River City Ranches #1 Ltd., Jeffry Bergamyer, Tax Matters Partner - Page 34




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          mere existence of past criminal investigations of a TMP does not            
          prove a disabling conflict of interest.  We found that, as in               
          Phillips, Hoyt was not under active criminal investigation by the           
          IRS when he signed any of the extensions.                                   
               In River City Ranches #1 Ltd. v. Commissioner, 401 F.3d at             
          1142, the Court of Appeals limited the application of Phillips,             
          stating:                                                                    
               The comparison to Phillips is unilluminating, however,                 
               because in Phillips “[t]he facts were stipulated by the                
               parties in skeletal form sufficient to provide, without                
               much flesh, what was necessary to raise the single                     
               issue relied on by Phillips.”  Id. at 1173.  The lesson                
               of Phillips is that the sole fact of past criminal                     
               investigations does not establish a disabling conflict                 
               of interest.  But there is more to the partnerships’                   
               assertion of a disabling conflict than past criminal                   
               investigations, and the record before us in this case                  
               is not a bare skeleton.                                                
               Respondent suspected that Hoyt was selling cattle to some              
          partnerships that had already been sold to other partnerships and           
          that he was depreciating cattle that did not exist.  Although               
          Hoyt was not under active criminal investigation by the IRS when            
          he signed any of the consents, at various times from 1984 through           
          1990 Hoyt was investigated by the CID, the DOJ, and the U.S.                
          Attorney’s Office.                                                          
              Hoyt signed the consents between February 1991 and March               
          1993, during the period when respondent was first seeking and               
          then performing the headcount that would prove Hoyt’s crimes.               
          Hoyt’s unwillingness in late 1991 and early 1992 to consent to              







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