Eugene A. Sanders - Page 2

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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.                                                             
               Some of the facts have been stipulated and are so found.  At           
          the time the petition was filed, petitioner resided in Athens,              
          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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