- 3 -
Yuma Mesa Jojoba, Ltd. (Yuma Mesa), is a Texas limited
partnership to which the TEFRA partnership provisions are
applicable. By notice of FPAA respondent determined the
following adjustments to the partnership return of income of Yuma
Mesa for the taxable year 1982: (1) Disallowance of $1,298,031
claimed as qualified research and experimental expenditures under
section 174; (2) disallowance of $9,000 claimed as a deduction
for tax counseling fees; and (3) disallowance of $750 claimed as
a deduction for guaranteed payments to partners. Respondent also
determined in the alternative that, if the research and
experimentation expenditure were allowed as a deduction, it would
be an item of tax preference under section 57(a)(6). William
Woodburn (Woodburn), as TMP, timely filed a petition with this
Court.
The issue remaining for decision is whether the Yuma Mesa
and Cactus Wren partnerships are entitled to losses for the
taxable years 1982 and 1983, respectively, resulting from claimed
deductions attributed to research and development expenses. In
their opening brief, petitioners make an alternative argument
that the partnerships are entitled to an abandonment loss under
section 165 for 1987. The 1987 tax year is not before the Court
with respect to these consolidated cases, and therefore we
decline to address this issue.
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