Mekulsia v. Comm'r
This text of 2003 T.C. Memo. 138 (Mekulsia v. Comm'r) is published on Counsel Stack Legal Research, covering United States Tax Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
*139 Respondent's motion for judgment on pleadings denied as moot. Judgment entered for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
DAWSON, Judge: This case was assigned to Special Trial Judge Stanley J. Goldberg pursuant to the provisions of
OPINION OF THE SPECIAL TRIAL JUDGE
GOLDBERG, Special Trial Judge: On August 14, 2000, respondent issued a notice*140 of final determination denying petitioner's claim under
Shortly before the scheduled trial date, respondent filed a motion under
The only issue for decision is whether respondent abused his discretion in denying petitioner's request to abate interest related to the taxable years 1982 through 1987.
FINDINGS OF FACT
Some of the facts in this case have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by reference. At the time the petition*141 was filed, petitioner resided in Painesville, Ohio.
From about 1971 through 1998, Walter J. Hoyt III (Jay Hoyt) organized, promoted to thousands of investors, and operated as a general partner more than 100 partnerships. 4 The partnerships were organized to own, breed, and manage cattle. Jay Hoyt was the tax matters partner (TMP) for a majority of the partnerships and was also an enrolled agent with the Internal Revenue Service (IRS).
Dating back to the early 1980s, the record-keeping practices of the Hoyt organization were very poor. During the years at issue, often no records were kept at all. Many of the documents, records, and tax returns the Hoyt organization prepared relating to the cattle partnerships were inaccurate, unreliable, and in many instances falsified. *142 The Hoyt organization's poor record keeping made the IRS's efforts to examine the partnerships difficult.
After approximately 1980, the IRS regularly examined many of the partnership returns of the numerous Hoyt investor partnerships and the individual returns of their partners. Believing the partnerships to be abusive tax shelters, the IRS generally disallowed the partnership tax benefits that each investor partnership and its respective partners claimed, resulting in those partnerships' and partners' commencing numerous cases in the Tax Court.
The Hoyt organization is no stranger to this Court. Since 1989, the Hoyt organization's investor partnerships have been involved in Tax Court litigation for tax years from 1977 through 1996. See
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*139 Respondent's motion for judgment on pleadings denied as moot. Judgment entered for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
DAWSON, Judge: This case was assigned to Special Trial Judge Stanley J. Goldberg pursuant to the provisions of
OPINION OF THE SPECIAL TRIAL JUDGE
GOLDBERG, Special Trial Judge: On August 14, 2000, respondent issued a notice*140 of final determination denying petitioner's claim under
Shortly before the scheduled trial date, respondent filed a motion under
The only issue for decision is whether respondent abused his discretion in denying petitioner's request to abate interest related to the taxable years 1982 through 1987.
FINDINGS OF FACT
Some of the facts in this case have been stipulated and are so found. The stipulation of facts and the accompanying exhibits are incorporated herein by reference. At the time the petition*141 was filed, petitioner resided in Painesville, Ohio.
From about 1971 through 1998, Walter J. Hoyt III (Jay Hoyt) organized, promoted to thousands of investors, and operated as a general partner more than 100 partnerships. 4 The partnerships were organized to own, breed, and manage cattle. Jay Hoyt was the tax matters partner (TMP) for a majority of the partnerships and was also an enrolled agent with the Internal Revenue Service (IRS).
Dating back to the early 1980s, the record-keeping practices of the Hoyt organization were very poor. During the years at issue, often no records were kept at all. Many of the documents, records, and tax returns the Hoyt organization prepared relating to the cattle partnerships were inaccurate, unreliable, and in many instances falsified. *142 The Hoyt organization's poor record keeping made the IRS's efforts to examine the partnerships difficult.
After approximately 1980, the IRS regularly examined many of the partnership returns of the numerous Hoyt investor partnerships and the individual returns of their partners. Believing the partnerships to be abusive tax shelters, the IRS generally disallowed the partnership tax benefits that each investor partnership and its respective partners claimed, resulting in those partnerships' and partners' commencing numerous cases in the Tax Court.
The Hoyt organization is no stranger to this Court. Since 1989, the Hoyt organization's investor partnerships have been involved in Tax Court litigation for tax years from 1977 through 1996. See
On February 12, 2001, Jay Hoyt was convicted*143 in the U. S. District Court for the District of Oregon of 1 count of conspiracy to commit fraud, 31 counts of mail fraud, 3 counts of bankruptcy fraud, and 17 counts of money laundering. See
After the initial IRS examinations of the many cattle partnerships, several criminal investigations relating to Jay Hoyt's activities were commenced by the IRS's Criminal Investigation Division (CID).
From April 23, 1984, until April 21, 1986, CID conducted an investigation of Jay Hoyt for allegedly backdating documents to enable 12 investor-partners to claim improper deductions and credits. On April 21, 1986, CID referred the case to IRS District Counsel, recommending prosecution. On July 31, 1986, the IRS District Counsel's Office in Sacramento, California, referred the matter to the Department of Justice (DOJ) for prosecution. The DOJ then forwarded the matter to the U. S. Attorney's Office in Sacramento for review and*144 consideration. On August 12, 1987, the U. S. Attorney's Office declined to prosecute Jay Hoyt.
On or about July 28, 1989, a member of the IRS Examination Division team examining Hoyt partnership returns for the 1983 through 1986 taxable years recommended that the CID investigate Jay Hoyt for allegedly making and/ or assisting in fraudulent or false tax return statements in connection with his promotion and operation of the cattle partnerships. On October 13, 1989, the U. S. Attorney's Office requested that the CID review certain information and determine whether IRS special agents from the CID should join in an ongoing grand jury investigation of Jay Hoyt for possible violations of the internal revenue laws. On October 17, 1989, the CID accepted the Examination Division's fraud referral and commenced an investigation. On November 3, 1989, the IRS Regional Counsel's Office requested that IRS special agents be authorized to participate in the grand jury investigation. On October 2, 1990, the U. S. Attorney's Office ended the grand jury investigation of Jay Hoyt without an indictment.
On or about August 31, 1993, the CID commenced an investigation of Jay Hoyt for possible criminal violations*145 of the internal revenue laws on account of his alleged misrepresentation of the total number and value of purported cattle that the Hoyt cattle partnerships allegedly owned. The CID closed the investigation on or about October 7, 1993, without a recommendation that the IRS attempt to have Jay Hoyt prosecuted.
On or about September 8, 1995, the CID commenced an investigation of Jay Hoyt for possible criminal violations of the internal revenue laws relating to the alleged shortage of cattle from the Hoyt cattle partnerships. The CID closed this investigation on September 29, 1995, without a recommendation that the IRS attempt to have Jay Hoyt prosecuted.
On at least four separate occasions, from April 1984 through September 1995, Jay Hoyt was under criminal investigation for violation of the internal revenue laws. Respondent never notified Jay Hoyt that he was under criminal investigation or removed him as the TMP of Shorthorn Genetic Engineering 1985-1 (SGE) as a result of any of these criminal tax investigations.
Starting in 1985, petitioner began investing in cattle partnerships promoted by the Hoyt organization. According*146 to the petition filed in this case, petitioner was a partner in SGE, Timeshare Breeding Syndicate, J.V., and Timeshare Breeding Syndicate 1987-2. As the interest of which he seeks abatement in this case accrued on assessments of income tax against petitioner for tax years 1982 through 1987, solely on the basis of his participation in SGE during 1985 and 1986, our analysis is limited to the tax implications of petitioner's association with the SGE partnership only.
Petitioner was a partner in SGE from 1985 through 1996. SGE was a partnership subject to the provisions of
For the 1985 tax year, SGE issued petitioner*147 a Schedule K- 1, Partner's Share of Income, Credits, Deductions, etc., reporting petitioner's distributive share of the ordinary loss from the partnership in the amount of $ 30,270 and property eligible for investment credit in the amount of $ 155,760. On his 1985 Form 1040, Individual Income Tax Return, petitioner deducted from his total income the $ 30,270 of ordinary loss passed through from SGE and claimed a $ 729 general business credit relating to SGE.
After his 1985 income tax return was filed, petitioner filed a Form 1045, Application for Tentative Refund, requesting a refund of income tax for the 1982, 1983, and 1984 tax years. Petitioner's refund request was based on carrying back to those tax years unused general business credits relating to his distributive share of qualified investment property from SGE for 1985.
SGE issued petitioner a Schedule K-1 for 1986, reporting petitioner's distributive share of the ordinary loss from the partnership in the amount of $ 36,324. On his 1986 individual tax return, petitioner deducted from his total income the $ 36,324 of ordinary loss passed through from SGE and claimed an $ 842 general business credit relating to SGE that he carried*148 forward from the previous year.
On petitioner's 1987 individual income tax return, he claimed a $ 319 general business credit relating to SGE that he carried forward from his 1985 income tax return.
On December 17, 1987, respondent sent a notice of beginning of administrative proceeding (NBAP) to Jay Hoyt, the TMP of SGE. The notice informed the TMP that respondent was beginning an examination of SGE for the 1985 and 1986 tax years.
On July 20, 1988, respondent sent an NBAP to petitioner notifying him that an examination was beginning on SGE for the 1985 tax year. On September 12, 1988, respondent sent petitioner an NBAP relating to SGE for the 1986 tax year.
On February 28, 1989, an examiner with the IRS signed Form 4665, Report Transmittal, and Form 4605-A, Examination Changes -- Partnerships, Fiduciaries, Small Business Corporations, and Domestic International Sales Corporations. Both forms related to the IRS's examination of SGE for the 1985 tax year.
In the Report Transmittal, the examiner discussed the difficulties encountered in obtaining SGE's records from the TMP. The examiner recommended issuing a notice of final*149 partnership administrative adjustment (FPAA) because the lack of adequate records did not allow respondent to perform a normal examination, and the parties were in complete disagreement over the issues.
On Form 4605-A, the examiner made examination changes to SGE's 1985 partnership tax return as follows: (1) An adjustment reducing the partnership's ordinary loss of $ 952,586 to zero; and (2) an adjustment reducing the cost or other basis of qualified investment property from $ 6,246,500 to zero.
On May 2, 1989, the same examiner signed Form 4665 and Form 4605-A for SGE's 1986 tax year. The Report Transmittal for the 1986 tax year was essentially identical in all material respects to the report completed for the previous year.
On Form 4605-A, the examiner made examination changes to SGE's 1986 partnership tax return as follows: (1) An adjustment reducing the partnership's ordinary loss of $ 1,856,560 to zero; and (2) an adjustment reducing payments to individual retirement accounts (IRA) and Keogh accounts totaling $ 60,000 to zero.
On June 13, 1989, respondent issued an FPAA to petitioner and Jay Hoyt, as TMP of SGE, relating to the partnership return filed for the 1985 tax year.*150 In the Explanation of Adjustments included with the FPAA, respondent adjusted the 1985 claimed partnership expenses totaling $ 962,586 to zero and adjusted the value of the qualified investment property claimed from $ 6,246,500 to zero. The explanation listed 12 reasons why SGE was "entitled to no items of ordinary loss, deduction, credit, or other items of tax benefit." Further, the explanation stated that the partners of SGE were not entitled to their distributive shares of partnership items reported on the partnership return for 1985.
On July 2, 1990, respondent issued an FPAA to petitioner and SGE's TMP relating to the partnership return filed for the 1986 tax year. In the Explanation of Adjustments included with the FPAA, respondent made adjustments to SGE's partnership return reducing all items reported during the 1986 tax year to zero. The following items reported on SGE's 1986 partnership return were reduced to zero: (1) Farm income totaling $ 123,434; (2) farm deductions totaling $ 1,948,760; (3) guaranteed payments totaling $ 31,234; (4) IRA payments totaling $ 52,000; (5) Keogh payments totaling $ 8,000; and (6) self-employment loss totaling $ 1,825,326. Again, the explanation*151 listed the various reasons why SGE was not entitled to the items reported and why the partners were not entitled to their distributive shares of those items.
On September 8, 1989, a petition was filed in the Tax Court at docket No. 22069-89, contesting the determinations made by respondent in the FPAA for SGE's 1985 tax year. On October 1, 1990, a petition was filed with this Court at docket No. 21954-90, contesting the determinations made in the FPAA for SGE's 1986 tax year.
By May 1993, the TMPs of many of the Hoyt partnerships had filed Tax Court petitions. On May 20, 1993, respondent and Jay Hoyt, acting as TMP, entered into a memorandum of understanding (MOU). The MOU outlined a basis for a settlement of all outstanding cattle partnership cases pending before the Court for the 1980 through 1986 tax years. The MOU included a basis of settlement for the SGE partnership with respect to its 1985 and 1986 tax years.
After memorializing the MOU, the parties were unable to reach an agreement on settlement documents reflecting the terms outlined in the MOU. As a result, on or about October, 14, 1994, the parties jointly moved*152 to consolidate several of the cattle partnership cases, including docket Nos. 22069-89 and 21954-90, for trial, briefing, and opinion.
On November 20, 1996, the Court issued its opinion with respect to the consolidated cases resulting from the MOU. See
On January 29, 1997, the following documents were filed in the consolidated cases: (1) A motion for leave to file out of time a motion to vacate; (2) a motion for leave to file out of time a motion for reconsideration of findings of fact and opinion; and (3) a request for a rehearing. On February 4, 1997, the Court granted both of the motions and the request.
On July 14, 1997, the Court denied (1) the motion to vacate, (2) the motion for reconsideration of findings of fact and opinion, and (3) the request for a rehearing.
On February 27, 1998, respondent*153 sent petitioner a Form 4549A-CG, Income Tax Examination Changes, for each of the tax years 1982 through 1987. For each of those tax years, the form and attached explanations detailed the adjustments made to petitioner's individual tax returns and calculated the deficiencies in each year's income tax. In addition, the explanations for each year informed petitioner that respondent had determined that a part of his underpayment of tax was attributable to tax-motivated transactions as defined in
*154 On the basis of the disallowed tax benefits claimed by petitioner relating to SGE, respondent assessed income tax deficiencies against petitioner in the amounts determined for each year in each Form 4549A-CG. The tax years, the assessment dates, and the amounts of income tax deficiencies assessed petitioner are as follows:
Tax Year Assessment Date Assessment Amount
________ _______________ _________________
1982 4-6-1998 $ 3,183
1983 4-6-1998
1984 4-6-1998
1985 4-6-1998
1986 4-6-1998
1987 3-30-1998
Respondent prepared an Interest and Penalty Detail Report for each tax year from 1982 through 1987 based on the total amount of income tax assessed and the applicable interest rates determined pursuant to
Dates Interest Accrued Total Amount
Year From To of Interest
____ ____ __ ____________
1982 4-15-1986
1983 4-15-1986
1984 4-15-1986
1985 6-9-1986
1986 4-15-1987
1987 4-15-1988
As a result of petitioner's making a deposit in the nature of a cash bond in the amount of $ 197,000 on March 26, 2001, respondent stopped interest from accruing on that date.
On June 3, 1998, petitioner initiated correspondence with respondent requesting an explanation for respondent's imposing interest relating to a*156 tax-motivated transaction pursuant to
On June 22, 1998, respondent denied petitioner's informal claim for abatement of interest for the 1982 through 1987 tax years. Respondent stated that tax-motivated interest was applicable on account of the abusive nature of the SGE partnership. In addition, respondent determined that there was no delay or error relating to the performance of a ministerial act warranting abatement of interest. The correspondence from respondent informed petitioner that he could request reconsideration of respondent's findings with the IRS Appeals Office.
On July 22, 1998, petitioner appealed respondent's denial of the informal interest abatement claim. Specifically, petitioner requested an abatement of all the interest accrued on his assessed income tax liabilities for tax years 1982 through 1987. Petitioner based the request for interest abatement on his assertion that the interest accrued because of delays caused by*157 employees of the IRS in performing ministerial or managerial acts when conducting the audits of SGE. Further, petitioner argued for abatement of the increased
On August 27, 1998, petitioner sent respondent a letter supplementing his interest abatement appeal. Petitioner asserted the same arguments as those raised in the July 22, 1998, appeal but acknowledged that for the years prior to 1996 only delays caused by ministerial acts were considered for interest abatement claims.
On October 19, 1998, petitioner sent respondent another letter further supplementing his interest abatement appeal. In this supplement, petitioner asserted that respondent's failure to remove Jay Hoyt as the TMP of SGE after he was under a criminal tax investigation was an error in performing a ministerial act that caused delays resulting in the accrual of interest. Petitioner based this assertion on his claim that
On July 27, 2000, an associate chief in the Appeals Office approved the recommendation of an Appeals officer denying petitioner's appeal of the denial of his informal interest abatement claim. In Form 5402-c, Appeals Transmittal Memorandum and Case Memo, the Appeals officer addressed each of petitioner's arguments and determined that interest abatement was not warranted.
Specifically, the Appeals officer concluded that the decision to remove a TMP under criminal investigation pursuant to
In addition, the Appeals officer made a determination that the increased interest*159 rate pursuant to
On August 14, 2000, respondent issued petitioner a final determination letter disallowing petitioner's request for interest abatement for the tax years 1982 through 1987. Respondent based the disallowance on the fact that no errors or delays that merit interest abatement were discovered in respondent's review of available records and other information. Respondent informed petitioner that he could file a Tax Court petition for a review of respondent's denial of interest abatement if he disagreed with the final determination.
OPINION
In general, interest on an underpayment of income tax begins to accrue on the due date of the return for the tax and continues to accrue, compounded daily, until payment is made. See
Pursuant to
A ministerial error or delay by an officer or employee (without distinction, employee) of the IRS is taken into account only if no significant aspect of the error or delay can be attributed to the taxpayer.
The temporary regulations interpreting
Even where errors or delays are present, *163 the Commissioner's decision to abate interest remains discretionary. See
The Tax Court is a court of limited jurisdiction, and we may exercise our jurisdiction only to the extent authorized by Congress.
"When reviewing the Commissioner's determination*164 pursuant to
The taxpayer bears the burden of proof with respect to establishing an abuse of discretion.
As a prerequisite to our reviewing the respondent's actions for an abuse of discretion, petitioner must show that the assessment of interest is attributable to some error or delay by an employee of the IRS in performing a ministerial act.
Petitioner argues that errors and delays occurred in the audit of SGE for the 1985 and 1986 tax years that warrant interest abatement from December 17, 1987, until August 31, 1990. Petitioner bases his interest abatement claim on his contentions that: (1) Respondent had sufficient information as of the date of first contact 9 to issue the FPAAs, yet delayed issuing the FPAAs for almost 3 years; and (2) the original 1985 and 1986 tax year audits were so replete with errors that respondent had to completely reaudit SGE starting in August 1990.
*166 Petitioner's first claim alleges that through (1) document requests in 1986 related to respondent's trial preparation in
It appears that petitioner considers himself entitled to the relief sought merely because of the time that transpired from the date the audits began until the dates the FPAAs were issued. The mere passage of time, however, does not establish error or delay in performing a ministerial act.
Determining the precise date on which to issue an FPAA requires the exercise of judgment and discretion on the Commissioner's part. The Commissioner's determination of when*167 to issue an FPAA depends on various factors, including but not limited to: (1) The nature and persuasiveness of the evidence gathered during the examination; (2) the level of cooperation received from the taxpayer; (3) the legitimacy of the information received during the examination; (4) the likelihood of obtaining additional evidence from other sources; (5) the impact of recently decided litigation dealing with similar issues; (6) the impact of a criminal tax investigation involving the taxpayer; (7) the recommendations set forth in the examiner's Report Transmittal; and (8) an overall evaluation of the evidence to determine whether the record supports the adjustments. Accordingly, respondent's determination of when to issue the FPAAs was not a ministerial act. See
Contrary to petitioner's claim that respondent had all the records sufficient to issue the*168 FPAAs in 1987, the facts reveal that respondent's difficulty in obtaining accurate records during the audits hindered the audit process. The record also establishes that respondent believed the partnerships were abusive tax shelters. Such delay in completing an examination because of the difficulties in obtaining documentation or because of the Commissioner's suspicion of fraud does not prove that the Commissioner was erroneous or dilatory in performing ministerial acts.
Petitioner's second claim alleges that the audits of SGE for 1985 and 1986 were so replete with errors that the audits had to be completely redone. Petitioner asserts that four of respondent's agents were assigned to District Counsel in August 1990 to reaudit SGE for 1985 and 1986.
While the parties have stipulated that the four agents were assigned to District Counsel to assist in trial preparation of the Hoyt investor partnerships docketed Tax Court cases for the 1980 through 1986 taxable years, petitioner argues that the agents' work was not limited to trial preparation and appeared*169 to be work traditionally done at the audit stage. Petitioner concludes that the existence of the "second" audit is "sufficient evidence that the first audit was replete with errors." Petitioner's conclusion is without merit. His argument fails to specify an error or delay in performing a ministerial act.
The entire record establishes that the four agents were assigned to District Counsel to assist in trial preparation relating to the Hoyt investor partnerships docketed Tax Court cases contesting the determinations made in the FPAAs. Petitioner has failed to show that respondent performed the functions of traditional audit work during trial preparation. In any event, no conclusion can be drawn from the work performed during the trial preparation that the 1985 and 1986 SGE audits were replete with errors because of respondent's being erroneous or dilatory in performing any ministerial act.
Since we have rejected both of petitioner's claims described above, finding that he failed to establish any error or delay by respondent in performing a ministerial act, we hold that respondent's failure to abate interest from December 17, 1987, until August 31, 1990, was not an abuse of discretion.
*170 D. Whether Respondent's Refusal To Abate Interest From October 17, 1989, to December 31, 1998, Was an Abuse of Discretion
Petitioner contends that interest should be abated from October 17, 1989, until December 31, 1998, because respondent's failure to remove Jay Hoyt as the TMP of SGE after he was under a criminal tax investigation was an error in performing a ministerial act. Petitioner argues that Jay Hoyt's removal as TMP was required by the interrelationship of
Our understanding of petitioner's argument is based on the following progression: (1) Pursuant to
While this Court and Court of Appeals for the Ninth Circuit have interpreted the interaction of
In sum, petitioner asserts that the language of
Petitioner asserts that had respondent notified Jay Hoyt on October 17, 1989, the date of the first criminal investigation of Jay Hoyt after the first contact by respondent relating to the audit of SGE, 10 petitioner would have become aware of Jay Hoyt's fraud and could have made informed decisions about the SGE deductions and credits he claimed. Further, petitioner claims that respondent's failure to send Jay Hoyt the notification concealed Jay Hoyt's fraud until December 31, 1998, the date petitioner alleges that investors had sufficient information concerning the fraud. On the basis of these claims, petitioner requested that respondent abate interest from October 17, 1987, until December 31, 1998. He contends that respondent's failure to abate interest for this period was an abuse of discretion.
*174 Contrary to petitioner's assertion that Phillips is distinguishable from the instant case, we find that
Petitioner attempts to limit Phillips to a mere determination that
Pursuant to the provisions of
criminal tax investigation of a partner in a TEFRA partnership
does not necessarily or immediately interfere with the
effective and efficient enforcement of the internal revenue laws
and require the treatment of partnership items as nonpartnership
items in every situation. [Emphasis added.]
From the above language in Phillips, it is clear that
In affirming this Court in Phillips, the Court of Appeals for the Ninth Circuit addressed the principal issue of whether a criminal tax investigation of a TMP "does, or must, end the TMP's power to act for a partnership."
In Phillips, the Tax Court and the Court of Appeals both held that
In the instant case, as in
Because there was no error in performing*177 a ministerial act, we hold that respondent's failure to abate interest from October 17, 1987, until December 31, 1998, was not an abuse of discretion.
E. Petitioner's Claims That Respondent's Denial of Interest Abatement Was an Abuse of Discretion
Petitioner sets forth various assertions that respondent failed to (1) provide discoverable documents, (2) adequately investigate his interest abatement claim, and (3) provide a sufficient explanation for denying the claim. Petitioner makes these arguments in an attempt to establish that respondent's decision not to abate interest was an abuse of discretion.
Because we have held that petitioner failed to establish an error or delay by an employee of the IRS in performing a ministerial act, we reject petitioner's arguments that the interest abatement denial was an abuse of respondent's discretion. See
On the basis of the conclusions herein, respondent's motion for judgment on the pleadings is deemed moot.
To reflect the foregoing,
An order denying respondent's motion, as supplemented, will be issued, and decision will be entered for respondent.
Footnotes
1. Unless otherwise stated, all section references are to the Internal Revenue Code in effect at the time the petition was filed, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2.
Sec. 6404(i) was redesignatedsec. 6404(h) by theVictims of Terrorism Tax Relief Act of 2001, Pub. L. 107-134, sec. 112(d)(1)(B), 115 Stat. 2435↩ (2002) .3.
Sec. 6404(i) , as cited throughout this opinion, was originally enacted assec. 6404(g) by theTaxpayer Bill of Rights 2 (TBOR 2), Pub. L. 104-168, sec. 302, 110 Stat. 1457 (1996) .Sec. 6404(g) was redesignatedsec. 6404(i) by theInternal Revenue Service Restructuring & Reform Act of 1998, Pub. L. 105-206, secs. 3305(a) ,3309(a), 112 Stat. 743, 745↩ .4. For a detailed discussion of the Hoyt organization and cattle operations see
Durham Farms #1, J. V. v. Comm'r, T.C. Memo. 2000-159 , affd.59 Fed. Appx. 952, 59 Fed. Appx. 952, 2003 U.S. App. LEXIS 5593, 91 A.F.T.R.2d (RIA) 1424↩, (9th Cir. 2003) .5. The unified partnership audit and litigation provisions of
secs. 6221-6223 were first enacted as part of theTax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248, sec. 402(a), 96 Stat. 648↩ , and are generally applicable to partnership taxable years beginning after Sept. 3, 1982.6. The
Omnibus Budget Reconciliation Act of 1989 (OBRA), Pub. L. 101-239, sec. 7721(b), 103 Stat. 2399 , repealedsec. 6621(c) . This repeal was effective for returns the due date for which (determined without extensions) is after Dec. 31, 1989. SeeOBRA sec. 7721(c), 103 Stat. 2400↩ .7.
Sec. 6404(e) was amended byTBOR 2 sec. 301(a)(1) and (2), 110 Stat. 1457↩ , to permit the Commissioner to abate interest with respect to an "unreasonable" error or delay resulting from "managerial" or ministerial acts. The amendment applies to interest accruing with respect to deficiencies for taxable years beginning after July 30, 1996. Accordingly, the amendment is inapplicable in the present case.8. The final regulations under
sec. 6404 , as issued on Dec. 18, 1998, contain the same definition of ministerial act. Seesec. 301.6404-2(b)(2) , Proced. & Admin. Regs. The final regulations generally apply to interest accruing on deficiencies or payments of tax described insec. 6212(a) for taxable years beginning after July 30, 1996. Seesec. 301.6404-2(d)(1) , Proced. & Admin. Regs. Accordingly, as the final regulations are inapplicable in the present case,sec. 301.6404-2T , Temporary Proced. & Admin. Regs.,52 Fed. Reg. 30163 (Aug. 13, 1987), effective for taxable years beginning after Dec. 31, 1978, but before July 30, 1996, applies. Seesec. 301.6404-2T(c) ,Temporary Proced. & Admin. Regs, supra.↩ 9. Respondent's first contact with petitioner for purposes of
sec. 6404(e)↩ was Dec. 17, 1987, the date that respondent sent the notice of beginning of administrative proceeding (NBAP) to the tax matters partner for the 1985 tax year.10. Respondent's first contact with petitioner for purposes of
sec. 6404(e)↩ was Dec. 17, 1987. See supra note 9.
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