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Petitioner is a well-educated individual who holds an
undergraduate degree in nuclear engineering as well as an MBA.
However, petitioner had no knowledge with respect to cattle
businesses before his Hoyt investment. Petitioner did not seek
professional legal or tax advice before his Hoyt investment.
Instead, petitioner relied on Hoyt promotional materials that
included articles titled “The 1,000 lbs. Tax Shelter” and
“Harvesting the Tax Code” and which stated that partnership
earnings from various Hoyt partnerships were “tax free” and
“sheltered from income tax”.
Before filing his 1991 return petitioner received two
separate notices from respondent that Durham was under
examination for the taxable years 1989 and 1990. In a separate
letter, respondent specifically informed petitioner that the
examination of Durham “could have a tax effect to your return”.
Petitioner also received a letter from respondent before filing
his 1991 return which stated that information which had been
previously sent to investors from Mr. Hoyt was “misleading and/or
inaccurate” and that petitioner should “consider having an
independent accountant or attorney review this matter”. Despite
these notices, petitioner did not make any inquiries with respect
to his Hoyt investment or have his 1991 return prepared or
reviewed by an independent tax professional.
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Last modified: May 25, 2011