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Hoyt partnership was legal. Mr. Abelein also contacted a local
Internal Revenue Service (IRS) agent to determine whether the
investment was legal. The agent would not discuss the Hoyt
investment with Mr. Abelein and only answered Mr. Abelein’s
general questions regarding the relationship of the Federal
Government and the cattle industry.
Before investing, petitioner reviewed a Hoyt brochure and
had access to other Hoyt materials. Petitioner and Mr. Abelein
also attended a Hoyt partnership meeting where two Hoyt
representatives were present. Mr. Abelein asked petitioner to go
to the meeting because he wanted petitioner to hear about the
Hoyt organization directly from those involved in the company
rather than from him.
Mr. Abelein was very forthcoming towards petitioner with
respect to what he knew about the Hoyt partnerships. He
explained to petitioner that they would claim losses from the
partnership on their joint tax returns and should not expect to
earn a profit until the 8th to 10th year of the partnership.
Petitioner knew that she and Mr. Abelein could get refunds from
previous years’ tax returns and invest them in the Hoyt cattle
business. Petitioner and Mr. Abelein agreed that they should
invest in the Hoyt organization to help pay for their children’s
college tuition.
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Last modified: May 25, 2011