- 8 - The partners’ individual income tax returns were often prepared first by the Hoyt Tax Office to claim partnership deductions or credits sufficient to eliminate or substantially reduce partners’ tax liabilities. Subsequently, the partnership returns were prepared to reflect the amounts reported on the partners’ individual income tax returns. The promotional materials explained that, beginning in 1982, other members of the Hoyt Tax Office would sign the individual partners’ tax returns as preparers instead of Hoyt. The materials further stated that the preparers would assist each partner in claiming all nonpartnership tax deductions and credits available to the partner before claiming any flowthrough deductions from the partnership. If a partner needed more or less partnership loss in any year, the Hoyt Tax Office arranged the increase quickly without requiring the partner to pay a higher fee to an outside return preparer. Hoyt routinely had the individual’s Federal income tax returns prepared and filed claiming large partnership losses before the Form 1065, U.S. Partnership Return of Income, was prepared and filed. Sometimes this would result in an inconsistency between the loss shown on an individual return and the amount shown on the partner’s Schedule K-1, Partner’s Share of Income, Credits, Deductions, Etc. From 1981 through 1991, Hoyt formed eight of the nine sheep partnerships at issue pursuant to the laws of California. RCRPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: November 10, 2007