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provide the promised tax benefits for JDP's investors and that it
was not based on the value of any anticipated services to be
rendered by HJI. Under such circumstances, we agree with
respondent that the R & D Agreement did not delineate the
agreement of the parties as to any research and development to be
conducted, and it had no substance.
Petitioners contend, however, that the option and farm lease
agreement, which purportedly accorded JDP the right to operate
Turtleback I had HJI elected not to enter into a joint venture,
shows that JDP was independent from HJI and intended to use the
expected discoveries in a trade or business. We do not agree.
First, as we have stated earlier, we believe that from its
inception Turtleback I was not an independent jojoba plantation
but functioned as a part of HJI's jojoba farming enterprise.
Second, we are not convinced from this record that JDP ever had a
realistic prospect of carrying on a jojoba farming operation.
For example, JDP had no experience in farming jojoba. As far as
we can tell from the record, Berberich was not involved directly
in the farming of jojoba on Turtleback I or anywhere. He was a
lawyer, not a farmer, and all of his activities concerned
administering JDP or monitoring his own investments in the Hyder
Jojoba plantations. JDP, moreover, had no employees and no
equipment, and it did not own the jojoba plants. The record is
devoid of any evidence that JDP could have operated a successful
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