Gary W. McDonough - Page 11




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          89-1.  The $1,800 may or may not have been related to                       
          petitioner’s participation in TBS 89-1.                                     
               For 1988, 1989, 1990, and 1991, petitioner received Federal            
          income tax refunds as follows:                                              
          Year      Refund Amount     Date Refund Issued                              
          1988         $10,714           May 29, 1989                                 
          1989           1,423           July 9, 1990                                 
          1990           3,850           July 29, 1991                                
          1991           4,053           Nov. 2, 1992                                 
          5.  Documents From the Internal Revenue Service                             
               Before signing his 1991 tax return, petitioner received                
          notices of beginning of administrative proceeding (NBAP)                    
          informing him that the Commissioner was examining the 1988, 1989,           
          and 1990 taxable years of DSBS 87-C.  Petitioner never took any             
          of the NBAPs to a tax professional independent of the Hoyt                  
          organization, e.g., to inquire about its significance.  Before              
          signing his 1991 tax return, petitioner also received two letters           
          from the Internal Revenue Service, containing information                   
          regarding material participation and section 469.                           
          6.  The Bales Memorandum Opinion                                            
               The case of Bales v. Commissioner, T.C. Memo. 1989-568,                
          pertained to Hoyt cattle partnerships (not including TBS 89-1)              
          and their 1974 through 1981 taxable years.  The Court in Bales              
          decided that those partnerships were not shams.  After Bales was            
          decided, Hoyt promoted the Hoyt partnerships to prospective                 
          participants by referring to the case.                                      






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