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and the legality of the tax claims being made by the Hoyt
organization. The Hoyt organization also portrayed employees of
the IRS as incompetent and claimed that they were engaging in
unjust harassment of Hoyt investors. Petitioner trusted these
documents and believed and relied upon what the Hoyt organization
told him.
III. Petitioner’s Federal Tax Claims
Petitioner reported the following on his Federal income tax
returns in each of the respective years:
1986 1987 1988 1989 1990
Wage income $43,112 $40,033 $46,858 $44,813 $45,734
Interest income 3,126 2,010 1,974 2,633 3,577
Other income1 -0- 1,754 -0- 1,608 -0-
Partnership losses 141,260 24,931 33,712 23,741 20,180
Tax liability -0- 464 1,054 926 1,181
1The other income was derived from capital gain from the sale of a
residence in 1987, and income from pensions and annuities in 1989.
The amounts listed above for 1986 are those amounts that appear
on the amended return filed by petitioner for that year. On the
original return, petitioner had reported a partnership loss of
$27,170 and an investment tax credit of $17,412, both derived
from the “rescinded” partnership DGE 86-1. The original return
also reflected zero tax liability. The amended return,
reflecting a $141,260 loss from SGE 84-2, explained the reason
for the amended return as follows:
During 1986, the Taxpayers [sic] became a General Partner in
the Partnership known as Durham Genetic Engineering 1986-1.
Taxpayers’ partnership purchased a group of registered
cattle during 1986. After the Partnership began business,
the Taxpayers elected to accept rescission of their
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