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Because a special Tax Counsel’s opinion concerning the
tax status of the Partnership is not binding on the IRS
or any court, one was not requested or obtained because
no assurance can be given that the IRS might not
successfully challenge the tax classification of the
Partnership.
IRS audits of the Partnership’s tax returns are
certain.
As of the date of this Memorandum, the IRS has proposed
disallowance of certain losses and investment tax
credits assigned to the Limited Partners of seventeen
(17) prior Partnerships for the tax years 1977, 1978,
1979, and 1980.
No assurance can be given the IRS will not challenge
[the allocations made by the Hoyt organization].
There can be no assurance that the tax consequences
indicated herein will be applied to the Partnership or
to the Partners since such matters are subject to
change by legislation, administrative action and
judicial decision.
Tax Returns
Petitioner and Mr. Ellison filed joint Federal income tax
returns for 1982, 1983, 1984, 1985, and 1986. Before petitioner
and Mr. Ellison invested in the Hoyt partnerships, H & R Block
prepared their returns. After petitioner and Mr. Ellison
invested in the Hoyt partnerships, the Hoyt organization prepared
their returns.
On their joint income tax return for 1985, petitioner and
Mr. Ellison reported $77,649 in wages. In arriving at total
income, the only additions and subtractions were $1,167 in
interest income, $442 in taxable refunds of State and local
taxes, and a $128,407 Schedule E, Supplemental Income Schedule,
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