Gary W. McDonough - Page 5




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          2.  Hoyt and His Organization                                               
               From about 1971 through 1998, Hoyt organized, promoted, and            
          operated as a general partner various cattle breeding                       
          partnerships.  Three of the partnerships were Durham Shorthorn              
          Breed Syndicate 1987-C J.V. (DSBS 87-C), Timeshare Breeding                 
          Service J.V. (TBS), and TBS 89-1.  Hoyt organized, marketed,                
          promoted, and operated all of his partnerships in essentially the           
          same fashion.  Among other things, Hoyt was responsible for and             
          directed the preparation of each partnership’s tax returns, and             
          he typically signed and filed each of those returns.                        
          3.  Petitioner’s Involvement With the Hoyt Partnerships                     
               In or about 1986, petitioner heard about the Hoyt                      
          partnerships from his fellow firefighters at the LAFD.                      
          Petitioner knew that 12 of his close coworkers either were                  
          considering participating in a Hoyt partnership or had                      
          participated in a Hoyt partnership.  Petitioner knew that two of            
          those coworkers had participated in one or more of the Hoyt                 
          partnerships for as long as 10 years.                                       
               In 1988, petitioner decided to participate in some of the              
          Hoyt partnerships with an intent to acquire a tax shelter and to            
          generate funds for his retirement.  Previously, in 1987 or 1988,            
          petitioner had visited Hoyt’s main office in Elk Grove,                     
          California, and he had toured Hoyt’s facilities and ranches in              
          Burns, Oregon.  During his visit and tour, petitioner saw land              







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