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Hoyt Partnership Investments
Walter J. Hoyt III (Mr. Hoyt) was the son of a prominent
Shorthorn cattle breeder, who, along with other members of his
family, organized, promoted, and operated more than 100 cattle-
breeding partnerships (the Hoyt partnerships) from 1971 through
1998. Each partnership was organized and marketed in the same
manner, and Mr. Hoyt served as the general partner of each
partnership. For an overview of the Hoyt organization, see Bales
v. Commissioner, T.C. Memo. 1989-568; see also River City Ranches
#1, Ltd. v. Commissioner, T.C. Memo. 2003-150; Mekulsia v.
Commissioner, T.C. Memo. 2003–138; Durham Farms #1 v.
Commissioner, T.C. Memo. 2000-159, affd. 59 Fed. Appx. 952 (9th
Cir. 2003); River City Ranches #4, J.V. v. Commissioner, T.C.
Memo. 1999-209, affd. 23 Fed. Appx. 744 (9th Cir. 2001).
In 1983 Mr. Capehart learned about the Hoyt partnerships
from his brother-in-law. Petitioner and Mr. Capehart eventually
met with Mr. Hoyt to discuss the partnerships. During their
initial meeting, Mr. Hoyt explained that he had developed a
special breed of cows, which sold at a very high price, and that
their investment in the cattle would grow as the cows reproduced.
Mr. Hoyt further explained that he would refile petitioner and
Mr. Capehart’s tax returns for the past 3 years and that, in
doing so, they would get a refund from the Internal Revenue
Service (IRS), which they could use to make their initial
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Last modified: May 25, 2011