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• Partners in the investor partnerships are divided
into two categories:
" Partners who continue to honor their note
obligations to Ranches, and who continue to
participate in the Hoyt Cattle partnership.
For purposes of this memorandum, will be
referred to as the “active partners.”
" Partners who have walked away from their note
obligations and/or who no longer participate
in the partnership. For purposes of this
memorandum, will be referred to as the
“inactive partners.”
• The determination of when and whether a partner is
active or inactive and the status of the partner’s
ownership interest will be made using all
appropriate records of Ranches, the investor
partnerships and the individual partners
including, but not limited to, Ranches’ note
records; whether or not Schedules K-1 were issued
to partners; whether the partners continued to
claim items from the partnership on Federal income
tax returns; correspondence; and Forms 1099.
• The amount of liabilities assumed personally by
the partners during the first year of the
partnership will be based on original subscription
agreements, and will be provided by Walter J. Hoyt
III within one week after the partnership
spreadsheet is submitted to him for review and/or
correction.
• For Federal income tax purposes, the maximum
amount of partnership debt which can be assumed by
all partners in an investor partnership is
determined by multiplying the number of cattle in
service during the first year of the partnership’s
existence -- as indicated above -- by the fair
market value of the cattle for Federal income tax
purposes, $4,000.
For example, Poison Creek Ranches # 2 is
considered to have put in service 118 head of
cattle in 1981. The cost basis of the cattle
for purposes of depreciation is $4,000 per
head. Therefore, the maximum amount of the
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