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checks when received to the Hoyt office so that Hoyt could
calculate and deduct intervenor’s required contribution to the
Shorthorn partnership. Intervenor delivered the endorsed refund
checks to Hoyt.2
Intervenor had invested only $25 in the Shorthorn
partnership at the time he and petitioner filed their joint 1985
Federal income tax return, in which they claimed $20,180 in tax
losses from the Shorthorn partnership. As a result of the
Shorthorn partnership losses, petitioner and intervenor received
a tax refund for 1985 of $3,185. Intervenor signed the refund
check over to the Shorthorn partnership and received back less
than $500. The Shorthorn partnership kept the balance of the
income tax refund as intervenor’s Shorthorn partnership capital
contribution.
At the time petitioner and intervenor filed their 1986
return, intervenor had invested less than $3,0003 in the
Shorthorn partnership, yet claimed an additional $26,234 of
Shorthorn partnership losses (together with the 1985 losses,
petitioner and intervenor recognized a total of $46,414 in
2It is unclear whether, and if so how (a general endorsement
or a restrictive endorsement), petitioner endorsed the refund
checks.
3According to the testimony, intervenor had invested the
original $25 plus the $3,185 tax refund endorsed to the Hoyt
Organization, less approximately $500 of the tax refund that they
received back from the Hoyt organization.
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