John C. Vanderschraaf and Cornelia Vanderschraaf, et al. - Page 5

                                        - 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