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financial situation changed, and Christopher thought of the Hoyt
investment.
Christopher received promotional materials from the Hoyt
organization about the Hoyt partnerships. He read these
materials, often several times, and kept them in his files. One
of the promotional materials included the following language
under the heading Specific Risks Involved: “A change in the tax
law or an audit and disallowance by the I [illegible] could take
away all or part of the tax benefits, plus the possi [illegible]
of having to pay back the tax savings, with penalties and in
[illegible]”. It further stated:
Even though the term “head torn off” is crude, it is a
concept that is very applicable to the comparison of a
disallowance of a tax deduction by the Internal Revenue
Service, the prospect of having to pay the taxes back
when you have put the tax money into a tax shelter, and
its [sic] gone.
The brochure went on to state that there was no assurance that
things would be “O.K.” In discussing the preparation of investor
tax returns, the promotional materials warned “there is a risk”
and stated that after many years of experience with tax shelters
the Hoyt partnerships have learned how “to deal with I.R.S.
audits of the Partnership returns and the Partners personal
returns, (being ‘attacked’ by the I.R.S.)”.
The promotional materials also advised prospective investors
to “seek independent advice and counsel concerning this
investment.”
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Last modified: May 25, 2011