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deficient record-keeping practices continued for both the cattle
and sheep partnerships through 1998, when all the investor
partnerships were consolidated for bankruptcy purposes. For the
years at issue, often no records were kept at all.
As the general partner managing each sheep partnership, Jay
Hoyt was responsible for and directed the preparation of the tax
returns of each partnership, and he typically signed and filed
each tax return. However, separate bookkeeping and accounting
records for each of the sheep partnerships were never maintained.
Nor did Jay Hoyt maintain separate bank accounts for each of
the sheep partnerships. From 1981 until sometime in 1990, checks
from the sheep partners were received at the Hoyt office in Elk
Grove, California, and deposited in one checking account. The
account was in the name of River City Ranches (RCR account) and
maintained at the Bank of Alex Brown located in Elk Grove,
California.7
Sometime in 1990, Jay Hoyt discontinued using the RCR
account. He implemented a new business practice of commingling
all Hoyt organization funds in one checking account referred to
as the pooling account. This account was in the name of W.J.
Hoyt Sons Ranches MLP (MLP) and maintained at the First
Interstate Bank in Elk Grove, California. The funds in the
7 The Bank of Alex Brown became the First Interstate Bank
in 1989.
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