River City Ranches #1 Ltd., Leon Shepard, Tax Matters Partner - Page 7

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          section 6621(c)(3)(A)(i), or (b) “sham and fraudulent                       
          transaction” as defined in section 6621(c)(3)(A)(v).                        
                                  FINDINGS OF FACT                                    
               Some of the facts and certain documents have been stipulated           
          for trial pursuant to Rule 91 and are found accordingly.  The               
          Court incorporates the parties’ stipulations in this opinion by             
          reference.                                                                  
               The parties have stipulated that at the time the respective            
          petitions herein were filed, each of the nine Hoyt sheep                    
          partnerships maintained its principal place of business in Burns,           
          Oregon.  However, the record reflects that the partnerships were            
          operated from a Hoyt organization office located in Elk Grove,              
          California.  Further, each sheep partnership, with the exception            
          of River City Ranches 85-2, was formed under and governed by                
          California law.  River City Ranches 85-2 was a Nevada general               
          partnership and in 1991 became known as River City Ranches #7               
          (RCR #7).                                                                   
          A.   Overview of the Hoyt Operations                                        
               Jay Hoyt’s father was a prominent breeder of Shorthorn                 
          cattle, one of the three major breeds of cattle in the United               
          States.  In order to expand his business and attract investors,             
          the father had started organizing and promoting cattle breeding             
          partnerships by the late 1960s.  Before and after the father’s              
          death in early 1972, Jay Hoyt and other members of the Hoyt                 






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