Richard K. PHILLIPS and Marilyn J. Phillips, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Richard K. Phillips and Marilyn J. Phillips (collectively Phillips) appeal the judgment of the Tax Court holding them liable as limited partners for taxes incurred by three livestock breeding partnerships. Phillips contends that a waiver of the three-year statute of limitations was invalidly executed by Walter Jay Hoyt III (Hoyt) the Tax Matters Partner of each of the partnerships. The principal issue on appeal is whether criminal tax investigation of a statutory Tax Matters Partner (the TMP) does, or must, end the TMP’s power to act for a partnership. Holding that there is no automatic termination of TMP status by virtue of such an investigation, we affirm the decision of the Tax Court.

FACTS

The 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. In 1983, Phillips became a limited partner in the Shorthorn Genetic Engineering 1983-2 partnership and claimed losses through the partnership for the taxable years 1980, 1981 and 1982. Phillips later became a limited partner in the Durham Shorthorn Breed Syndicate 1987-E and the Timeshare Breeding Service Joint Venture…