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affiliate of the Partnership preparing all personal and
Partnership returns and controlling all audit activity with
the Internal Revenue Service. * * * Then, all Partners are
able to benefit from the concept of “Circle the Wagons,” and
no individual Partner can be isolated and have his tax
losses disallowed because of the incompetence or lack of
knowledge of a tax preparer who is not familiar with the
law, regulations, format, procedures, and operations
concerning the Partnership that are required to protect the
Limited Partners from Internal Revenue audits. * * * If a
Partner needs more or less Partnership loss any year, it is
arranged quickly within the office, without the Partner
having to pay a higher fee while an outside preparer spends
more time to make the arrangements.
Finally, the document warned that there remained a chance that “A
change in tax law or an audit and disallowance by the IRS could
take away all or part of the tax benefits, plus the possibility
of having to pay back the tax savings, with penalties and
interest.”
At the time that she initially made the investment in 1986,
and through the year in issue, Ms. Hansen believed that she owned
cattle through the investment and that the investment would
produce a profit and provide retirement income.1 She also
believed the Hoyt promotional materials insofar as they stated
that Congress passed tax laws intending to promote the
subsidization of the cattle industry and that investing in a Hoyt
partnership was therefore “socially desirable”. Before investing
in the Hoyt partnerships, petitioners did not consult with anyone
1Because Mr. Hansen did not testify at trial, there is no
evidence in the record with respect to his understanding of the
nature of the Hoyt investment.
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