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and Kathryn G. Houser (petitioners Houser) were liable for
increased interest under section 6621(c).4 Respondent concedes
that there is no addition to tax due from Dr. Mahoney under
section 6659.
The issues remaining for decision are: (1) Whether
petitioners are entitled to deduct losses relating to their
investments in a limited partnership, Jojoba Development
Partners, Ltd., which arose principally from that partnership's
deduction of purported research and development expenditures paid
or incurred during 1981; (2) whether petitioners are liable for
additions to tax for negligence; and (3) whether petitioners'
underpayments of tax are attributable to a tax-motivated
transaction for purposes of computing increased interest pursuant
to section 6621(c).
FINDINGS OF FACT
Some of the facts have been stipulated, and are so found.
The stipulation of facts and exhibits attached thereto are
incorporated herein by this reference.
A. Background
1. The Jojoba Industry in General
The jojoba plant is a shrub that is native to the Sonoran
Desert region in Arizona, California, and Mexico. A jojoba plant
4 Respondent asserted also by first amendment to answer that
Dr. Mahoney was liable for increased interest under sec. 6621(c).
Respondent had determined in the statutory notice of deficiency
as well that the provision for increased interest under sec.
6621(c) applied.
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