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Ltd. (hereinafter DGE), which had been organized, promoted, and
operated by Walter J. Hoyt III.2 Petitioner and Mr. Owen held
partnership interests either jointly or as tenants in common in
three separate “series” of DGE partnership units. Petitioner
wrote and signed numerous checks payable to DGE or the Hoyt
organization from her and Mr. Owen’s joint bank account and wrote
and signed several other checks drawn on her own account to
maintain their investment in DGE. DGE issued Schedules K-1,
Partner’s Share of Income, Credits, Deductions, etc., for 1987 to
1995, which reflected that both petitioner and Mr. Owen were
partners in DGE. In addition, in 1992, petitioner and Mr. Owen
signed a Power of Attorney and Debt Assumption Agreement in which
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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