James L. and Eva J. Downs - Page 4




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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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