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participated in the appeal in Fargo as counsel for the amici. On
brief, petitioners suggests that the Court of Appeals knowingly
wrote its opinion in Fargo in such a way as to distinguish that
case from the cases of counsel’s similarly situated clients
(e.g., petitioners), and to otherwise allow those clients’
liabilities for penalties and interest to be forgiven. We do not
read the opinion of the Court of Appeals in Fargo to support that
conclusion. See Keller v. Commissioner, supra; Barnes v.
Commissioner, supra.
Respondent’s rejection of petitioners’ longstanding case
argument was not arbitrary or capricious.
2. The IRM Example
Petitioners argue that respondent erred when he determined
that they were not entitled to relief based on the second example
in IRM section 5.8.11.2.2(3). Petitioners assert that many of
the facts in this case were not present in the example, and,
therefore, any reliance on the example was misplaced.
Petitioners’ argument is not persuasive.
IRM section 5.8.11.2.2(3) discusses effective tax
administration offers-in-compromise based on equity and public
policy grounds and states in the second example:
In 1983, the taxpayer invested in a nationally marketed
partnership which promised the taxpayer tax benefits
far exceeding the amount of the investment.
Immediately upon investing, the taxpayer claimed
investment tax credits that significantly reduced or
eliminated the tax liabilities for the years 1981
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