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On December 6, 2002, we filed petitioner’s timely petition
seeking review of respondent’s determination pursuant to section
6015(e). In the petition, petitioner alleged, in pertinent part,
that respondent erred in concluding that petitioner did not
qualify for relief under section 6015(c) and that “Respondent
made no effort to prove, and failed to prove, that Petitioner had
actual knowledge of the factual circumstances which made the tax
items unallowable as a deduction.” As she did in her initial
request for relief and her administrative appeal, petitioner
included an extensive recitation of the facts on which she relied
to support her allegations, including the following:
p. Neither Petitioner nor Mr. Owen had actual
knowledge of the underlying problems with the
transactions, nor could they have discovered
that Jay Hoyt failed to transfer title to
livestock to the partnership and that he was
otherwise converting partnership assets.
* * * * * * *
q. Due to the complexity of Jay Hoyt’s fraud, it was
impossible for either Petitioner or Mr. Owen to
discover the true nature of the transactions.
r. Mr. Owen and all other Hoyt investors were
deceived by Jay Hoyt as to the nature of
their investment and were ultimately
determined by a court of law to be victims of
his elaborate fraud.
On February 27, 2003, we filed respondent’s answer in which
he denied each of petitioner’s allegations of error. Respondent
also denied petitioner’s representations in subparagraphs p. and
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