River City Ranches #1 Ltd., Leon Shepard, Tax Matters Partner - Page 85

                                        - 70 -                                         
          in which it warned them that IRS personnel had concluded and                 
          determined that:  (1) A number of fictitious breeding cattle and             
          sheep had been sold to the Hoyt cattle and sheep partnerships;               
          and (2) Jay Hoyt and the Hoyt organization had overstated both               
          the numbers and value of the purported livestock that the                    
          partnerships allegedly owned.                                                
               In the Examination Division letter sent to each partner,                
          respondent specifically informed the partners of the problems                
          that respondent had uncovered in the Hoyt organization’s tax                 
          shelter program as a result of the respondent’s count and                    
          inspection of the cattle and sheep.  The letter provided the                 
          partners with sufficient information to place them on notice that            
          fraudulent activity might be taking place.  By providing the                 
          partners with their findings, respondent discharged any duty it              
          arguably had to the partnerships and partners, as it was then up             
          to them to decide whether to take advantage of this                          
          information.16  E.g., Wintner v. Commissioner, T.C. Memo. 1977-              
          144 (noting that IRS agents had told the taxpayer or put the                 
          taxpayer on notice about the irregularities the agents had                   
          uncovered in examining the books and records of the taxpayer’s               
          business; concluding further that having provided the taxpayer               


               16  Certainly by 1993, the partners also knew or should have            
          known that the IRS might:  (1) Disallow the tax benefits that the            
          Hoyt cattle and sheep partnerships and their partners claimed;               
          and (2) attempt to uphold such disallowances and partnership                 
          adjustments in any tax litigation that the partnerships and                  
          partners commenced.                                                          




Page:  Previous  60  61  62  63  64  65  66  67  68  69  70  71  72  73  74  75  76  77  78  79  Next

Last modified: May 25, 2011