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Petitioners first invested in the Hoyt partnerships in late
1986. Prior to investing, petitioners received promotional
material prepared by the Hoyt organization. Petitioners relied
on these promotional materials which, in general, provided
rationales for why the partnerships were good investments and why
the purported tax savings were legitimate. One document on which
petitioners relied, entitled “Hoyt and Sons -- The 1,000 lb. Tax
Shelter”, provided information concerning the Hoyt investment
partnerships and how they purportedly would provide profits to
investors over time. The document emphasized that the primary
return on an investment in a Hoyt partnership would be from tax
savings, but that the U.S. Congress had enacted the tax laws to
encourage investment in partnerships such as those promoted by
Mr. Hoyt. The document stated that an “investment in cattle [is
arranged] so the cash required to keep it going is only about
seventy five percent” of an investor’s tax savings, while the
other twenty-five percent of the tax savings is “a thirty percent
return on investment.” This arrangement purportedly provided
protection to investors: “If the cows do die and the sky falls
in, you have still made a return on the investment, and no matter
what happens you are always better off than if you paid taxes.”
After an explanation of the tax benefits, the document asked:
“Now, can you feel good about not paying taxes, and feeling like
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