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separate bank accounts and accurate accounting records for each
of the sheep partnerships, the IRS audited the partnership tax
returns as a group. The IRS generally disallowed the partnership
tax benefits that each cattle and sheep partnership and their
respective partners claimed, resulting in those partnerships’ and
partners’ commencing numerous cases in this Court.
After the initial IRS examinations of the many cattle and
sheep partnerships, several investigations by various Government
agencies were commenced relating to Hoyt’s activities.
From 1984 through 1986, the IRS’s Criminal Investigation
Division (CID) conducted an investigation of Hoyt for allegedly
backdating documents to enable 12 investor-partners to claim
improper deductions and credits for 1980, 1981, and 1982. On
July 31, 1986, the IRS District Counsel’s Office in Sacramento,
California, referred the matter to the Department of Justice
(DOJ) for prosecution. The DOJ then forwarded the matter to the
U.S. Attorney’s Office in Sacramento for review and
consideration. On August 12, 1987, the U.S. Attorney’s Office
declined to prosecute Hoyt.
In July 1989, a member of the IRS Examination Division team
(which had been examining the returns of many of the cattle and
sheep partnerships for the 1983 through 1986 taxable years)
recommended that the IRS’s CID investigate Hoyt for allegedly
making and/or assisting in fraudulent or false tax return
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