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heavily on the investors’ tax savings. One brochure, titled “The
1,000 lb Tax Shelter”, highlighted the investors’ writeoffs,
refers to the investment as a tax shelter, and emphasizes that
the primary return on an investment in a Hoyt partnership would
be from the tax savings. See Van Scoten v. Commissioner, T.C.
Memo. 2004-275 (where the Tax Court made a similar finding based
on its review of the same Hoyt brochure), affd. 439 F.3d 1243
(10th Cir. 2006). In Van Scoten, we pointed out that the 1,000
lb Tax Shelter brochure spent numerous pages explaining the tax
benefits of investing in a Hoyt partnership and explaining why
investors should trust only Hoyt’s organization to prepare their
individual Federal income tax returns. Another brochure, bearing
the heading “Harvesting Tax Savings by Farming the Tax Code”,
also emphasized tax savings and explained that the investment
could be financed from the investors’ tax savings, which the
investors otherwise would have paid to the IRS.
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 a partner’s tax liability. 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
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Last modified: November 10, 2007