Ronald F. and Cynthia G. Van Scoten - Page 5

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          cases, the U.S. trustee moved in 1997 to have the bankruptcy                
          court substantively consolidate all assets and liabilities of               
          almost all Hoyt organization entities and all of the investor               
          partnerships.  On November 13, 1998, the bankruptcy court entered           
          its Judgment for Substantive Consolidation, consolidating all the           
          above-mentioned entities for bankruptcy purposes.  The trustee              
          then sold off what livestock the Hoyt organization owned or                 
          managed on behalf of the investor partnerships.                             
               Mr. Hoyt and others were indicted for certain Federal crimes           
          and a trial was conducted in the U.S. District Court for the                
          District of Oregon.  The District Court described Mr. Hoyt’s                
          actions as “the most egregious white collar crime committed in              
          the history of the State of Oregon.”  Mr. Hoyt was found guilty             
          on all counts, and as part of his sentence in the criminal case             
          he was required to pay restitution in the amount of $102 million.           
          This amount represented the total amount that the United States             
          determined, using Hoyt organization records, was paid to the Hoyt           
          organization from 1982 through 1998 by investor-partners in                 
          various investor partnerships.                                              
          II.  Petitioners and Their Investment                                       
               Petitioner husband (Mr. Van Scoten) has an associate’s                 
          degree, and petitioner wife (Ms. Van Scoten) completed 1 year of            
          a college education.  During the year in issue, Mr. Van Scoten              








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