Glenn A. Mortensen - Page 14

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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          from the “rescinded” partnership DGE 86-1.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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