Opinion ID: 167170
Heading Depth: 2
Heading Rank: 1

Heading: Mr. Hoyt and the Hoyt Organization

Text: 3 Mr. Hoyt's father was a nationally recognized breeder of shorthorn cattle, one of the three major breeds of cattle in the United States. In order to expand his business and attract investors, Mr. Hoyt's father, in the late 1960s, began organizing and promoting cattle breeding partnerships. Before and after his father's death in 1972, Mr. Hoyt and other members of his family were also extensively involved in these activities. 4 From approximately 1971 to 1998, Mr. Hoyt organized, promoted, and operated as a general partner more than 100 cattle breeding partnerships (collectively, the Hoyt partnerships or Hoyt organization). He promoted the Hoyt partnerships as a way for investors to realize tax savings as the partnerships' herds grew and eventually profit when the herds were liquidated. Over the years, however, the partnerships outgrew the number of available animals, and Mr. Hoyt generated the promised tax benefits by creating phantom animals and overvaluing existing animals. 5 Mr. Hoyt controlled all aspects of the partnerships. In addition to managing each partnership as general partner, beginning in 1983, and until removed due to a criminal conviction, Mr. Hoyt served as each partnership's tax matters partner. He was responsible for and directed the preparation of each partnership's tax return, typically signing and filing them himself. Mr. Hoyt also prepared most of the partners' individual tax returns during the years of their investments through various tax preparation companies he operated. From approximately 1980 to 1997, Mr. Hoyt was a licensed enrolled agent, and as such he represented many of the partners before the Internal Revenue Service (IRS) until he was disenrolled in 1998. 6 Starting in 1993, after a cattle count, the Commissioner generally froze and stopped issuing income tax refunds to investors in the Hoyt partnerships. The IRS issued pre-filing notices to investors advising them that, starting with the 1992 taxable year, the IRS would disallow the tax benefits claimed on their individual returns attributable to the Hoyt partnerships and would not issue refunds based thereon. 7 Mr. Hoyt and others were eventually indicted for federal offenses relating to their involvement in the Hoyt partnerships. Mr. Hoyt was convicted on all 52 counts brought against him, including fraud and conspiracy, but not tax fraud. As part of his sentence he was required to pay restitution in the amount of $102 million—the amount that was paid to the Hoyt organization from 1982 through 1998 by investors in various Hoyt partnerships.