                           T.C. Memo. 2013-288



                     UNITED STATES TAX COURT



PEKING INVESTMENT FUND, LLC, PEKING INVESTMENT HOLDINGS
           LLC, TAX MATTERS PARTNER, Petitioner v.
      COMMISSIONER OF INTERNAL REVENUE, Respondent



   Docket No. 12772-09.                       Filed December 23, 2013.



          Participant, T, acting on behalf of Peking Investment Fund,
   LLC (PIF), as PIF's tax matters partner (TMP), executed a series of
   consents extending the I.R.C. sec. 6229(a) periods of limitations for
   making assessments (periods of limitations) with respect to PIF's
   2001-04 taxable years (years in issue) until Dec. 31, 2008. T
   executed those consents pursuant to his appointment as PIF's TMP by
   H, acting on behalf of CMI, PIF's member-manager and its then TMP.
   R's agent auditing PIF's returns for the years in issue was notified of
   that appointment, and he solicited and accepted the consents in the
   belief that they were properly executed by T as PIF's new TMP. T
   and his wife (Ts) also executed consents extending to that same date
   the periods of limitations for making assessments against them for
   their 2001-03 taxable years, including assessments attributable to
   items of a partnership.
                                  -2-

[*2] T moves for summary judgment that the consents he executed
on behalf of PIF are invalid and that the FPAA, issued on Dec. 30,
2008, is, therefore, untimely, on the ground that, as a nonmanaging
member of PIF, he was not qualified to be PIF's TMP and not
otherwise authorized to sign the consents. See I.R.C. sec.
6229(b)(1)(B). For 2001, T argues in the alternative that the initial
consent, properly executed by H, on behalf of PIF's then TMP, CMI,
was executed after the period of limitations for 2001 had expired. As
an alternative basis for his motion, T argues that, because R had
opposed T's motion to elect to participate in this case on the ground
that T was never PIF's TMP, R is both judicially and equitably
estopped from alleging that any of the foregoing consents are valid
extensions of the periods of limitations. R argues that (1) PIF's
appointment of T as PIF's TMP effectively authorized him to execute
the consents on behalf of PIF, (2) in the alternative, CMI's resignation
and appointment of T as PIF's TMP was ineffective so that CMI
remained PIF's TMP, and T, as CMI's vice president, was authorized
to execute the consents on CMI's behalf, (3) for 2001, the initial
consent was timely executed by H, and (4) the doctrines of judicial
and equitable estoppel are inapplicable to invalidate the foregoing
consents. R moves for summary judgment that the consents executed
by the Ts for 2001-03, and by T for 2004, are valid with respect to
them individually so that the FPAA is timely with respect to T's
distributive share of PIF's partnership items for the years in issue.

      1. Held: T's motion for summary judgment that the initial
consent for PIF's 2001 taxable year was untimely will be denied
because there remains a genuine dispute as to material facts.

      2. Held, further, R is not barred by the doctrines of judicial
and/or equitable estoppel from relying on the foregoing consents.

      3. Held, further, the consents that T executed on behalf of PIF
extended the periods of limitations beyond the issuance of the FPAA
on the ground that (1) T's appointment as PIF's TMP effectively
authorized him to execute the consents pursuant to I.R.C. sec.
6229(b)(1)(B) and, alternatively, (2) T is estopped from denying his
                                        -3-

      [*3] authority, as PIF's ostensible TMP, to execute consents on PIF's
      behalf for the years in issue.

            4. Held, further, R is not estopped by any misconduct from
      relying upon the consents that the Ts executed for 2001 to extend the
      period of limitations for that year beyond the issuance of the FPAA.



      Roy E. Hahn (an officer), for petitioner.

      Laura L. Gavioli, Denise M. Mudigere, and Michael Todd Welty, for

participant, Li Chien Tsai.

      Gregory Michael Hahn, Chong S. Hong, Connor J. Moran, and James P.

Thurston, for respondent.



                              MEMORANDUM OPINION


      HALPERN, Judge: Both participant Li Chien Tsai (participant or Mr. Tsai),

on behalf of petitioner, and respondent have moved for summary judgment

(participant's motion, respondent's cross-motion, or, together, motions). Each

party objects to the other's motion.
                                         -4-

[*4] Participant's motion seeks our determination that the section 6229(a)1 three-

year periods of limitations on assessment (periods of limitations) with respect to

partnership items associated with Peking Investment Fund, LLC's (PIF) 2001-04

taxable years (years in issue) expired before respondent issued the notice of final

partnership administrative adjustment (FPAA) covering those years.2 Specifically,

the issue, as regards participant's motion, is whether, pursuant to section

6229(b)(1)(B),3 Forms 872-P, Consent to Extend the Time to Assess Tax

Attributable to Partnership Items, covering the years in issue, executed by

participant, who signed as PIF's tax matters partner (TMP), effectively extended

the periods of limitations for those years for all of PIF's partners beyond the



      1
      Unless otherwise indicated, all section references are to the Internal
Revenue Code in effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
      2
       PIF filed two returns for 2001: one for the short year ending December 24,
2001, and one for the short year ending December 31, 2001. The FPAA failed to
include PIF's short year ending December 24, 2001, and respondent concedes that
we lack jurisdiction over that year. Thus, except as otherwise specifically stated,
any reference herein to PIF's 2001 taxable year is a reference to the short year
ending December 31, 2001.
      3
        Sec. 6229(b)(1)(B) provides that the period of limitations may be extended
"with respect to all partners, by an agreement entered into by the Secretary and the
tax matters partner (or any other person authorized by the partnership in writing to
enter into such an agreement)".
                                         -5-

[*5] issuance of the FPAA. Participant argues that, because he was (1) ineligible

to be PIF's TMP when he signed the Form 872-P consents and (2) not otherwise

authorized to sign them, they were invalid and did not extend the periods of

limitations pursuant to section 6229(b)(1)(B). For 2001, there is a second issue:

whether the first of the consents executed for 2001, properly executed by PIF's

then TMP, was executed before the expiration of the period of limitations.

      Respondent's cross-motion seeks a determination that the FPAA was timely

issued with respect to participant and his wife, Debbie L. Tsai (together, Tsais), in

regard to their 2001-03 taxable years and with respect to Mr. Tsai for his 2004

taxable year. The issue is whether Forms 872-I, Consent to Extend the Time to

Assess Tax As Well As Tax Attributable to Items of a Partnership, executed by the

Tsais for 2001-03, effectively extended the periods of limitations with respect to

deficiencies attributable to Mr. Tsai's distributive share of PIF's partnership items

for those years beyond the issuance of the FPAA. For 2004, the issue is whether

Mr. Tsai's execution of Form 872-P consents for that year effectively extended the

period of limitations applicable to him (as an indirect partner of PIF) and

attributable to his distributive share of PIF's 2004 partnership items beyond the

issuance of the FPAA. For all four years, respondent premises his right to assess

on section 6229(b)(1)(A), which provides that the period of limitations "may be
                                         -6-

[*6] extended * * * with respect to any partner, by an agreement entered into by

the Secretary and such partner * * * before the expiration of such period." In

response, participant argues that, for all four years, the doctrines of both judicial

and equitable estoppel bar respondent from arguing that any agreement to extend

the periods of limitations exists. In addition, for 2004 participant argues that the

Form 872-P consent he executed for that year is "facially invalid" and, therefore,

ineffective to extend the period of limitations "as if it were a Form 872-I consent."

      Because, for the reasons stated infra, we find, as a matter of law, that the

Form 872-P consents that participant executed for PIF's 2002 and 2003 taxable

years effectively extended the periods of limitations for those years with respect to

all of PIF's partners pursuant to section 6229(b)(1)(B), the validity, pursuant to

section 6229(b)(1)(A), of the Tsais' Form 872-I consents for 2002 and 2003, as

they pertain to Mr. Tsai's distributive shares of PIF's partnership items for those

years, becomes moot. Similarly, because we find that the Form 872-P consent that

participant executed for 2004 was valid with respect to all partners of PIF pursuant

to section 6229(b)(1)(B), the issue of whether it was valid with respect to

participant only, pursuant to section 6229(b)(1)(A), also becomes moot.

      For 2001, for the reasons stated infra, we find that there remains a genuine

dispute of material fact as to the date on which PIF filed its 2001 Form 1065, U.S.
                                        -7-

[*7] Return of Partnership Income (2001 return). As a result, we are unable to

resolve, by summary judgment, the timeliness, with respect to all of PIF's partners

under section 6229(b)(1)(B), of the initial Form 872-P consent executed on behalf

of PIF for 2001. Thus, the validity, pursuant to section 6229(b)(1)(A), of the

Tsais' Form 872-I consent for 2001, as it pertains to Mr. Tsai's distributive share of

PIF's partnership items for that year is not moot. Therefore, we will decide

whether to grant summary judgment for respondent on that issue.

                                    Background

Organization and Ownership of PIF

      PIF was organized in 2001 as a Delaware limited liability company "for the

primary purpose of making investments in distressed assets * * * in an effort to

yield an above-average return * * * through * * * the restructuring and

rehabilitation of such assets." During the years in issue, there were three members

of PIF: Peking Investment Holdings, LLC (PIH), owned a 98% membership

interest; Chenery Management, Inc. (CMI) (an S corporation within the meaning

of section 1361(a)(1)), owned a 1% membership interest; and China Cinda, AMC,

owned a 1% membership interest. PIH had five members, two of whom were Mr.

Tsai, who held a 12.990589% membership interest, and CMI, which held a
                                        -8-

[*8] .032396% membership interest. Roy E. Hahn was president and participant

was vice president of CMI during the years in issue.4

      The PIF operating agreement (PIFOA) provides for the appointment of a

manager to manage PIF's "business, property and affairs", and it appoints CMI as

the "initial manager". The PIFOA further provides that the manager serve "an

indefinite term" until a majority in interest of the members designates "a

replacement Manager or until the Manager shall either be unwilling or unable to

continue." The PIFOA also gives the manager the right to resign "at any time

upon sixty (60) days' written notice to the Company." The PIFOA designates

CMI, as the initial manager, to be the TMP "to represent * * * [PIF] * * * in

connection with all examinations of * * * [PIF's] affairs by tax authorities".

CMI's Resignation in Favor of Participant as TMP of PIF

      Mr. Hahn, acting on behalf of CMI, PIF's manager/TMP, signed each of

PIF's returns for the years in issue. Subsequently, by letter dated March 30, 2006,

addressed to Rafael Oliveras (Mr. Oliveras or agent), the IRS agent who audited

PIF's returns for the years in issue, Mr. Hahn advised that "we [meaning CMI]

have resigned as tax matters partner for all tax years for which we previously

      4
       Mr. Hahn was also president of Chenery Associates, Inc. (later renamed
Sussex Financial Enterprises, Inc.), which held a 43.302395% membership interest
in PIH.
                                        -9-

[*9] served as tax matters partner for * * * [PIF and PIH]." Mr. Hahn enclosed

two copies of his (i.e., CMI's) formal "Resignation By Tax Matters Partner (TMP)

Filed Pursuant to Reg. § 301.6231(a)(7)-1(i)". Mr. Hahn's letter states that

participant will be the new TMP for purposes of dealing with Mr. Oliveras in

connection with the PIF audit, and it gives participant's contact information. Mr.

Hahn copied participant on both the letter and the enclosures. Thereafter, by fax

dated April 5, 2006, participant advised Mr. Oliveras that CMI was sending him

all of PIF's books and records and that, upon their receipt, he would "take on the

role of tax matter [sic] partner of * * * [PIF] and * * * [would send Mr. Oliveras] a

separate letter acknowledging my position as the tax matter [sic] partner." That

letter was forthcoming by means of a fax to Mr. Oliveras dated October 11, 2006.

After CMI's March 30, 2006, resignation as TMP and until December 2008,

participant acted and was treated by respondent in connection with the audit of PIF

as PIF's TMP. It was not until December 17, 2008, when the IRS TEFRA5


      5
        The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L.
No. 97-248, sec. 402(a), 96 Stat. at 648, established special procedures for
auditing partnership returns whereby the return is subject to a single audit in
which one partner acts for the partnership but all partners are bound by the results
of the audit. The audit results may be contested in court in a unified proceeding
the results of which are also binding on all partners. See Boris I. Bittker &
Lawrence Lokken, Federal Taxation of Income, Estates and Gifts, para. 112.3.1, at
S112-88-89 (Cum. Supp. No. 2, 2013).
                                        - 10 -

[*10] coordinator reviewing the proposed FPAA to be mailed to PIF first raised

the issue of participant's eligibility to be PIF's TMP, that his status as PIF's TMP

became an issue.6 Subsequently, on January 21, 2010 (in connection with this

litigation), the Court granted PIH's motion to have itself appointed PIF's TMP.

PIF's Returns and the Consents To Extend the Time To Assess Tax Attributable to
PIF

      As discussed more fully infra, the parties disagree as to the date on which

PIF's 2001 return was filed. Participant alleges that that return was timely filed on

or before April 15, 2002. Respondent alleges a filing date of July 12, 2002. There

is no dispute, however, that PIF's 2002-04 returns were timely filed on or before

the April 15 filing due dates. Each of the returns listed a San Francisco, California

address for PIF.

      For 2001 and 2002, CMI, in the person of Mr. Hahn as PIF's TMP, executed

Form 872-P consents, which extended the periods of limitations for 2001 to

December 31, 2006, and, for 2002 to April 15, 2007. Mr. Hahn executed and


      6
       In a December 31, 2008, exchange of emails, Mr. Oliveras sought
information regarding the circumstances and authority by which Mr. Tsai became
PIF's TMP, and Mr. Tsai responded that his "appointment as the TMP was a
mutual verbal agreement between myself, a director of CMI and Roy Hahn,
president of CMI." Respondent's subsequent failure to continue to treat Mr. Tsai
as PIF's TMP would indicate respondent's nonacceptance of that explanation as
describing a valid appointment of Mr. Tsai to that position.
                                         - 11 -

[*11] mailed the Form 872-P consent for 2001 on June 6, 2005, and the consent

for 2002 on January 23, 2006. After participant's March 30, 2006, appointment as

PIF's TMP, replacing CMI in that capacity, the agent forwarded to participant all

subsequent requests for period of limitations extensions. Participant signed all of

the Form 872-P consents forwarded to him as PIF's TMP and returned them to the

agent for IRS signature before the expiration of the previously executed consents.

The last of the Form 872-P consents that both participant and respondent executed

for each of the years in issue purported to extend the periods of limitations on

assessment for those years to December 31, 2008.7

      During 2005-07, the agent also timely requested and obtained from the

Tsais a series of Form 872-I consents for their 2001-03 taxable years, the last of

which extended the periods of limitations with respect to the Tsais, individually

for those years (including tax, interest, and additions to tax attributable to

partnership or affected items or computational adjustments within the meaning of

section 6231(a)(3), (5), and (6)), until December 31, 2008.




      7
       On November 20, 2008, participant, acting as PIF's TMP, signed Form
872-P consents extending the periods of limitations for the years in issue to
December 31, 2009, but respondent never executed those consents and, therefore,
they were ineffective to further extend the periods of limitations. They have no
application to this case.
                                        - 12 -

[*12] On December 30, 2008, respondent sent, by certified mail, nine copies of

the FPAA to various addresses, intending to serve PIF's TMP, its members, and

participant. The FPAA generally denies loss deductions claimed by PIF for the

years in issue and imposes penalties on the ground that the transactions giving rise

to those losses were without business purpose and lacked economic substance.

Prior Motions and the Court's Prior Orders in This Case

      On February 17, 2010, the Court filed respondent's motion for entry of

decision based upon a settlement of this case entered into with PIH as PIF's TMP.

On March 11, 2010, the Court filed Mr. Tsai's motion for leave to file a notice of

election to participate in this case. Mr. Tsai signed the motion as PIF's TMP.8 Mr.

Tsai's motion was prompted, in large part, by his noninclusion in the settlement

negotiations with Mr. Hahn, acting on behalf of PIH, and his opposition to the

settlement. Respondent objected to Mr. Tsai's motion on the ground that his

notice of election to participate was not timely filed and on the further ground that

respondent would be prejudiced by the granting of Mr. Tsai's motion. In his

response to respondent's objection to his motion, Mr. Tsai emphasized that, even

though he had moved to China in July 2008, the agent continued to communicate


      8
       Presumably, participant was unaware, at that time, of our January 21, 2010,
order granting PIH's motion to substitute itself as PIF's TMP.
                                         - 13 -

[*13] with him as PIF's TMP at his New York City mailing addresses until the

issuance of the FPAA. He argued that, because he lacked knowledge of both the

FPAA and respondent's earlier motion for entry of decision, he should be allowed

to participate in the case despite his election to do so out of time. In his reply to

that response, respondent alleged that he did mail copies of the FPAA to Mr.

Tsai's New York addresses and that Mr. Tsai was made aware, by Mr. Hahn, of the

proceedings in this case. Respondent also alleged that he was not required to

serve a copy of his motion for entry of decision on Mr. Tsai because Mr. Tsai "was

neither the TMP [of PIF] nor a participating partner."

      Thereafter, on May 13, 2010, we ordered Mr. Tsai to file a status report

relating to his right and preparedness to participate in litigating this case on behalf

of PIF.

      On July 12, 2010, Mr. Tsai filed his status report. In his declaration

accompanying the status report, Mr. Tsai alleged that, in March 2006, he "properly

notified the Respondent that * * * [he] was the new * * * [TMP for PIF]." He also

alleged that when "[r]espondent issued the FPAA, Mr. Tsai was * * * [PIF's]

TMP", and he confirmed that "respondent communicated with * * * [me in my]

capacity as * * * [PIF's] TMP * * * up through December 2008." The status report

itself argues for Mr. Tsai's participation in this case on the ground that his
                                        - 14 -

[*14] "experience in investing in Chinese distressed assets is crucial to [an]

understanding [of] the transactions at issue" and that "he has first-hand

information as to the legitimacy * * * and the economic benefits such transactions

provided." The status report concludes that Mr. Tsai must not be deprived "of his

opportunity to challenge this unfair settlement and litigate the merits of this case.

Accordingly, he must be entitled to participate in this action."

      In his response to Mr. Tsai's status report, respondent defends his mailing of

the FPAA to a "generic TMP" on the ground that "although Mr. Tsai represented

himself to be the TMP of PIF, he was not legally eligible to be the TMP * * *

because he held no interest in PIF and was not a member of PIF."

      On November 10, 2010, we issued an order (November 10, 2010, order)

requiring the parties and Mr. Tsai to file memorandums of law (MOLs) addressing

"who is or has been" PIF's TMP, the extent to which the case must be dismissed

because filed by or on behalf of an improper person, and the need, if any, to amend

the caption. In the order, we observed that, after "PIF designated Mr. Tsai as its

new TMP * * * [t]he revenue agent proceeded to deal with Mr. Tsai as PIF's

TMP." We further observed:

      Apparently, Mr. Tsai was entitled to become the TMP of PIF because
      at the time of the designation he was a "member-manager" of PIH, see
      sec. 301.6231(a)(7)-2(b)(3), Proced. & Admin. Regs., and an indirect
                                         - 15 -

      [*15] member of PIF, see Dionne v. Commissioner, T.C. Memo.
      1993-117 (holding that an indirect partner is treated as a partner
      under sec. 6231(a)(2)(B)), and PIH was a member-manager of PIF.

      In his MOL in response to the November 10, 2010, order, respondent

argued that, pursuant to section 301.6231(a)(7)-1, Proced. & Admin. Regs.,

Mr. Tsai was ineligible to be PIF's TMP and that CMI's purported resignation as

TMP in favor of Mr. Tsai was "meaningless". In making that argument,

respondent specifically rejected our conclusion in the November 10, 2010, order

that Mr. Tsai's status as an indirect partner of PIF, through his interest as a

member-manager in PIH, entitled him to become PIF's TMP.9

      In his MOL in response to respondent's MOL, Mr. Tsai argued that his role

was "crucial to a complete understanding of * * * [the case] given [that]

Respondent treated him as TMP for two years and relied upon his authority to

extend the statute of limitations." Mr. Tsai notes, however, that, assuming CMI

continued as PIF's TMP after its purported resignation as such, "the FPAA was not

timely issued because the Respondent does not have [a] validly executed * * *

extension from an authorized PIF partner."




      9
     Rather, according to respondent, "because Mr. Tsai was never a member-
manager of PIF, he was never and is not qualified to be PIF's TMP."
                                         - 16 -

[*16] On May 5, 2011, we issued an order (May 5, 2011, order) granting Mr.

Tsai's motion for leave to file a notice of election to participate in this case and

denying respondent's earlier motion for entry of decision based upon his

settlement negotiated with Mr. Hahn. In the May 5, 2011, order, we noted Mr.

Tsai's desire to participate in the case in order "to prove that PIF realized real

economic benefits from its involvement in the distressed asset program underlying

this case and to prove that respondent's determination is wrong", and we further

noted our reliance on Mr. Tsai's representations "to the Court, without

contradiction by respondent, that he is prepared and financially able to litigate the

merits of this case on behalf of PIF."

                                      Discussion

I.    Summary Judgment

      A summary judgment is appropriate "if the pleadings, answers to

interrogatories, depositions, admissions, and any other acceptable materials,

together with the affidavits or declarations, if any, show that there is no genuine

dispute as to any material fact and that a decision may be rendered as a matter of

law." Rule 121(b). A summary judgment may be made upon part of the legal

issues in controversy. See Rule 121(a).
                                        - 17 -

[*17] II.    Participant's Motion

      A.     Timeliness of the Initial Form 872-P Consent for 2001

             1.     Introduction

      As noted supra, there are two issues concerning 2001: (1) whether

participant's execution of Form 872-P consents for that year on behalf of PIF were

effective to extend the period of limitations to December 31, 2008 (an issue

common to all of the years in issue), and (2) whether the first of those consents for

2001 (signed by Mr. Hahn who, by signing as president of CMI, PIF's then TMP,

was admittedly authorized to sign the consent) was executed before the expiration

of the period of limitations for 2001. We will address issue (2) first because it is

unique to 2001 and then address issue (1) in connection with our analysis of the

validity of all of the Form 872-P consents that participant executed as PIF's TMP

for the years in issue.

             2.     Analysis

      On June 6, 2005, Mr. Hahn, on behalf of CMI, executed a Form 872-P

consent to extend the period of limitations for 2001 to December 31, 2006. If PIF

timely filed its 2001 return on or before April 15, 2002, the foregoing extension,

executed after the April 15, 2005, expiration of the period of limitations for 2001,

would be invalid, as would all subsequent consents for 2001.
                                         - 18 -

[*18] Participant argues that the evidence in the record raises a presumption, not

rebutted by respondent, that PIF's 2001 return was timely filed on or before April

15, 2002, so that the June 6, 2005, consent, executed after the period of limitations

had expired, is invalid. Participant relies upon his and Mr. Hahn's June 28, 2012,

declarations that Mr. Hahn, on behalf of PIF, was in the practice of timely filing

PIF's returns and of mailing its returns within three days of execution. He also

notes that both Mr. Hahn and the return preparer signed all of PIF's returns,

including the 2001 return, on or before the April 15 deadline.

      Participant argues that his and Mr. Hahn's declarations furnish extrinsic

evidence ("prima facie proof") of the timely filing of PIF's 2001 return and that

"[r]espondent has not and cannot produce admissible evidence to establish the

presence of a genuine factual dispute." Therefore, summary judgment in

petitioner's favor on the limitations issue with respect to 2001 is justified. In that

regard, participant notes that respondent is unable to provide either the filed 2001

return or the envelope in which it was mailed.

      In support of his position, participant cites three cases holding that

unrebutted, extrinsic evidence of timely mailing of a return is sufficient to justify a

holding that the return was timely filed. See Anderson v. United States, 966 F.2d
                                         - 19 -

[*19] 487 (9th Cir. 1992); Kralstein v. Commissioner, 38 T.C. 810 (1962);

Oppenheimer v. Commissioner, 16 T.C. 515 (1951).

      Both Anderson and Kralstein involved taxpayers who were found to have

testified credibly (and, in Anderson, with corroborating testimony) that they did, in

fact, timely mail the returns in question. In this case, neither participant nor Mr.

Hahn has a personal recollection of the exact date on which PIF's 2001 return was

filed. Both were able to state only that, "to the best of my knowledge", all of PIF's

returns were timely executed and filed, and that CMI was in the practice of timely

filing PIF's returns within a few days of execution. Therefore, Anderson and

Kralstein are inapposite.

      In Oppenheimer, however, we held that, despite the taxpayer's inability to

"remember precisely that she personally mailed the return", her certainty that "she

followed her usual method in sending it to the collector" coupled with the

Commissioner's failure to retain the postmarked envelope in which it was mailed

was sufficient for us to find "as a fact that the petitioner's return was timely filed."

Oppenheimer v. Commissioner, 16 T.C. at 527-528. In essence, we found for the

taxpayer on the basis of her testimony, unrebutted by the Commissioner. In this

case, however, respondent has presented substantial evidence to rebut participant's

evidence that the 2001 return was timely filed.
                                        - 20 -

[*20] Although, as in Oppenheimer, respondent is unable to provide the original

2001 return or the original mailing envelope for that return, there exists credible

evidence that, for 2001, PIF mailed to respondent a Form 8736, Application for

Automatic Extension of Time To File U.S. Return for a Partnership, REMIC, or

for Certain Trusts, on or about April 15, 2002, and its 2001 return on or about July

12, 2002.10 Mr. Hahn, in a second declaration dated August 9, 2012, states that he

reviewed PIF's 2001 tax files at respondent's counsel's request and found copies of

(1) the Form 8736 for 2001, (2) a U.S. Postal Service (USPS) certified mail receipt

dated April 15, 2002, with a handwritten IRS Ogden, Utah, address and a

handwritten notation stating "Extension 8736 D", (3) a USPS form with a

handwritten IRS Ogden, Utah, address and a stamp "IRS - OSC RECEIVED

Ogden, UT", and (4) a letter from FedEx Express dated July 25, 2002, with a

tracking number and the handwritten notation "Peking Inv Fund Form 1065

11/27/01-12/24/01 & 12/25/01-12/31/01." Mr. Hahn states that, to the best of his

knowledge, the handwritten notations were by a former CMI employee with

mailroom responsibilities and are, presumably, accurate. On the basis of that

documentation obtained from PIF's 2001 tax files, Mr. Hahn concludes:

      10
       A July 12, 2002, filing date for the 2001 return would mean that the initial
Form 872-P consent for 2001, executed and mailed to respondent on June 6, 2005,
was timely; i.e., executed within three years of the return filing date.
                                        - 21 -

[*21] "Although I do not now have any personal recollection of the date that the

PIF 2001 Tax Returns were mailed to the IRS, the documentation in the CMI files

indicates that PIF mailed an extension on April 15, 2002 and mailed the Forms

1065 on July 11, 2002." Mr. Hahn further states: "It was not a regular practice of

CMI to simultaneously mail both an extension of time to file and tax returns at the

same time."

      Participant acknowledges "the existence of a FedEx tracking slip which

indicates that * * * [PIF] mailed a package to the Service on July 11, 2002", but

argues, on the basis of a handwritten notation, "duplicate return", on an IRS

transcript for PIF opposite a date of July 12, 2002, that PIF mailed a duplicate, not

its original, return to respondent on July 11, 2002. In response to that claim,

respondent has submitted the declaration of Laura J. Schmitz (Schmitz

declaration) dated August 30, 2012. In her declaration, Ms. Schmitz identifies

herself as "a TEFRA Coordinator with the * * * ('IRS') * * * since July 10, 2005"

and, previously, "a Revenue Agent since September 18, 1994." On the basis of the

above-described mailing documentation and her reading of IRS transcripts

pertaining to PIF, Ms. Schmitz concludes that the filing extension applications

were mailed on April 15, 2002, and received by the IRS on April 19, 2002. On the

basis of the same evidence, she further concludes that respondent received and
                                          - 22 -

[*22] filed original returns for the two short years ending in 2001 on July 12,

2002. She explains that the coding of PIF's return for the second 2001 short year

as a "duplicate return" was made necessary by PIF's filing of returns for two tax

years ending in the same month. She states that, in those circumstances, the IRS

"cannot establish a separate tax module for each * * * [return] filed by the

partnership. Rather * * * [it] will create only one tax module for both * * *

returns." She further states that, because it cannot code two original returns in one

"tax module", the IRS codes the later return as a "duplicate return", but that does

not indicate that that return is not an originally filed return.

      We find that respondent has presented substantial credible evidence that PIF

did not file its 2001 return until July 12, 2002, and that that evidence is more than

sufficient to show a "genuine dispute as to * * * [a] material fact", within the

meaning of Rule 121(b), pertaining to the timeliness of the initial extension for

2001. Participant asks that we disregard Ms. Schmitz's declaration on the ground

that it should have been furnished to him during discovery. Participant argues that

he "has had no meaningful opportunity to examine and test the credibility of the

evidence." But even if we were to disregard Ms. Schmitz's declaration, we would

find that Mr. Hahn's declarations plus the documentary evidence of (1) an April

15, 2002, mailing of an application for a filing extension and (2) a July 12, 2002,
                                        - 23 -

[*23] filing of the 2001 return are sufficient to raise a genuine issue of material

fact regarding the date on which PIF filed its 2001 return. Moreover, should this

case proceed to trial, participant will have ample opportunity to "examine and test

the credibility" of Ms. Schmitz's evidence, either by deposition, pursuant to Rules

70 and 74, or at trial.

              3.     Conclusion

       Participant's motion for summary judgment with respect to the timeliness of

the initial Form 872-P consent for 2001 will be denied.

       B.     Validity of the Form 872-P Consents That Participant Signed

              1.     The Parties' Arguments

       Participant argues that, because he was not a member-manager of PIF, he

was neither eligible to be (and, therefore, he was not) PIF's TMP nor was he

otherwise properly authorized to extend the period of limitations for any of the

years in issue. As a result, he argues that the Form 872-P consents that he

executed for the years in issue did not pursuant to section 6229(b)(1)(B) extend

the period of limitations to December 31, 2008, for any of those years and, as a

result, the FPAA respondent issued on December 30, 2008, is untimely and

invalid.
                                       - 24 -

[*24] Participant cites the requirement of section 301.6231(a)(7)-1(b)(1), Proced.

& Admin. Regs., that, unlike participant, a TMP must be a general partner at some

time during the taxable year or a general partner when the designation is made.

See also section 301.6231(a)(7)-2(a), Proced. & Admin. Regs., stating that "only a

member-manager of an LLC is treated as a general partner" and section

301.6231(a)(7)-2(b)(3), Proced. & Admin. Regs., defining a "member-manager" as

"a member of an LLC who, alone or together with others, is vested with the

continuing exclusive authority to make the management decisions necessary to

conduct the business for which the organization was formed."

      In further support of his argument that he was not otherwise authorized to

be PIF's TMP, participant states that PIF did not grant him authority to extend the

period of limitations pursuant to the procedures specified in section 301.6229(b)-

1, Proced. & Admin. Regs.

      Participant also argues that he did not have express authority, under the

PIFOA, to extend the period of limitations on assessment nor did he have apparent

authority to do so under Delaware law. Therefore, he argues that cases allowing

an individual other than the TMP to execute binding consents under those

circumstances are inapposite.
                                        - 25 -

[*25] Lastly, participant argues that, pursuant to the doctrines of both judicial and

equitable estoppel, respondent may not assert "that Tsai either had authority to

extend the statute [of limitations] or that an agreement to extend the statute

existed."

      Participant bases his argument for the application of judicial estoppel on

what he considers to be respondent's improperly inconsistent positions regarding

participant's status as PIF's TMP; i.e., respondent's treatment of participant as PIF's

TMP for purposes of obtaining the Form 872-P consents followed by his assertion

"[t]hroughout this proceeding" that participant's designation as TMP was invalid

and that CMI has been PIF's TMP from its formation to the present. In

participant's view: "Respondent intends to have it both ways. Respondent argues

that Tsai's consents as TMP were valid because Respondent reasonably relied on

Tsai's apparent authority, but Respondent also treated Tsai as having no apparent

authority when attempting to settle the case."

      Participant invokes the doctrine of equitable estoppel on the ground that he

relied on good faith upon respondent's acceptance of him as PIF's TMP in signing

the Form 872-P consents for the years in issue, thereby reasonably believing that

his "execution of the extensions would result in good-faith efforts to resolve the

case". Participant argues that the detriment to him was respondent's
                                       - 26 -

[*26] (unsuccessful) attempt to exclude him from the settlement negotiations,

which served as "an injustice" to him. He states that, had he "known that he was

not authorized to execute the statute extensions, that * * * [respondent] considered

his appointment [as TMP] invalid", and that he would be excluded from

participating in the settlement negotiations, he "would not have granted * * *

[respondent] the additional time for assessment or attempted to cooperate with

* * * [respondent's] requests."

      Respondent counters that Mr. Hahn's March 30, 2006, letter, whereby Mr.

Hahn notified the agent of his resignation and appointment of participant as PIF's

TMP "consisted of written words which, reasonably interpreted, caused Mr. Tsai

and * * * [Revenue Agent] Oliveras to believe Mr. Tsai had the authority to sign

the Form 872-P consents." Respondent concludes that the letter "granted Mr. Tsai

actual authority to execute consents for PIF." In essence, respondent argues that

participant did not execute the consents as TMP but, rather, as a "person

authorized by the partnership in writing" to execute the consents, as provided for

in section 6229(b)(1)(B). Alternatively, respondent argues that because CMI was

the only member-manager of PIF it could not properly designate a substitute TMP

and, therefore, was "deemed to be the TMP for the years at issue notwithstanding

its purported resignation." Respondent then reasons that, as vice president of
                                         - 27 -

[*27] CMI, participant was authorized to sign the consents on its behalf, and, by

not objecting to its agent's (i.e., CMI's) action, PIF, in effect, ratified the execution

of the Form 872-P consents.

      Lastly, respondent rejects participant's claim that he has taken inconsistent

positions in this case which merit the application of either judicial or equitable

estoppel. In opposing application of the former, respondent argues that, in

connection with both Mr. Tsai's motion to elect to participate and his motion for

summary judgment, respondent "has consistently maintained the position that Mr.

Tsai was not authorized to be PIF's TMP." In opposing application of the latter,

respondent argues that participant's good-faith execution of the Form 872-P

consents was not "a change of position to his detriment" because his failure to sign

would have caused the immediate issuance of an FPAA leaving participant (and

PIF) in the same position, and that, even if he did act to his detriment in signing

the consents, those signings, followed by respondent's alleged noncommunication

with participant during the course of this litigation is not the type of "affirmative

misconduct" necessary to warrant the application of equitable estoppel against

respondent.
                                         - 28 -

[*28]         2.     Analysis

                     a.    Application of Judicial and/or Equitable Estoppel

        We agree with respondent that he is neither judicially nor equitably

estopped from opposing participant's summary judgment motion on the merits;

i.e., from arguing that the Form 872-P consents were properly executed and that

the FPAA was, therefore, timely issued.

        The Supreme Court has described the doctrine of judicial estoppel as

follows:

              "[W]here a party assumes a certain position in a legal
        proceeding, and succeeds in maintaining that position, he may not
        thereafter, simply because his interests have changed, assume a
        contrary position, especially if it be to the prejudice of the party who
        has acquiesced in the position formerly taken by him." Davis v.
        Wakelee, 156 U.S. 680, 689 (1895). This rule, known as judicial
        estoppel, "generally prevents a party from prevailing in one phase of a
        case on an argument and then relying on a contradictory argument to
        prevail in another phase." Pegram v. Herdrich, 530 U.S. 211, 227, n.8
        (2000); * * *

               Although we have not had occasion to discuss the doctrine
        elaborately, other courts have uniformly recognized that its purpose is
        "to protect the integrity of the judicial process," Edwards v. Aetna
        Life Ins. Co., 690 F.2d 595, 598 (CA6 1982), by "prohibiting parties
        from deliberately changing positions according to the exigencies of
        the moment," United States v. McCaskey, 9 F.3d 368, 378 (CA5
        1993). * * *
                                         - 29 -

[*29] New Hampshire v. Maine, 532 U.S. 742, 749-750 (2001); see also

Huddleston v. Commissioner, 100 T.C. 17, 26 (1993) ("Judicial estoppel is an

equitable doctrine that prevents parties in subsequent judicial proceedings from

asserting positions contradictory to those they previously have affirmatively

persuaded a court to accept.").

      We agree with respondent that he has not taken contradictory positions in

this case (nor does his position herein contradict a position sustained in any prior

case) regarding participant's status as PIF's TMP. In his submissions in opposition

to both Mr. Tsai's motion for leave to file a notice of election to participate and in

his motion for summary judgment, respondent has consistently argued that Mr.

Tsai was never PIF's TMP. Respondent's allegedly inconsistent or contradictory

treatment of participant as PIF's TMP, authorized to sign the Forms 872-P

consents on behalf of PIF, occurred during the audit, before the issuance of the

FPAA and the commencement of this case, and appears to have been based upon

both the agent's and participant's good-faith belief that participant had, in fact,

become PIF's TMP.

      Respondent has made two alternative arguments during this litigation:

(1) participant's execution of the Form 872-P consents effectively extended the

period of limitations not because he was, in fact, PIF's TMP at the time but
                                       - 30 -

[*30] because, as vice president of CMI, which never ceased to be the TMP

(despite its purported resignation as such), he was authorized to execute the

consents on CMI's behalf and (2) Mr. Hahn's March 30, 2006, resignation, on

behalf of CMI, as PIF's TMP and designation of participant as the new TMP was,

in substance, CMI's authorization of participant to execute the consents under

section 6229(b)(1)(B). Neither argument contradicts a prior successful argument

before this or any other court. Therefore, respondent is not judicially estopped

from making those arguments.

      Nor are respondent's arguments herein barred by the doctrine of equitable

estoppel.

      In McCorkle v. Commissioner, 124 T.C. 56, 68 (2005), we described the

doctrine of equitable estoppel as follows:

             Equitable estoppel is a judicial doctrine that precludes a party
      from denying that party's own acts or representations that induce
      another to act to his or her detriment. E.g., Graff v. Commissioner,
      74 T.C. 743, 761 (1980), affd. 673 F.2d 784 (5th Cir. 1982). It is to
      be applied against the Commissioner only with utmost caution and
      restraint. E.g., Hofstetter v. Commissioner, 98 T.C. 695, 700 (1992).
      The essential elements of estoppel are: (1) There must be a false
      representation or wrongful misleading silence; (2) the error must be in
      a statement of fact and not in an opinion or a statement of law; (3) the
      person claiming the benefits of estoppel must be ignorant of the true
      facts; and (4) he must be adversely affected by the acts or statements
      of the person against whom estoppel is claimed. E.g., Estate of
      Emerson v. Commissioner, 67 T.C. 612, 617-618 (1977); * * *
                                        - 31 -

[*31] Here, there was no "false representation or wrongful misleading silence" on

respondent's part. It was participant who represented to respondent that he was

PIF's TMP. Respondent, in the person of the agent, accepted participant's claim to

that role in good faith until he was advised otherwise and, after some

investigation, concluded that participant was not qualified to be PIF's TMP. Not

until then did respondent stop treating participant as PIF's TMP. The

circumstances do not warrant the application of equitable estoppel against

respondent.11




      11
         We note in passing that it is participant, not respondent, who has taken
inconsistent positions regarding his status as PIF's TMP during the course of this
litigation. In support of his motion to elect to participate in this case, participant
argued that he became PIF's TMP in 2006 and continued to retain that status when
the FPAA was issued. Participant further argued, in support of his motion, that his
"experience in investing in Chinese distressed assets is crucial to understanding
the transactions at issue" and that, therefore, he was both willing and able to
litigate the case on behalf of PIF. In fact, participant's right, as a claimed former
TMP, with knowledge of PIF's business, to litigate this case on the merits was a
basis for our May 5, 2011, order granting participant's motion to elect to
participate ("Mr. Tsai seeks to participate to prove that PIF realized real economic
benefits from its involvement in the distressed asset program * * * and to prove
that respondent's determination was wrong."). Participant's position in support of
his summary judgment motion, whereby he (1) denies ever having been PIF's TMP
and (2) seeks to bar respondent's proposed adjustments on procedural grounds, is
clearly inconsistent with his representations in support of his prior motion.
                                         - 32 -

[*32]                b.    Respondent's Right To Rely Upon the Form 872-P
                           Consents that Participant Signed as Extending the Period
                           of Limitations

                           (1)    Introduction

        In essence, participant argues that (1) he was ineligible to be, and therefore

never was, PIF's TMP, (2) as a non-TMP, he was never granted actual authority to

execute the Form 872-P extensions pursuant to section 6229(b)(1)(B) or pursuant

to the PIFOA, and (3) he had no apparent authority to do so under Delaware law.

        Respondent challenges only the second of participant's arguments, arguing

that Mr. Hahn, as president and on behalf of CMI, PIF's sole member-manager,

effectively authorized participant to execute the Form 872-P consents when he

appointed participant to be PIF's TMP. Respondent argues, in the alternative, that

"CMI's purported resignation did not terminate CMI's status as TMP, because CMI

was the sole member-manager of PIF." He states: "Because CMI was the only

member-manager and did not designate a proper substitute TMP, * * * [CMI] was

deemed to be the TMP * * * notwithstanding its purported resignation." He then

concludes that the Form 872-P consents were valid on the ground that participant,

as vice president of CMI, had the authority to execute those forms on CMI's behalf

and on the further ground that Mr. Hahn's subsequent silence constituted PIF's

ratification of participant's execution of the forms on CMI's behalf.
                                       - 33 -

[*33] Because we agree with respondent's first argument, we do not address his

alternative argument.12 We do, however, offer a separate, alternative basis for

sustaining respondent's right to rely on the Form 872-P consents that is not

directly addressed by either participant or respondent.

                          (2)   Whether Participant Was Authorized To Execute
                                the Form 872-P Extensions

                                (a) Analysis

      The March 30, 2006, letter that Mr. Hahn faxed to both Mr. Oliveras and

participant specifically appoints participant to be PIF's TMP and states that CMI is

"in the process of transitioning to Mr. Tsai the books and records of * * * [both

PIF and PIH], including the files pertaining to the examinations and pending

IDRs." Assuming that that notification did not succeed in substituting participant

for CMI as PIF's TMP because participant was ineligible to be the TMP, the issue

      12
         Although we do not formally address respondent's alternative argument
based, in part, upon CMI's alleged inability to resign as PIF's TMP, we note that
that argument appears problematic in the light of sec. 301.6231(a)(7)-1(i), Proced.
& Admin. Regs., which provides that a designated TMP "may resign at any time
by a written statement to that effect." Moreover, even though participant was not a
member-manager of PIF and, therefore, was ineligible to be treated as a general
partner pursuant to sec. 301.6231(a)(7)-2(a), Proced. & Admin. Regs., he was, at
least, an indirect limited partner in PIF pursuant to sec. 6231(a)(2)(B), and
respondent had the power to select him, as such, to serve as TMP pursuant to sec.
6231(a)(7). See Computer Programs Lambda, Ltd. v. Commissioner, 90 T.C.
1124, 1127 (1988); see also Starlight Mine v. Commissioner, T.C. Memo. 1991-
59, 1991 Tax Ct. Memo LEXIS 75, at *2.
                                       - 34 -

[*34] is whether it effectively constituted a section 6229(b)(1)(B) authorization of

participant to execute the Form 872-P consents on behalf of PIF.

      Respondent cites our decision in Inv. Eng'rs, Ltd. v. Commissioner, T.C.

Memo. 1994-255, 1994 WL 243487, aff'd without published opinion sub nom.

Montelius v. Commissioner, 145 F.3d 1339 (9th Cir. 1998), in support of his

argument that the March 30, 2006, letter gave participant the authority to execute

the extensions on behalf of PIF. In that case, Investment Engineers, Ltd., was a

limited partnership and Curtis was its sole general partner. Curtis decided he no

longer wanted to be a general partner, and, in July 1984, without soliciting the

approval of the limited partners, he executed a witnessed document purporting to

admit Montelius, one of the limited partners, "as an additional general partner",

intending to confer on him all the powers and responsibilities of a general partner.

Id., 1994 WL 243487, at *2. Curtis and Montelius both believed that Montelius

thereby became a general partner in the partnership. Curtis also believed that he

was no longer a partner and that Montelius was the sole general partner.

Montelius' actions as the general partner from July 1984 to 1993 included his

signing the partnership's 1984 through 1991 Federal income tax returns as the

general partner. In that capacity, he also dealt with the IRS agent auditing the

partnership's 1982-84 returns. During 1985-87, he signed consents extending the
                                         - 35 -

[*35] time for assessments relating to the audit years. He filed a protest,

purportedly on behalf of all the partners, appealing the agent's findings, and he

was the addressee (as the partnership's TMP) of the FPAA that was ultimately

issued by the IRS.

      The partnership argued that Montelius was never more than a limited

partner without authority to execute the consents extending the periods of

limitations on assessments and that, therefore, those consents were invalid and the

FPAA was untimely and, therefore, void. We agreed with the Commissioner's

argument that Montelius, through his purported admission as a general partner of

the partnership, had written authorization to sign the consents. We determined

that (1) Curtis, as general partner, had the authority to execute the consents and,

therefore, the authority to delegate that power, (2) the intent of Curtis and

Montelius was to shift to the latter broad authority with respect to partnership

matters, including the authority to execute the consents, and (3) all but one of the

limited partners acquiesced in that arrangement and that one did not express his

objection until long after the expiration of the period of limitations. Id. at *6. We

concluded that "[r]egardless of whether the written agreement changed Montelius'

status to that of general partner, it authorized Montelius to assume the powers and

responsibilities of a general partner" and that petitioner failed to prove that the
                                        - 36 -

[*36] consent executed by Montelius "was invalid or that Curtis, as the general

partner [and] agent of the Partnership, did not intend to authorize Montelius to

execute [the] consents on behalf of the Partnership." We held that, under the

partnership agreement, State law, and "the explicit grant of authority from Curtis,

Montelius had the written authority to sign the consents, as required by section

6229(b)". Inv. Eng'rs, Ltd. v. Commissioner, 1994 WL 243487, at *7.

      Our decision in Inv. Eng'rs, Ltd. was based, in large part, upon our prior

decisions in Cambridge Research & Dev. Grp. v. Commissioner, 97 T.C. 287

(1991), and Amesbury Apartments, Ltd. v. Commissioner, 95 T.C. 227 (1990),

and, specifically, our conclusion in each that there is nothing in section

6229(b)(1)(B) or the relevant legislative history to suggest a requirement that the

writing authorizing one other than the TMP to sign consents extending the period

of limitations is limited to a writing specifically referring to a consent agreement

under section 6229(b)(1)(B). See Cambridge Research & Dev. Grp. v.

Commissioner, 97 T.C. at 300-301; Amesbury Apartments, Ltd. v. Commissioner,

95 T.C. at 242-243; see also Bugaboo Timber Co. v. Commissioner, 101 T.C. 474,

488 (1993). Moreover, in Inv. Eng'rs, Ltd. v. Commissioner, 1994 WL 243487, at

*5, we followed our holding in Cambridge Research & Dev. Grp. (which, in turn,

followed Amesbury Apartments, Ltd.) that "'the use of the verbal auxiliary "may,"
                                        - 37 -

[*37] rather than "shall," in the first sentence of section 301.6229(b)-1T,

Temporary Proced. & Admin. Regs., * * * establishes that the procedures

specified in the regulation [for drafting, executing, and filing a section

6229(b)(1)(B) authorization] are permissive and not mandatory'", so that a

partnership "may use another method to authorize a person to extend * * * [the

period of limitations]."13

      Here, Mr. Hahn, on behalf of CMI, PIF's designated member-manager and

TMP under the PIFOA, had the power to confer upon participant the authority to

execute the Form 872-P consents, and he exercised that power by appointing him

PIF's TMP.14 His appointment of participant as PIF's TMP may have been fruitless

to actually make participant PIF's TMP, see sec. 6231(a)(7); sec. 301.6231(a)(7)-1,

Proced. & Admin. Regs., but the appointment expressed Mr. Hahn's intent to


      13
         The same may be said of the final regulation, sec. 301.6229(b)-1, Proced.
& Admin. Regs., which is effective for partnership taxable years beginning on or
after October 4, 2001, i.e., for PIF's 2002-04 taxable years, and, with respect to the
facts of this case, is identical, in all material respects, to the cited temporary
regulation.
      14
        Cf. Med. & Bus. Facilities, Ltd. v. Commissioner, 60 F.3d 207, 208, 210-
211 (5th Cir. 1995) (general partner's authorization of the individual who signed
the consents on behalf of the partnership to represent the partnership before the
IRS was deemed ineffective where the partnership agreement required the
managing general partner and a management committee to "act collectively on all
decisions with respect to the management and control of the business"), rev'g T.C.
Memo. 1994-38.
                                        - 38 -

[*38] authorize participant to exercise the authority that, on behalf of CMI (as

PIF's designated member-manager and TMP), Mr. Hahn could exercise, including

the authority to execute the Form 872-P consents. The efficaciousness of Mr.

Hahn's ostensible appointment of participant as PIF's TMP should be no less than

Curtis' ostensible appointment of Montelius as sole general partner of Investment

Engineers, Ltd., in his stead. Although both appointments may have been

inefficacious to accomplish the stated purpose (i.e., designation of a TMP or

creation of a general partner), both granted authority that was broad enough to

permit the recipient to deal with the IRS on behalf of the partnership (or in this

case, the LLC), including the authority to execute consents extending the period of

limitations. Just as Curtis "authorized Montelius to assume the powers and

responsibilities of a general partner", so too did Mr. Hahn authorize participant "to

assume the powers and responsibilities of" PIF's TMP, which, pursuant to section

6229(b)(1)(B), included the power to execute the consents.15

      15
         With regard to the efficacy of an individual's purported or ostensible
authority to act as a partnership's TMP, the language of the Court of Appeals for
the Ninth Circuit, in its unpublished opinion affirming our decision in Inv. Eng'rs,
Ltd., discussing Montelius's ostensible authority to act as a general partner, is
instructive:

      Thus, the Partnership, through its agent Curtis, led Claus [the IRS
      agent] to believe that Montelius was an agent of the Partnership with
                                                                       (continued...)
                                        - 39 -

[*39]                            (b) Conclusion

        Participant was authorized to execute the Form 872-P consents for 2001-04

on behalf of PIF.

                           (3)   Whether Participant Is Estopped From Denying
                                 His Authority To Execute the Form 872-P
                                 Extensions

                                 (a) Analysis

        In Cascade P'ship v. Commissioner, T.C. Memo. 1996-299, 1996 WL

348214, we considered whether the partnership was estopped from denying an

individual partner's authority to execute a consent binding the partnership to an

extension of the period of limitations. In that case, at the request of Walsh, the

nonpartner promoter and manager of the partnership, Costello, one of the partners,

        15
          (...continued)
        the powers of general partner. Given the fact that Montelius was, in
        fact, acting as a general partner, Claus's reliance on Curtis's
        representations was not unreasonable. Because Montelius was an
        agent of the Partnership with ostensible authority to act as general
        partner, the broad grant of authority to general partners in the
        Partnership Agreement provided him with the necessary written
        authorization to sign consents under § 6229(b)(1)(B).

Montelius v. Commissioner, 145 F.3d 1339, 1998 WL 337955, at *2 (9th Cir.
1998), aff'g Inv. Eng'rs, Ltd. v. Commissioner, T.C. Memo. 1996-122. Here,
because participant was, indirectly, an agent of PIF with ostensible authority to act
as its TMP, the grant of authority to TMPs, under sec. 6229(b)(1)(B), to sign
consents extending the period of limitations provided him with the necessary
written authorization to sign consents under that same provision.
                                        - 40 -

[*40] signed a consent extending the limitations period for making assessments

against the partnership. He signed the consent on the line designated for the TMP

rather than on the line designated for a representative of the partnership.

Thereafter, he dealt with the IRS in connection with its audit of the partnership as

the partnership's TMP. In response to the IRS' proposed adjustment and

subsequent FPAA, the partnership filed a petition with this Court signed by

Costello as TMP. Almost five years after the petition was filed and the caption

changed to reflect Mr. and Mrs. Costello as the partnership's TMP, the partnership

moved to amend the petition in order to plead that the period of limitations had

expired before the Commissioner's mailing of the FPAA to Mr. Costello.

Thereafter, both parties moved for partial summary judgment on the period of

limitations issue. Id., 1996 WL 348214, at *2. We noted that

       Costello, although a general partner of Cascade, had not been
       expressly designated as Cascade's TMP, and he was not the partner
       with the largest partnership interest. Costello held himself out as an
       agent of Cascade and permitted respondent to believe that he was
       Cascade's TMP. Respondent's agents relied to their detriment on
       Costello's manifestation of authority to act as TMP on behalf of
       Cascade. * * *

Id. at *3.

       In holding that the partnership was estopped from denying Costello's

authority to execute the consents as the ostensible TMP, we reasoned as follows:
                                        - 41 -

       [*41] There is no question that Costello, Walsh, and the other partners
       were aware that respondent was acting on Costello's execution of
documents, including the consent and correspondence with respondent. * * * [I]t
is clear that respondent did not know that Costello was not the appointed or
qualified TMP and that Costello's representations were reasonably relied on to
respondent's substantial detriment. Under these circumstances, we hold that
Cascade is estopped to deny Costello's authority to execute a consent binding the
partnership to an extension of the period for assessment.

Cascade P'ship v. Commissioner, 1996 WL 348214, at *6.16

      16
         In determining that Cascade was estopped from denying Costello's
authority to execute the consent, we found the facts to be "distinguishable" from
the facts in Med. & Bus. Facilities, Ltd. v. Commissioner, 60 F.3d 207, which
declined to find that a partnership was estopped from arguing that the individual
who signed the consents was not the TMP. See Cascade P'ship v. Commissioner,
T.C. Memo. 1996-299, 1996 WL 348214, at *6. Presumably, we distinguished
Med. & Bus. Facilities, Ltd. on the ground that, unlike the facts in Cascade P'ship,
in Med. & Bus. Facilities, Ltd. the IRS agent specifically advised one of the
partners and the partnership's counsel to formally designate a TMP "or the IRS
would designate one for it." In response, the partnership failed to file any
statement with the IRS designating a TMP and, instead, merely furnished the agent
with consents signed by the individual who had been internally authorized by one
of the partners to deal with the IRS. Under those circumstances, the Court of
Appeals determined that the IRS could not "reasonably rely on the representations
of a third party as to the identity of a TMP." See Med. & Bus. Facilities, Ltd. v.
Commissioner, 60 F.3d at 209, 212. The facts in this case are also distinguishable
from those in Med. & Bus. Facilities, as Mr. Hahn, on behalf of CMI (PIF's
member-manager), did fax to the agent a letter formally designating participant as
PIF's TMP.

        We also noted, in Cascade P'ship v. Commissioner, 1996 WL 348214, at *6,
that appeal was to the Court of Appeals for the Ninth Circuit, which had not
addressed the "specific [estoppel] question." That is also true in this case as PIF's
principal place of business (according to the San Francisco address listed on each
of its returns for the years in issue) would also suggest that appeal of this case lies
                                                                         (continued...)
                                       - 42 -

[*42] We find our analysis and conclusion with respect to the application of

estoppel in Cascade P'ship to be persuasive, and we further find that the case for

applying estoppel against participant is, if anything, more compelling than it was

for applying that doctrine in Cascade P'ship. Here, not only did both Mr. Hahn,

acting on behalf of CMI, PIF's manager, and participant hold the latter out as PIF's

TMP during the entire period in which participant, acting in that capacity, signed

Form 872-P consents on behalf of PIF, but Mr. Hahn also specifically advised

respondent beforehand of his resignation as TMP and participant's appointment to

that position. As in Cascade P'ship, respondent relied upon that advice to his

substantial detriment by accepting the consents executed by participant as valid

extensions of the periods of limitations for the years in issue. Moreover,

respondent's reliance on Mr. Hahn's and participant's representations was

reasonable under the circumstances. As in Cascade P'ship, it was "clear that

respondent did not know" that participant was not a "qualified TMP". The

reasonableness of respondent's belief is further confirmed by the tentative

conclusion, expressed in the November 10, 2010, order, that, by virtue of his

indirect membership interest in PIF, which made him a partner in PIF pursuant to


      16
        (...continued)
to the Court of Appeals for the Ninth Circuit pursuant to sec. 7482(b)(1)(E).
                                         - 43 -

[*43] section 6231(a)(2)(B), "[a]pparently, Mr. Tsai was entitled to become the

TMP of PIF".

                                 (b) Conclusion

       Participant is estopped from denying his authority as PIF's ostensible TMP

to execute the Form 872-P consents for the years in issue.

             3.     Conclusion

       The Form 872-P consents that participant signed for 2002-04 were valid to

extend the periods of limitations to December 31, 2008, for those years; and,

assuming the initial consent that Mr. Hahn signed for 2001 was timely, the Form

872-P consents that participant signed for that year were similarly valid.

III.   Respondent's Motion

       As noted supra, respondent's motion asks us to determine that (1) by virtue

of the Form 872-I consents executed by the Tsais for 2001-03, the FPAA was

timely with respect to them for those taxable years and (2) by virtue of Mr. Tsai's

execution of a Form 872-P consent for 2004, the FPAA was timely with respect to

him for that taxable year. In both cases the timeliness issue relates to respondent's

right to assess deficiencies attributable to Mr. Tsai's distributive share of PIF's

partnership items for those years.
                                        - 44 -

[*44] Our determination that the FPAA was timely for 2002-04 with respect to all

of PIF's partners, by virtue of the Form 872-P consents that participant executed,

renders moot the issue of whether participant's execution of (1) Forms 872-I for

2002 and 2003 and (2) a Form 872-P for 2004 was effective to extend the period

of limitations applicable to assessments against the Tsais or participant alone with

respect to participant's distributive share of PIF's partnership items for those years.

However, because the timeliness of the initial Form 872-P consent for 2001,

executed by Mr. Hahn, remains unresolved, the issue regarding the validity of the

Tsais' Form 872-I consent for 2001 is not moot at this time.

      Participant's claim that the Tsais' Form 872-I consents (including the one

they executed for 2001) are invalid rests solely on his claim of respondent's

alleged misconduct, which, participant argues, should be the basis for holding that

respondent "is equitably estopped from relying on any agreement with participant

[including the Form 872-I consents] to validate the untimely FPAA." Because we

have found that respondent was not guilty of any misconduct that would justify the

application of either judicial or equitable estoppel to him, see discussion supra

section I.B.2.a., we reject participant's attack on the validity of his Form 872-I

consents for 2001 and hold that they effectively extended the period of limitations

to December 31, 2008, with respect to respondent's right to make assessments
                                         - 45 -

[*45] against the Tsais attributable to participant's distributive share of PIF's

partnership items for 2001. Therefore, the FPAA was timely issued, on December

30, 2008, with respect to those items.


                                                  An appropriate order will be issued

                                         granting in part respondent's cross-motion

                                         and denying participant's motion for

                                         summary judgment.
