- 72 -
v. Commissioner, supra. In addition, this Court has also
disallowed deductions claimed for research and experimental
expenditures even though the licenses had not officially been
entered into upon execution of the research and development
agreements. See Stauber v. Commissioner, T.C. Memo. 1992-128;
Double Bar Chain Co. v. Commissioner, supra. In Stauber, we
found that the partnership never intended to enter into a trade
or business with respect to the technology, and that there was a
pre-existing understanding regarding a future license of the
technology. In Double Bar Chain Co. v. Commissioner, supra, we
held that even though there was no written license agreement, the
partnership never intended to enter the trade or business of
manufacturing and marketing the technology. The relevant factors
in this determination included the limited capital retained in
the partnership, the private offering memorandum stating that
none of the essential activities relating to the technology would
be conducted by the partnership, the lack of control over the
research activities, and the lack of experience of the investors.
In Stankevich v. Commissioner, supra, we looked to the
passive nature and limited activity of the partnerships, as well
as their lack of control over all aspects of the investment, in
holding that the general partner never intended that the
partnerships would enter into a trade or business. We also held
that the contractual arrangements between the parties made the
prospects unrealistic that the partnerships would ever be capable
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