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Petitioner knew it was a high-risk investment, and he considered
the cautions in the prospectus about the risks to be standard
language.
On November 19, 1982, petitioners signed a “Subscription
Agreement”, a “Promissory Note”, and a “Limited Guarantee
Agreement”. In the Subscription Agreement, petitioners purchased
four units in the partnership and agreed to pay $10,000. In the
Promissory Note petitioners promised to make yearly payments over
the next 10 years to the partnership for a total of $23,920.
About 6 months after investing in the partnership,
petitioner drove out to Desert Center, California, where the
jojoba plantation was located. To him, it looked like the
plantation was flourishing. A few months after the visit to the
plantation, petitioner visited the offices of CFS in Salt Lake
City, Utah, which looked reputable to him. During the years at
issue, petitioner did not have much contact with the partnership.
In 1983, pursuant to the promissory note, petitioners made a
payment to the partnership of $2,600.
On their 1982 Federal income tax return, petitioners
reported income of $116,522, and claimed a partnership loss of
$20,919 from Utah Jojoba I.2 On their 1983 Federal income tax
return, petitioners reported income of $110,000 and claimed a
2 There also were other losses claimed in this year from
other investments.
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Last modified: May 25, 2011