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Mr. Bartak provided petitioner the Hoyt partnerships’
brochures. Mr. Bartak did not deny petitioner access, or hide
from petitioner, any documents related to their investment in the
Hoyt partnerships. Mr. Bartak wanted petitioner to look at the
Hoyt organization’s materials and to hear what petitioner thought
about the Hoyt partnerships.
One of the promotional materials petitioner and Mr. Bartak
received included the following language under the heading
Specific Risks Involved: “A change in the tax laws or an audit
and disallowance by the IRS could take away all or part of the
tax benefits, plus the possibility of having to pay the tax along
with penalties and interest”. It further stated:
This term [“decapitated”] is crude, but it is a concept
that is very applicable to the comparison of having a
disallowance of your tax deductions by the Internal
Revenue Service. The prospect of having to pay the
taxes when you have put your tax money into the cattle,
and it’s gone, is a financial wreck.
The brochure went on to state that there was no assurance that
things would be “O.K.” and:
If you’re like most people, your first impression of a
W.J. HOYT SONS livestock purchase was “this deal looks
to good to be true”! We know you’ve heard “if a deal
looks to good to be true, it probably is”. You
probably looked at this business and thought at first
“no way can that be legal”.
You only considered going into the cattle business
after you heard about the tax benefits. Tax benefits
were your incentive to look at this kind of business.
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Last modified: May 25, 2011