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taxable years.9 During these examinations, Jay Hoyt and the Hoyt
organization failed to provide adequate documents and records
substantiating the livestock the partnerships purportedly
acquired and owned.
Following the 1989 Bales opinion, the IRS attempted to
verify the existence of all purported livestock that the cattle
and sheep partnerships allegedly owned for post-1979 taxable
years. As a result of an administrative summons enforcement
action brought in the United States District Court for the
District of Oregon (U.S. District Court) in 1992, the IRS first
inspected and counted all the purported cattle and sheep that
these partnerships allegedly owned from fall 1992 through spring
1993. The livestock count and inspection were conducted in
connection with the IRS’s examinations of the post-1986 taxable
year returns of the partnerships.
By February 1993, although the IRS’s inspection and
livestock count were not fully completed, IRS personnel concluded
that Jay Hoyt and the Hoyt organization had greatly overstated
the number of actual breeding animals that these partnerships
claimed to own. The IRS further concluded that Jay Hoyt and the
Hoyt organization had also grossly overvalued the livestock upon
which the partnerships were claiming tax benefits.
9 The unified partnership audit and litigation provisions
of secs. 6221-6233, applied to these partnership taxable years.
See supra note 8.
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