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promoted, and operated by Walter J. Hoyt III.2 Petitioner and
Mr. Bulger held partnership interests either jointly or as joint
tenants with rights of survivorship in three separate “series” of
SGE partnership units. Petitioner wrote and signed numerous
checks payable to SGE or the Hoyt organization from her and Mr.
Bulger’s joint bank account to maintain their investment in SGE.
SGE issued Schedules K-1, Partner’s Share of Income, Credits,
Deductions, etc., for 1985 and 1986 to petitioner and Mr. Bulger,
which reflected that both petitioner and Mr. Bulger were partners
in SGE. In addition, in 1992, petitioner and Mr. Bulger signed a
Power of Attorney and Debt Assumption Agreement in which they
2Walter J. Hoyt III also organized, promoted, operated, and
served as the general partner of more than 100 livestock breeding
limited partnerships from 1971 through 1998. See, e.g., River
City Ranches #1, Ltd. v. Commissioner, T.C. Memo. 2003-150, affd.
in part, revd. in part and remanded 401 F.3d 1136 (9th Cir.
2005). In general, the Hoyt partnerships purchased livestock
from related Hoyt entities for no money down and a promissory
note. See, e.g., Durham Farms #1, J.V. v. Commissioner, T.C.
Memo. 2000-159, affd. 59 Fed. Appx. 952 (9th Cir. 2003);
Shorthorn Genetic Engg. 1982-2, Ltd. v. Commissioner, T.C. Memo.
1996-515. The investors in the Hoyt partnerships assumed
personal liability for the partnerships’ promissory notes, made
payments on the notes to the Hoyt partnerships, see, e.g.,
Shorthorn Genetic Engg. 1982-2, Ltd. v. Commissioner, supra, and,
in return, deducted large partnership losses related to the
purchase, management, and sale of livestock, see River City
Ranches #1, Ltd. v. Commissioner, supra; Mekulsia v.
Commissioner, T.C. Memo. 2003-138, affd. 389 F.3d 601 (6th Cir.
2004); Durham Farms #1, J.V. v. Commissioner, supra; Shorthorn
Genetic Engg. 1982-2, Ltd. v. Commissioner, supra; Bales v.
Commissioner, T.C. Memo. 1989-568.
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