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1994, respectively. He had never been a partner in a
partnership.
Petitioner’s only experience in farming came in the late
1970s, when he spent a couple of weeks milking cows. Petitioner
has never purchased livestock. Petitioner is not an expert in
cattle or embryo valuation and has no knowledge of the success
rate of embryo transplants in cattle.
Petitioner first heard about the Hoyt organization in 1985
from several coworkers. At that time, petitioner understood that
Hoyt was in the business of breeding cattle, that the business
was profit motivated, and that investment in a Hoyt partnership
would minimize a partner’s tax liability. Petitioner did not
invest in 1985, taking a “wait-and-see attitude” because the
investment “just [sounded] too good to be true.”
In 1994, petitioner talked to current and former coworkers,
including Joe Trodglen (Trodglen), about Hoyt and the tax
benefits of investing in a Hoyt partnership. In December 1994,
petitioner told Trodglen that he wanted to invest in the Hoyt
organization. Trodglen provided petitioner with Hoyt promotional
materials, including a pamphlet entitled “Registered Livestock
Purchase Guide” (the purchase guide). The purchase guide
provides an outline of Hoyt’s partnerships and “investment
opportunities.” Many sections are devoted to tax considerations,
including tax benefits and tax risks. The purchase guide states:
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Last modified: May 25, 2011