River City Ranches #4 - Page 105

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          partnership had entered already obligated Barnes Ranches to                 
          provide stud ram services to a partnership's breeding sheep.                
               The Court considers the flock recap sheets Mr. Hoyt and his            
          organization compiled highly suspect and unreliable, as Mr. Hoyt            
          and his organization failed to employ good record keeping                   
          practices and appear to have prepared the recap sheets in a                 
          manner contrary to standard, fundamental accounting principles.             
          The Court also can see no good reason or justification for their            
          preparing these annual flock recap sheets in this highly                    
          deficient manner--if each of these partnerships, as petitioners             
          maintain, indeed "owned" anywhere near the number of specific               
          individual breeding sheep stated in its bill of sale.  Indeed,              
          the Court believes that the flock recap sheets were prepared in             
          this manner because the requisite number of specific breeding               
          sheep did not exist and could not, in fact, be assigned to each             
          partnership.  It is also to be noted that the flock recap sheets            
          were, at times, inconsistent with the partnership returns Mr.               
          Hoyt filed.  For instance, the annual flock recap sheets reflect            
          that RCR #3 had no breeding sheep by 1987.  However,                        
          notwithstanding its apparently having no sheep, on its returns              
          for the years 1987, 1988, and 1989, RCR #3 continued to claim and           
          take farming expense deductions.                                            
          D.  Petitioners' Corrected Bills of Sale                                    

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Last modified: May 25, 2011