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promissory note.7
Prior to investing in San Nicholas, petitioner did not have
any experience or expertise in jojoba, nor did petitioner have
any experience or expertise in the area of research or
development of jojoba.
Petitioner’s decision to invest in San Nicholas was
influenced by the fact that Mr. Pace, his friend and business
associate, was president of U.S. Agri, see infra “G”, and that
Mr. Kellen, another of petitioner’s friends and business
associates, had also invested in San Nicholas.8
Petitioner’s decision to invest was also influenced by
petitioner’s belief that an investment in San Nicholas offered
tax benefits.
Prior to investing in San Nicholas, petitioner did not
consult any attorney.9
7 The note, which was recourse in form, contemplated
payments of interest only for the first 5 years. As matters
actually transpired, late in the 1980s, the limited partners were
given the option of paying a steeply discounted percentage of the
principal in cash. The record does not disclose whether
petitioner elected this option.
8 Mr. Kellen’s investment in San Nicholas also culminated in
a case in this Court. See Kellen v. Commissioner, T.C. Memo.
2002-19; see also Utah Jojoba I Research v. Commissioner, T.C.
Memo. 1998-6, discussed infra in subdivision “J”, regarding Mr.
Kellen’s involvement in another jojoba partnership.
9 Although Mr. Kellen was an attorney, he never rendered any
legal advice to petitioner concerning San Nicholas. Indeed,
petitioner never consulted Mr. Kellen in his capacity as an
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