River City Ranches #1 Ltd., Jeffry Bergamyer, Tax Matters Partner - Page 29

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               The only purported business purpose of these partnerships              
          was their sheep breeding activities.  Yet, as we have found, the            
          partnerships never acquired the benefits and burdens of                     
          ownership, the promissory notes did not evidence valid                      
          indebtedness, and Barnes Ranches never performed under the                  
          sharecrop agreement.  Consequently, they could not, and did not,            
          conduct any economic activities.                                            
               There are a number of other facts supporting our conclusion            
          that the partnerships lacked economic substance and were shams.             
          For example, there were many irregularities in the partnerships’            
          documents.  Several of the partnerships did not have signed                 
          partnership agreements or had no partnership agreements at all.             
          There was no separate prospectus for each of the sheep                      
          partnerships; instead Hoyt used the promotional materials he had            
          prepared for the cattle partnerships.  And not all of the sheep             
          partnerships had all of the principal documents to evidence their           
          purported sheep sale agreements with Barnes Ranches.                        
               The traditional books and records expected of a partnership            
          that has economic substance were lacking.  The sheep partnerships           
          did not maintain separate books, records, or assets.  None of               
          them had separate bank accounts.                                            
               We are persuaded that all of the above facts support our               
          conclusion that the partnerships and their purported sheep                  

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