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the principal business activity of the partnerships as “ranching”
and the principal product of the partnerships as registered
sheep. The RCR tax returns included false or fraudulent
depreciation deductions and credits attributable to nonexistent
and overvalued sheep, interest deductions for illusory
indebtedness, and false deductions for farm expenses and
guaranteed payments.
On Schedules F, Farm Income and Expenses, of the RCR tax
returns, the partnerships reported the following false and
fraudulent deductions pertaining to the purported ranching and
registered sheep activities of the partnerships:
RCR #2 Partnership
Deductions 1987
Interest $40,195
Guaranteed payments 3,082
Total 43,277
RCR #3 Partnership
Deductions 1987 1989
Depreciation $149,759 $5,063
Interest 27,607 29,041
Other farm deductions 40,875 19,861
Guaranteed payments 2,482 2,219
Total 220,723 56,184
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