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income tax. The issue for decision is whether the underpayment
of tax required to be shown on petitioner’s 1991 Federal income
tax return is due to negligence or intentional disregard of rules
or regulations.
Background
Some of the facts have been stipulated and are so found. At
the time the petition was filed, petitioner resided in Athens,
Alabama.
A. Hoyt Partnerships
Walter J. Hoyt III (Mr. Hoyt) and some members of the Hoyt
family (hereinafter collectively referred to as Hoyt) were in the
business of organizing and promoting cattle-breeding
partnerships. From 1971 through 1992, Mr. Hoyt organized and
operated as a general partner nearly 100 partnerships.2
On February 12, 2001, Mr. Hoyt was convicted in the U.S.
District Court for the District of Oregon of 1 count of
conspiracy to commit fraud, 31 counts of mail fraud, 3 counts of
bankruptcy fraud, and 17 counts of money laundering. See United
2 For a general description of the Hoyt organization and
its operation, see Bales v. Commissioner, T.C. Memo. 1989-568;
see also 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); Mekulsia v. Commissioner, T.C. Memo. 2003-138,
affd. 389 F.3d 601 (6th Cir. 2004); Durham Farms #1, J.V. v.
Commissioner, T.C. Memo. 2000-159, affd. 59 Fed. Appx. 952 (9th
Cir. 2003); and River City Ranches #4, J.V. v. Commissioner, T.C.
Memo. 1999-209, affd. 23 Fed. Appx. 744 (9th Cir. 2001).
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