- 3 -
C. Respondent’s Examination Efforts and Enforcement Actions
............................ 17
D. Governmental Investigations of Jay Hoyt ........ 25
E. Certain Agreements Extending the Period of Limitations That
Jay Hoyt and the IRS Executed ............. 30
OPINION ........................... 31
Issue 1. Entitlement to Partnership Level Theft Loss Deductions
............................ 32
A. The Parties’ Arguments ................. 32
1. Petitioners’ Arguments .............. 32
2. Respondent’s Arguments .............. 34
B. Discussion of Applicable Law ............. 35
1. Section 165 Theft Loss .............. 35
2. Estoppel Principles ................ 37
a. Equitable Estoppel ............. 37
b. Collateral Estoppel ............ 39
c. Judicial Estoppel ............. 41
C. Discussion of Partnership Level Theft Loss Deductions . 43
1. Determination of Whether the Sheep Partnerships Were
Victims of Theft ................. 43
a. The Occurrence of a Theft ......... 43
(i) Jay Hoyt’s Conviction of Federal Crimes
.................. 45
(ii) Petitioners’ Claim That a Theft From the
Partners is a Theft From the
Partnerships ............ 51
(iii) Petitioners’ Claim That a Theft Occurred
Under State Law .......... 55
(iv) Analysis of Case Law Cited by
Petitioners ............ 61
b. The Year of Discovery Requirement ..... 65
(i) Application of Equitable Estoppel . 67
(ii) Application of the Rod Warren Ink Case
.................. 72
(iii) Petitioners’ Year of Discovery Claim
.................. 76
c. The Remaining Elements of a Theft Loss ... 76
2. Application of Collateral and Judicial Estoppel .. 77
a. Collateral Estoppel ............ 77
b. Judicial Estoppel ............. 80
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Last modified: May 25, 2011