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other than members of the Hoyt organization and investors in Hoyt
partnerships--such as other cattle ranchers, independent
investment consultants, or independent tax advisers--concerning
either the partnerships or the tax claims made by the
partnerships.
Petitioners signed a number of documents in connection with
their investment in the Hoyt partnerships; those documents that
appear in the record are summarized as follows. On December 17,
1986, both petitioners signed a document titled “Instructions to
the Managing General Partner”.2 This document stated in relevant
part:
(1) You [Mr. Hoyt] have the authority to sign my
[petitioners’] name to full recourse Promissory Notes used
for the purchase of breeding cattle to be held as an
investment by the above Limited Partnership [Shorthorn
Genetic Engineering 1986], purchased from HOYT & SONS
RANCHES, an Oregon Partnership, in Burns, Oregon, but only
on notes that were made for the purchase of Registered
Shorthorn Breeding Cattle from HOYT & SONS RANCHES.
(2) You must inform me of the amount of Partnership
liabilities I have personally assumed in order to increase
my tax basis and qualify for income tax deductions. I
understand I can refuse, at the end of any year, to obligate
myself to any additional liability and reserve the right to
notify you in writing that I refuse to incur any additional
personal liability through my ownership in the above named
Partnership.
2Petitioners initially invested in the Hoyt partnerships in
1986. However, the partnership in which they initially invested
was “rescinded”, forcing petitioners to change their investment
to a different partnership in 1987. It is unclear why the
partnership was rescinded; Ms. Hansen believes it was because
“the tax laws changed and so they had to do things a little
differently.”
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