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as River City Ranches 85-2 (RCR 85-2). Petitioners were told by
the Hoyt organization to ignore communications from the Internal
Revenue Service (IRS) as they were merely harassing Hoyt
investors.
Petitioners continued investing in the Hoyt partnership
through approximately 1994. Petitioners continued remitting
their Federal income tax refunds to the Hoyt partnership until
Mr. Hitchen retired from General Mills in 1991. Starting in
approximately 1990, petitioners began making substantial out-of-
pocket cash payments in response to various requests and
“assessments” by the partnership. Petitioners also were required
to pay additional amounts throughout the years representing tax
return preparation fees. The losses and credits claimed by
petitioners with respect to their taxable years 1984 through 1989
are discussed below; petitioners claimed a deduction for a
partnership loss of $42,260 in 1990, but they did not claim a
deduction for either a farming loss or a partnership loss in
1991. In a letter to petitioners dated February 6, 1992, Mr.
Hoyt stated in relevant part:
I have been notified by the General Partners office
that your 1990 contribution is still past due. Because
this balance of $3500 has not been paid we are
beginning collection enforcement. Your partnership
note authorizes us to repossess shares of unpaid
partnership units.
When your cattle, sheep or truck units are taken back
the Internal Revenue Service regulations require us to
notify them you have debt relief income of about 13
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Last modified: May 25, 2011