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Beginning in 1984, petitioners’ Federal income tax returns
claimed losses and credits from their investment in a partnership
organized and operated by Walter J. Hoyt III (Hoyt). The
partnership was Shorthorn Genetic Engineering 1984-5. Hoyt was
the partnership’s general partner and tax matters partner, and
the partnership was subject to the unified audit and litigation
procedures of the Tax Equity and Fiscal Responsibility Act of
1982, Pub. L. 97-248, sec. 402(a), 96 Stat. 648. Hoyt was
convicted on criminal charges relating to the promotion of this
and other partnerships.
Petitioners’ claim to the losses and credits resulted in the
underreporting of their 1981 through 1991 taxable income. On
May 9, 2003, respondent mailed to petitioners a Letter 1058,
Final Notice of Intent to Levy and Notice of Your Right to a
Hearing. The notice informed petitioners that respondent
proposed to levy on their property to collect Federal income
taxes that they owed for 1981 through 1991. The notice advised
petitioners that they were entitled to a hearing with Appeals to
review the propriety of the proposed levy.
On May 29, 2003, petitioners asked Appeals for the
referenced hearing. On March 25, 2004, Linda Cochran (Cochran),
a settlement officer in Appeals, held the hearing with
petitioners’ counsel. Cochran and petitioners’ counsel discussed
two issues. The first issue concerned petitioners’ intent to
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