Norman H. Fawson and Mary Jane B. Fawson - Page 11

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          evidence supports the conclusion that petitioners acted                     
          reasonably under the circumstances.                                         
               In contrast to many of the cases decided by this Court                 
          involving tax shelters in which the impropriety of partnership              
          deductions could be discerned only by an investigation of the               
          partnership’s actual operations, the problem with Utah Jojoba I             
          Research was apparent from the documents included in the offering           
          prepared by CFS.  Both the R&D agreement and the licensing                  
          agreement were included in the offering.  An experienced attorney           
          capable of reading and understanding these documents should have            
          understood the legal ramification of the licensing agreement                
          canceling the R&D agreement.  With the concurrent execution of              
          the two agreements, the partnership was not engaging, even                  
          indirectly, in any research or experimentation.  Instead, the               
          partnership was merely a passive investor seeking royalty returns           
          pursuant to the licensing agreement.                                        
               Rather than seeking professional legal and tax advice,4                
          petitioners relied solely on their reading of the offering, their           
          discussions with Mr. Jones, who was selling the investment, their           
          discussion with someone from CFS, which was promoting the                   
          investment, and petitioner’s reading about jojoba.  The record              

               4  Petitioner testified that he discussed the investment               
          with his accountant “at least after the investment was made”.  He           
          did not indicate, however, what information he shared with the              
          accountant or the exact nature of any advice he received.                   

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