one from the IRS Chief Operating Officer
and
one from the National Taxpayer Advocate.

Please do not read between the lines and think this is over. We are making progress--we now have people inside the IRS trying to straighten this out. We are asking for fair treatment in accordance with the laws--something we have not yet been afforded.

Please make sure you stay current on your present taxes and keep writing to Congress and your Senators.

Chief Operations Officer:


                                   February 2, 1999

MEMORANDUM FOR REGIONAL CHIEF COMPLIANCE OFFICERS
REGIONAL CHIEFS CUSTOMER SERVICE ASSISTANT COMMISSIONER
(INTERNATIONAL) EXECUTIVE OFFICER FOR SERVICE CENTER OPERATIONS

                   (signature)
FROM:      John M. Dalrymple
           Chief Operations Officer

SUBJECT:  Stay of Collection Actions All Cases Relating to Hoyt
Partnership


We have received a number of inquiries at both the national and local
levels from taxpayers who invested in Hoyt partnerships, from
practitioners who represent Hoyt partnership investors, and from members
of Congress concerning disallowance of the deductions relating to these
partnerships.  Most of the Hoyt investors have already been assessed
taxes either as a result of settlements or court decisions.  Collection
activity may be ongoing with regards to these assessed taxes.

The volume of correspondence indicates a significant number of related
cases may be in the notice stream and collection inventories.  However,
we are unable to identify all taxpayers affected by the pending decision.

Please suspend all collection action against "Hoyt" investors for
collection of assessments flowing from "Hoyt Partnership" adjustments
except for jeopardy situations, until you receive further instructions. 
Installment agreements can be entered into if requested by a "Hoyt"
investor.

If you have questions, please call me or have a member of your staff
contact Dennis Reaves at (xxx)xxx-xxxx.

cc: National Taxpayer Advocate
    Chief Counsel

National Taxpayer Advocate

                         February 3, 1999


MEMORANDUM FOR REGIONAL TAXPAYER ADVOCATES
    DISTRICT TAXPAYER ADVOCATES

FROM         W. Val Oveson (signature)
             National Taxpayer Advocate

SUBJECT   Hoyt Investors

We have received a number of inquiries at both the national and local
levels from taxpayers who invested in Hoyt partnerships; from
practitioners who represent Hoyt partnership investors and from members
of Congress.  These partnerships have been and continue to be the subject
of considerable litigation.  One issue raised by investors and
practitioners in their correspondence is that the IRS allowed Mr. Hoyt to
continue as the Tax Matters Partner even though it is alleged that we
knew there was a conflict of interest for him to do so.  Shorthorn
Genetic Engineering 1982-2, Ltd., Shorthorn Genetic Engineering 1982-4,
Ltd., Shorthorn Genetic Engineering 1982-5, Ltd., Walter J. Hoyt, III,
Tax Matters Partner, et al., Docket Nos., 22003-89 plus 22 other
consolidated cases and Durham Farms #1, J.V., Walter J. Hoyt, III, Tax
Matters Partner, et al., Docket Nos. 2465-94 plus 25 other cases are
currently pending before the Tax Court.  Attached is a copy of the letter
that I will be sending to the numerous inquires that we have received.

Many Hoyt investors have already been assessed taxes either as a result
of settlements or court decisions.  Collection activity is ongoing with
regards to these assessed taxes.  However, the Chief Operations Officer
has agreed to stay collection action while this matter is under review by
my office.  Also attached is a copy of the memorandum issued by the Chief
Operations Officer authorizing the stay on collection action.

With the stay on collection and the pending matters before the Tax Court,
I would advise you to maintain the status quo regarding cases that you
now have or that you may receive.  If any case before you needs action,
please deal with them on a case-by-case basis under existing law and
guidance.  When the Tax Court cases are resolved, I will provide further
direction and guidance.

Attachments (2)