Ingrid Capehart - Page 12

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               In Bales v. Commissioner, supra, we held, inter alia, that             
          although the Hoyt partnerships at issue were not lacking in                 
          economic substance and would be respected for tax purposes,                 
          adjustments to the Hoyt partnerships’ proportionate shares of               
          losses generated from the acquisition, management, and sale of              
          Hoyt cattle were required, and the recalculated losses were                 
          deductible by the limited partners to the extent of the partners’           
          adjusted bases.                                                             
               The settlement agreement, which was executed after we issued           
          Bales in 1989, provided, in pertinent part, as follows:                     
               •    deductions for contributions to an Individual                     
                    Retirement Arrangement -- also called an                          
                    Investment Retirement Account -- are limited to                   
                    cash actually paid to custodial banks on or before                
                    the due date of the return for which the deduction                
                    is to be claimed.                                                 
                           *    *    *    *    *    *    *                            
               •    The total number of cattle in service and subject                 
                    to depreciation by the investor partnerships in                   
                    each of the following respective years is                         
                    1980 -- 1,736                                                     
                    1981 -- 2,463                                                     
                    1982 -- 2,388                                                     
                    1983 -- 2,932                                                     
                    1984 -- 3,476                                                     
                    1985 -- 4,024                                                     
                    1986 -- 6,409                                                     
               •    For Federal income tax purposes, all the cattle                   
                    are adult breeding cattle, each having an original                
                    depreciable basis of $4,000.                                      
               •    The number of cattle to be depreciated during any year            
                    will be determined by the following method:                       






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