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responded on February 17, 1995, thanked petitioner for his
interest, provided him with promotional materials, and requested
that he “fill out the enclosed credit application and return it
with copies of your tax returns for the years 1991, 1992, and
1993, so I can review your qualifications for your livestock
purchase.” The promotional materials included copies of the
purchase guide and the business opportunities pamphlet provided
to petitioner by Trodglen. Petitioner sent the requested
information to Barnes in March 1995.
Sometime in early 1995, petitioner met with Barnes at Elk
Grove, a Hoyt ranch, to further discuss “investment
opportunities”.3 Their meeting lasted approximately 3 hours,
during which Barnes explained Bales v. Commissioner, T.C. Memo.
1989-568 (the Bales case, or Bales) and spent at least 15 minutes
discussing tax benefits.
After talking to Barnes, petitioner decided to invest.
Petitioner did not consult a tax attorney, an accountant, or an
expert in the cattle industry before he invested.
On April 15, 1995, David Cross (Cross), a Hoyt employee,
sent petitioner a letter stating:
After reviewing your information we are
comfortable with your income, you can afford the
payments on 73 head [of cattle].
3 It is not clear whether this meeting took place before or
after petitioner requested information from Hoyt.
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