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Issue 1. Entitlement to Partnership Level Theft Loss Deductions
A. The Parties’ Arguments
1. Petitioners’ Arguments
It is our understanding that the gist of petitioners’ theory
regarding entitlement to a theft loss deduction for each taxable
year at issue is as follows: (1) Each of the nine sheep
partnerships was the victim of a theft by Jay Hoyt because his
conviction in the U.S. District Court for specific Federal crimes
establishes the existence of the theft11; (2) since Oregon is
where the partnerships were formed and operated, Oregon is the
jurisdiction where the thefts occurred; (3) Oregon criminal
statutes that are similar to the Federal criminal statutes Jay
Hoyt was convicted of violating are evidence that Jay Hoyt’s
Federal crimes are also crimes in Oregon; and (4) each
partnership is entitled to a theft loss deduction equal to the
total amount of cash invested by the partners in each year.
Further, petitioners contend that the Government’s
successful prosecution of Jay Hoyt precludes respondent, under
doctrines of collateral and/or judicial estoppel, from denying
that the Hoyt sheep partnerships and their investor-partners were
victims of a theft.
11 The details of Jay Hoyt’s criminal conviction and
specific crimes for which he was found guilty are discussed supra
pp. 28-30.
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