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actions following the execution of the R & D Agreement with HJI
were ministerial at most and that HJI enjoyed complete discretion
and control over any research or experimentation as well as the
farming activities that were pursued after January 1, 1987.
Respondent contends further that the second phase of JDP,
following the expiration of the R & D period, was highly
speculative since it was conditioned on HJI's exercising an
option to exploit the jojoba plantation that had been developed.
If HJI refused to exercise the option, however, JDP could only
realize profit from the arrangement by exercising its option to
lease the property from Whittaker Jojoba, in which JDP's general
partner held an interest. Respondent argues that these highly
speculative and conditional arrangements could not rise to the
status of a business, realized or anticipated, on December 31,
1981, when the research and development fee was deducted.
Respondent asserts that JDP was only a vehicle "for the injecting
of risk capital". Green v. Commissioner, 83 T.C. 667, 687
(1984); see also Levin v. Commissioner, 87 T.C. 698, 725 (1986),
affd. 832 F.2d 403 (7th Cir. 1987).
In Snow v. Commissioner, 416 U.S. 500 (1974), the Supreme
Court established that deductions under section 174 could be
claimed in connection with a trade or business even though the
taxpayer was not currently producing or selling any product. In
following the Snow case, however, this Court has held that to be
entitled to a deduction the taxpayer must be engaged in a trade
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