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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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