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Second, petitioners provide the first page of RCC's private
placement memorandum. That document describes RCC as
a California limited partnership organized to further
research and development of the technology involved
relating to the high volume manufacturing of a
fabricated all-plastic, reusable and recyclable
shipping and storage container and pallet * * * which
has various proven produce and industrial applications;
to build the production tooling and equipment to
manufacture and sell the Product; and to license the
technology to manufacture the Product on a world-wide
basis.
The Amended Certificate of Limited Partnership for RCC was
entered into on December 30, 1983. Petitioner's checks to RCC
are dated June 12, 1992. It is unclear when the private
placement memorandum was issued. It is possible that during the
9 years between RCC's formation and petitioner's investment, RCC
started to manufacture and sell its product. If that is the
case, petitioners would need to demonstrate that their $50,000
was spent on research or experimentation as opposed to
manufacturing. This they have not done. It is also possible
that RCC licensed the technology to another organization on an
exclusive basis. In that event, RCC's research is not being
conducted in connection with a trade or business of its own or
petitioners' of developing recyclable plastic containers. As a
result, petitioners, on whose behalf the research is being
conducted, have not met the requirements of section 174(a).
The above situations are merely hypothetical. The record
does not provide enough evidence for more than speculation. It
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