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purported plan to breed the seeds from only one generation of
jojoba plants in an attempt to produce a jojoba plant with
superior attributes was nothing more than U.S. Agri practicing
culling. Chen's report explained that U.S. Agri's activities
were not plant breeding. Producing plants with consistently
superior attributes takes many generations in order to assure
that "the progenies would breed true."
After touring U.S. Agri's laboratory and greenhouse in
Riverside, California, Chen concluded that the activities carried
out in the laboratory and greenhouse had not been contracted for
by Utah I. The amended research plan of Utah I contains no
references to U.S. Agri's laboratory or greenhouse. U.S. Agri
did not provide Chen with any of its expense records regarding
the contract fee it received from Utah I.
On the basis of the foregoing, Chen concluded that in his
expert opinion "the partnership has not shown that it has done
anything but farming."
OPINION
This partnership proceeding is governed by the procedural
rules of the Tax Equity and Fiscal Responsibility Act of 1982
(TEFRA), Pub. L. 97-248, sec. 402(a), 96 Stat. 648, codified as
secs. 6221-6233. Under section 6221, the tax treatment of
partnership items is determined at the partnership level. We
conclude that Utah I is not entitled to a section 174(a) research
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