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share of Durham’s ordinary loss. Attached to the Schedule K-1
was a Form 8271, Investor Reporting of Tax Shelter Registration
Number, which identified Durham as a tax shelter. On a Schedule
E attached to his 1990 return, petitioner reported a partnership
loss of $175,560.
During July 1991, petitioner traveled to Burns, Oregon, to
tour several Hoyt ranches. Petitioner did not review any Hoyt
records during his 4-day visit. During his visit to the Hoyt
ranches, petitioner saw “just a handful” of cattle. Petitioner
was unable to determine which cattle, if any, were specifically
owned by Durham.
On February 3, 1992, respondent sent to petitioner an NBAP
which notified petitioner that Durham’s 1990 taxable year was
under examination.
On February 11, 1992, Revenue Agent Norm Johnson sent
petitioner a letter. The letter noted, in part, that in prior
correspondence sent by Mr. Hoyt in January 1992 to petitioner and
other Hoyt investors, “misleading and/or inaccurate premises were
made which may directly affect you and your decision-making
process in filing your 1991 individual tax return.”8 The revenue
agent’s letter further stated that if petitioner was confused by,
or questioned the accuracy of, the information provided by
8 Mr. Hoyt’s letter to the Hoyt investors addressed
arguments with respect to material participation under sec. 469.
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