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his investment in DGE, a TEFRA partnership; respondent proposed a
settlement offer in 2000 in which respondent offered to forgo
penalties; petitioner rejected the settlement offer; petitioner
now proposes a compromise on terms more beneficial than those in
the settlement offer; and petitioner argues that the penalties
and interest have accumulated as a result of the length of the
case.
Petitioner is correct in asserting that all of the facts in
his case are not present in the example. However, it is
unreasonable to expect that facts in an example be identical to
facts of a particular case before the example can be relied upon.
The Internal Revenue Manual example was only one of many factors
respondent considered. Given the similarities to petitioner’s
case, respondent’s reliance on that example was not arbitrary or
capricious.
3. Petitioner’s Other “Equitable Facts”
Petitioner argues that respondent abused his discretion by
failing to consider the other “equitable facts” of this case.
Petitioner’s “equitable facts” include reference to: (1)
Petitioner’s reliance on Bales v. Commissioner, T.C. Memo. 1989-
568;11 (2) petitioner’s reliance on Hoyt’s enrolled agent status;
11 Bales v. Commissioner, T.C. Memo. 1989-568, involved
deficiencies determined against various investors in several Hoyt
partnerships. This Court found in favor of the investors on
several issues, stating that “the transaction in issue should be
(continued...)
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