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2 This partnership loss was further broken down as
follows: Ordinary loss of $59,179 and a special
allocation deduction of $33,782 for legal fees.
Petitioner never asked the Hoyt organization to let him see any
record relating to a partnership for which petitioner claimed
losses for 1988 and 1991, and petitioner never contacted the Hoyt
organization to ask questions or request records substantiating
the amounts of partnership losses reported on his 1989 and 1991
tax returns.
Petitioner’s 1988, 1989, 1990, and 1991 tax returns included
Forms 8271, Investor Reporting of Tax Shelter Registration
Number, listing a number of tax shelters including TBS (for 1988,
1989, and 1990), DSBS 87-C (for 1988 and 1990), and TBS 89-1 (for
1989, 1990, and 1991). Petitioner’s 1991 return also included a
one-page document that he entitled “Material Participation
Statement”. Petitioner signed that statement on September 30,
1992, asserting therein that he had spent 145 hours in 1991
materially participating in a business activity of his named
“Gary McDonough Co.” Petitioner’s 1991 return also included two
Schedules F, Profit or Loss from Farming, reporting farm income
of $1,800 and $23,294 from a “SALE OF COW” and “BREEDING VALUE
PRODUCTION AND SALES”, respectively, and reporting no related
farm expense. The $23,294 stemmed from petitioner’s
participation in TBS 89-1 and appeared on his 1991 Schedule K-1,
Partner’s Share of Income, Credits, Deductions, Etc., from TBS
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