- 5 -
6659, and 6661 of additions to tax for negligence, for valuation
overstatements, and for substantial understatements of tax.
As indicated, our findings and holdings in Krause v.
Commissioner, supra, were affirmed by the U.S. Court of Appeals
for the Tenth Circuit.
The license agreements entered into by Boulder, Tech-1979,
and Winfield with Elektra are not materially different from the
license agreements entered into by the partnerships involved in
the Krause test cases.
Facts found and conclusions reached in Krause with regard
specifically to lack of profit objective of the partnerships
involved in Krause are incorporated herein by reference and apply
to Boulder, Tech-1979, and Winfield.
Similar to our findings in Krause v. Commissioner, supra at
169, with regard to the partnerships involved therein, the stated
consideration agreed to by Boulder, Tech-1979, and Winfield for
the license of enhanced oil recovery (EOR) technology and for the
lease of tar sands properties was excessive, bore no relation to
the value of that which was acquired, did not conform to industry
norms, and precluded any realistic opportunity for profit.
In the oil and gas industry, a portfolio of technology is
not ordinarily licensed when it is not known whether the
technology will even work on the property on which the technology
is to be implemented. EOR technology is known to be site
specific. For this reason, the acquisition of a portfolio of EOR
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011