Gary D. and Johnean F. Hansen - Page 13

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               Petitioners were involved in a variety of different cattle             
          breeding partnerships from 1987 through 1996, including Shorthorn           
          Genetic Engineering 1986-B, Hoyt and Sons Trucking, Timeshare               
          Breeding Services, and Timeshare Breeding Services 1989-1.                  
          During the year in issue, petitioners were involved with the                
          partnerships known as Durham Shorthorn Breed Syndicate 1987-A,              
          J.V. (DSBS 87-A) and Durham Shorthorn Breed Syndicate 1987-C,               
          J.V. (DSBS 87-C). Ms. Hansen believed that the Hoyt                         
          organization’s frequent changing of their partnership investments           
          was the result of tax law changes rather than problems with the             
          underlying business operations.                                             
               Although petitioners did not personally visit or otherwise             
          independently investigate the cattle ranching operations prior to           
          their investment, in 1990 and again in 1993 petitioners                     
          participated in “ranch tours”.  These tours were annual events              
          where partners met one another, toured Hoyt-related ranches, and            
          talked with people involved in the Hoyt organization.  When                 
          visiting the ranches, Ms. Hansen did not know which cattle                  
          belonged to any given partnership, or whether the herds were                
          segregated in any manner.  Beginning sometime in either 1989 or             
          the early 1990s, petitioners also attended a number of monthly              
          meetings of Hoyt partners that were held near petitioners’ home.            
          Various guest speakers were invited to these meetings, and                  
          members of the Hoyt organization would also attend on occasion.             






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