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organized under the laws of the States of California and Nevada.
The limited partners obtained interests in the partnerships by
executing subscription agreements.
The partnerships purchased the cattle used in their breeding
operations from Hoyt & Sons Ranches (Ranches). In payment for
the cattle purchased, the partnerships executed promissory notes
to Ranches. Thereafter, the partners signed assumption of
liability agreements, thereby assuming personal liability for
these recourse partnership liabilities. Principal payments on
the notes became due starting in the sixth year after the notes
were executed.
Pursuant to the settlement agreement (the agreement), the
numbers of cattle deemed to be held by the partnerships were
reduced. Accordingly, the amount of principal on each of the
notes payable to Ranches was treated as reduced. The agreement
provides that this new principal amount is the amount of
partnership debt to be treated as personally assumed by the
partners.
The agreement further provides:
Each partner's profit and loss sharing percentage is
determined annually by comparing the partner's capital
account to the aggregate of the capital accounts of all
partners in the partnership. This determination is made
based on the total capital owned, not the total capital
originally subscribed.
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Last modified: May 25, 2011