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royalties if any actual production resulted from use of the
licensed EOR technology.
Other differences alleged by petitioner have no
significance.
All of the partnerships, including Drake and Barton, were
organized around similar stated fixed license fees that were
based on a portfolio of technology, the total amount of which was
based on the number of partnership units sold. The licensed
technology was either merely conceptual or could have been
obtained with no fixed fees. Krause v. Commissioner, supra at
158-163.
The stated consideration that Drake agreed to pay for the
licenses was excessive, did not bear any relationship to what was
acquired, and was designed to generate deductions that would
produce losses for the investors far in excess of what they
contributed in cash to the partnerships. Neither Basile,
Coppage, nor Krause independently investigated or attempted to
determine the fair market value of the licenses. Id. at 146,
155.
At the time the partnerships obtained licenses of EOR
technology, the partnerships had no idea what technology they
might need or whether the technology they had licensed would, or
even could, be utilized. This is true for all of the
partnerships, whether they had leased acreage in the Utah tar
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