- 2 - CONTENTS Page MEMORANDUM FINDINGS OF FACT AND OPINION........................2 OPINION OF THE SPECIAL TRIAL JUDGE.............................3 FINDINGS OF FACT...............................................4 A. Background...............................................4 1. The Jojoba Industry in General.......................4 2. Carole A. Whittaker..................................5 3. Joseph E. Berberich..................................7 4. Jojoba Development Partners, Ltd.....................9 a. The Private Offering Memorandum..................9 b. The Research and Development Agreement..........15 c. The Option and Joint Venture Agreement..........20 d. The Farm Lease..................................23 e. The Option and Farm Lease Agreement.............24 5. Petitioners.........................................25 a. Petitioners Stephen H. Glassley and Judith S. Glassley........................................25 b. Petitioner Paul S. Mahoney......................28 c. Petitioners Edward F. Houser, Jr. and Kathryn G. Houser..........................................29 B. The Jojoba Plantation...................................32 C. The Consequences of Petitioners' Initial Investment.....41 D. The Experts.............................................43 1. Paul H. Gross.......................................43 2. Dr. Eberhardt.......................................47 3. Marvin T. Parr......................................48 OPINION.......................................................51 A. The Criteria That Must Be Satisfied For Expense Treatment Under Section 174.......................................51 1. The Expenditures Must Be For Research or Experimentation.....................................52 2. The Expenditures Must Be Paid or Incurred on Behalf of the Taxpayer.....................................64 3. The Expenditures Must Be Paid or Incurred in Connection with the Taxpayer's Trade or Business....68 B. Negligence..............................................77 1. Petitioners Glassley and Houser.....................78 2. Dr. Mahoney.........................................82 C. Increased Interest......................................82 MEMORANDUM FINDINGS OF FACT AND OPINION DAWSON, Judge: These cases were assigned to Special Trial Judge Norman H. Wolfe pursuant to the provisions of sectionPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011