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advised prospective investors to get “expert tax help” concerning
the Hoyt partnerships.
The promotional materials further stated: “If a Partner
needs more or less Partnership loss to be special[ly] allocated
to him for any year, it is arranged quickly within the same
office, without the Partner having to pay a higher fee while an
outside preparer spends more time to make the arrangements.”
The promotional materials clearly contemplated the tax
shelter being audited by the IRS--stating at one point: “we know
we will be subject to constant audits by the IRS”.
Other documents petitioner and Mr. Ellison received from the
Hoyt organization contained the following statements under the
heading “Federal Income Tax Related Risks”:
Special tax counsel to the Partnership has not provided
any opinion with respect to IRS recognizing the
Partnership as a Partnership for tax purposes, the
deductibility or treatment of any particular item, the
proper percentages for allocating Partnership profits,
losses, gains, deductions or credits among Partners,
the fair market value of the purchased Registered
Shorthorn Cattle or the amount of allowable income,
credit, or losses that may be generated by the
Partnership.
NO ASSURANCE CAN BE GIVEN THAT THE IRS WILL NOT ATTEMPT
TO TREAT THE PARTNERSHIP AS A TAX SHELTER, or whether
such attempt to treat the Partnership as a tax shelter
would not be successful.
Moreover, because the Partnership has not requested a
ruling from the IRS with respect to any of the tax
consequences of the Partnership, there is an inherent
and substantial risk that such benefits might be
challenged in whole or in part by the IRS.
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Last modified: May 25, 2011