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partnership items will interfere with the effective and efficient
enforcement of this title”. The regulations state:
The treatment of items as partnership items with
respect to a partner under criminal investigation for
violation of the internal revenue laws relating to
income tax will interfere with the effective and
efficient enforcement of the internal revenue laws.
Accordingly, partnership items of such a partner
arising in any partnership taxable year ending on or
before the last day of the latest taxable year of the
partner to which the criminal investigation relates
shall be treated as nonpartnership items as of the date
on which the partner is notified that he or she is the
subject of a criminal investigation and receives
written notification from the Service that his or her
partnership items shall be treated as nonpartnership
items. The partnership items of a partner who is
notified that he or she is the subject of a criminal
investigation shall not be treated as nonpartnership
items under this section unless and until such partner
receives written notification from the Service of such
treatment. [Sec. 301.6231(c)-5T, Temporary Proced. &
Admin. Regs., 52 Fed. Reg. 6793 (Mar. 5, 1987).]
Petitioner concedes that respondent never sent Steele a notice
that he was under investigation for violation of internal revenue
laws or that his partnership items would be treated as
nonpartnership items.
Petitioner argues that the regulations do not set forth the
exclusive cause to remove a TMP following the start of a criminal
investigation. Notwithstanding the regulations, petitioner
asserts, Steele suffered from a disabling conflict of interest
that required respondent to terminate Steele’s status as
Leatherstocking’s TMP. While we agree with petitioner that the
regulations do not set forth the exclusive reason for removing a
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