- 74 -
farming on Turtleback I is not determinative. As we have stated
previously, "the mere presence of a valid business enterprise at
some levels of a transaction does not automatically entitle
passive investors distant from day-to-day operations of the
enterprise to the associated tax benefits." Beck v.
Commissioner, 85 T.C. 557, 580 (1985). Rather, to resolve the
trade or business question in the instant cases we must focus on
JDP, not TJV, as petitioners would have us do. For the reasons
set forth above, we conclude that JDP did not intend to engage,
nor did it engage, in its own trade or business.
As stated previously, we have concluded that Turtleback I
was not operated as an independent jojoba plantation.21 JDP
functioned from the beginning as a part of HJI's farming
enterprise. JDP's relationship with HJI did not change as of
January 1, 1987, when purportedly the research and development
period ended and the putative joint venture operation commenced.
HJI continued to have sole responsibility and control over the
jojoba farming operations. JDP moreover was not called upon to
provide any additional contributions to fund the operations of
the joint venture. The fact that JDP would begin to share in any
profits after formation of the joint venture is not determinative
since no profits could have been expected during the putative
21 We may take into account a taxpayer's actions in years
subsequent to the years in issue in evaluating the taxpayer's
prospects during the years in issue. Levin v. Commissioner, 832
F.2d, 403, 406 n.3 (7th Cir. 1987), affg. 87 T.C. 698 (1986).
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