River City Ranches #1 Ltd., Jeffry Bergamyer, Tax Matters Partner - Page 12

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          large numbers of individual breeding sheep that did not exist.              
          The flock recap sheets prepared by Hoyt contained false                     
          information and did not represent the sheep purportedly owned by            
          each partnership.  Sheep purportedly sold to the partnerships               
          were not of the quality represented on the bills of sale.                   
          Further, the total purchase price that each partnership agreed to           
          pay for each sheep was much greater than the fair market value of           
          similar quality sheep.  The average purported purchase price per            
          ewe paid by the sheep partnerships ranged from $1,135 to $2,126,            
          but these purchase prices were not within a reasonable range of             
          value.  The sheep that Barnes Ranches sold for $400 or more                 
          typically had been judged champions or had won some other awards            
          at national shows, but the sheep purportedly sold to the sheep              
          partnerships were nowhere near the quality of breeding sheep sold           
          for $400 or more.                                                           
               The partnerships never acquired control over the ewes                  
          allegedly purchased, nor did they obtain the benefits and burdens           
          of ownership of any breeding ewe.  Barnes Ranches purportedly               
          managed the partnerships’ breeding sheep in a commingled flock              
          with Barnes’s own sheep.  No sheep registration certificates were           
          issued in the name of any of the partnerships.  Neither Hoyt nor            
          Barnes Ranches kept any records that adequately identified the              
          breeding sheep owned by each partnership.  The partnerships could           
          not identify the specific breeding sheep they purchased, nor                

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