- 70 -
approximate the cattle’s fair market value. The alleged recourse
promissory note each partnership issued was not a valid recourse
indebtedness. In some instances, the Hoyt organization
attributed and reallocated certain breeding cattle originally
assigned to and “owned” by one partnership to another
partnership. Accordingly, we hold that DF #1, SGE 82-1, DGE 84-
3, SGE 84-5, DGE 86-2, TBS 89-1, and TBS 90-1 did not acquire the
benefits and burdens of ownership with respect to the breeding
cattle each had purportedly acquired. See Ferrell v.
Commissioner, supra at 1186-1190; Grodt & McKay Realty, Inc. v.
Commissioner, 77 T.C. at 1237-1238. We further hold that these
foregoing partnerships are not entitled to the depreciation
deductions they claimed upon such breeding cattle during the
years in issue.
Issue 2. Interest Deductions
As discussed supra in connection with parts E and F of Issue
1, the Court has concluded that the purported recourse promissory
notes DF #1, SGE 82-1, DGE 84-3, SGE 84-5, DGE 86-2, TBS 89-1,
and TBS 90-1 each issued to the Hoyt organization in transactions
subsequent to those involved in Bales v. Commissioner, T.C. Memo.
1989-568, were not a valid indebtedness. Accordingly, we hold
that these foregoing partnerships are not entitled to the
interest deductions they claimed for the years in issue with
respect to those notes.
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