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on these promotional materials which, in general, purported to
provide rationales for why the partnerships were good investments
and why the purported tax savings were legitimate. One document
on which petitioners relied, entitled “Hoyt and Sons -- The 1,000
lb. Tax Shelter”, provided information concerning the Hoyt
investment partnerships and how they purportedly would provide
profits to investors over time. The document emphasized that the
primary return on an investment in a Hoyt partnership would be
from tax savings, but that the U.S. Congress had enacted the tax
laws to encourage investment in partnerships such as those
promoted by Mr. Hoyt. The document stated that an “investment in
cattle [is arranged] so the cash required to keep it going is
only about seventy five percent” of an investor’s tax savings,
while the other twenty-five percent of the tax savings is “a
thirty percent return on investment.” This arrangement
purportedly provided protection to investors: “If the cows do
die and the sky falls in, you have still made a return on the
investment, and no matter what happens you are always better off
than if you paid taxes.” After an explanation of the tax
benefits, the document asked: “Now, can you feel good about not
paying taxes, and feeling like you were not, somehow, abusing the
system, or doing something illegal?”
A section of the “1,000 lb. Tax Shelter” document that was
devoted to a discussion of audits by the IRS, stated that the
partnerships would be “branded an ‘abuse’ by the Internal Revenue
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