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amended return for that year, the Hoyt organization prepared a
statement in which it was claimed that petitioner’s partnership
interest had been switched from DGE 86-1 to SGE 84-2. At that
time, however, petitioner had signed partnership agreements and
other documents pertaining only to SGE 86; the investment
documents in the record show that petitioner did not invest in
SGE 84-2 until April 1992. Furthermore, the Hoyt organization
reported to petitioner that the claimed investment tax credit of
$17,412 that was no longer available was being replaced by a loss
of $141,260. Petitioner accepted at face value that these
amounts were accurate, even when the amounts were of such size
that they purportedly completely eliminated petitioner’s tax
liability for 3 prior years.
When it came time to prepare petitioner’s tax returns and
claim the losses being reported by the Hoyt partnerships,
petitioner relied on the very people who were receiving the bulk
of the tax savings generated by the claims. Thus, the same
individuals who sold petitioner an interest in the Hoyt
partnerships and who managed the purported ranching operations
also prepared the partnerships’ tax returns, prepared
petitioner’s tax returns, and received from petitioner most of
the tax savings that resulted from the positions taken on his
returns.
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