Norman H. Fawson and Mary Jane B. Fawson - Page 8




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          Commissioner, T.C. Memo. 1998-6.3  See Greene v. Commissioner,              
          supra.  It is petitioners’ burden, in any event, to establish the           
          context in which their deductions were taken.  See Rule 142(a);             
          Welch v. Helvering, 290 U.S. at 115; Bixby v. Commissioner, 58              
          T.C. 757, 791 (1972).                                                       
               In Utah Jojoba I Research v. Commissioner, supra, we found             
          that the partnership was organized on December 27, 1982, as a               
          limited partnership with a described purpose of conducting                  
          research and development (R&D) involving the jojoba plant.  CFS             
          prepared the private placement memorandum (the offering) dated              
          November 10, 1982, and an R&D agreement and licensing agreement             
          executed on December 31, 1982.  The partnership was formed with             
          subscriptions for 247 units for a total capitalization of                   
          $2,094,560.                                                                 
               The offering identified William G. Kellen as the general               
          partner and characterized him as having “no previous experience”            
          with respect to jojoba beans.  The offering also indicated that             



               3  Although the parties disagree as to what was apparent               
          from the partnership’s promotional materials, they have                     
          stipulated that the Court found in Utah Jojoba I Research v.                
          Commissioner, T.C. Memo. 1998-6, that the activities of the                 
          partnership did not constitute a trade or business and that the             
          research and development and licensing agreements entered into by           
          the partnership had been designed and entered into solely to                
          provide a mechanism to disguise the capital contributions of                
          limited partners as currently deductible expenditures.  In their            
          brief, petitioners request a finding of fact that the Court’s               
          decision found that the activities of the partnership did not               
          constitute a trade or business.                                             





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