Gary W. McDonough - Page 7

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          75 percent of which he had to give to the Hoyt organization and             
          25 percent of which he could keep.                                          
               Petitioner received promotional materials from the Hoyt                
          organization, which he showed to other firemen who were Hoyt                
          participants but did not take to an attorney independent of the             
          Hoyt organization.  One of those documents was similar to a                 
          brochure entitled “The 1,000 lb. Tax Shelter”.  That brochure               
          explained that the Hoyt partnerships were designed to provide               
          profits over time and emphasized that the primary return on                 
          investment was realized through tax savings.  The brochure                  
          indicated that the benefit of participating in a Hoyt partnership           
          was that participants could obtain refunds of Federal income tax            
          paid in the previous 3 years by amending their returns for those            
          years so as to claim a carryback of investment tax credits                  
          generated by the partnership.  The brochure stated that each                
          partner had to pay 75 percent of the tax refunds to the Hoyt                
          organization as an investment in the cattle but could keep the              
          remaining 25 percent as a 30-percent return on investment.  The             
          brochure stated that the Hoyt organization would prepare each               
          partner’s tax returns, and                                                  
               would assist the Partners in claiming all the tax                      
               savings available to them first, before entering the                   
               Partnership numbers.  If a Partner needs more or less                  
               Partnership loss any year, it is arranged quickly                      
               within the office, without the Partner having to pay a                 
               higher fee while an outside preparer spends more time                  
               to make the arrangements.                                              

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Last modified: November 10, 2007