.
Second, by refusing to grant approval for * * * [DOE]
to sell excess assets of the Project, * * * [the
partnership] has shown that it has not abandoned all
rights or involvement in the Project or control over
the Project’s assets.
Approximately 10 years after the IRS National Office issued
this letter ruling, the Houston IRS District Office submitted to
the IRS National Office factual and legal objections to the
ruling, contending that the partners’ original ruling request had
omitted or misstated material facts that resulted in an incorrect
ruling. On October 17, 1997, the IRS National Office issued
Technical Advice Memorandum 9811002, which rejected the
objections of the IRS Houston District Office, stating:
although the ruling request omitted certain information
that bore some relevance to the underlying tax issues
and characterized other information differently than
the District, these additional facts and alternate
characterizations, when taken together, were not
material. Therefore, the * * * [ruling] is to be
applied by the district director in the determination
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