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In addition to the claim of an immediate full tax deduction,
the promoters of JDP made a sales presentation concerning the
profit potential of the jojoba industry and the idea that the
purchase of a partnership unit was a good investment. The
offering, however, did not attract as many investors as the
promoters had hoped. By December 21, 1981, six limited partners
had each subscribed to one full partnership unit in JDP. By
December 28, 1981, an additional two limited partners had each
subscribed to one full partnership unit in JDP and two limited
partners had each subscribed to a one-half partnership unit in
JDP. No limited partner acquired a partnership unit in JDP after
December 28, 1981. Berberich, in his capacity as general
partner, nonetheless executed the certificate and agreement of
limited partnership and certificate of fictitious name of JDP on
December 31, 1981. Such certificate was recorded in the official
records of Yuma County, Arizona, on December 31, 1981. Under the
limited partnership agreement, no limited partner was required to
make any capital contribution beyond the initial capital
contribution, and no limited partner was liable for the expenses,
liabilities, or obligations of JDP.
b. The Research and Development Agreement
On December 31, 1981, Berberich, as general partner of JDP,
and Whittaker, as president of HJI, executed a research and
development agreement (R & D Agreement). The R & D Agreement
represented that HJI was experienced in the planting and
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