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D. Some Individual Investors' Failure To Make Payments
During the period from 1981 through 1991, a number of
investors in the eight sheep partnerships (excluding OGT 90) that
entered into transactions with Barnes Ranches failed to continue
making the specified payments required of them, including paying
their pro rata share of the payments required under their
partnership's long-term "Full Recourse Promissory Note". Mr.
Hoyt (who was the general partner managing each partnership)
permitted all of these defaulting investors to withdraw from
their partnership. He essentially tried to treat their
withdrawal from a partnership as having no effect upon the
potential tax benefits being claimed by the partnership's
remaining partners.
Barnes Ranches and the partnerships never sought to hold any
of the defaulting investors personally liable for the payments
they had defaulted upon. These investors were allowed to walk
away from their partnership's long-term "Full Recourse Promissory
Note".
E. RCR #4's, RCR #6's, and OGT 90's Respective Returns for the
Years in Issue
RCR #4's returns for some of the years in issue reflect that
it originally claimed depreciation and investment tax credit on a
"Breeding Flock" placed in service on February 1, 1984, for which
its stated cost or other basis was $1,983,486. RCR #4
depreciated this breeding flock over a 5-year period.
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