- 15 -
686-687. We explained that the partnership was acting merely as
an investor and not as the type of business that section 174
intended to promote. See id. at 687.
In Diamond v. Commissioner, 92 T.C. 423, 424 (1989), affd.
930 F.2d 372 (4th Cir. 1991), the taxpayer was a limited partner
in a limited partnership that became a limited partner in
another limited partnership (project partnership). The general
partner in the project partnership was a publicly held
corporation that was involved in robotics technology. See id.
Pursuant to the project partnership agreement, the corporation
was required to contribute the rights to its technology to the
project partnership and to pursue further research activities on
behalf of the project partnership. See id. at 427-428. In
return, the partners in the project partnership were to
contribute certain sums of money. See id. at 428. The
corporation was granted an option, exercisable in its sole
discretion at any time, to acquire an exclusive and irrevocable
license to carry out all production, manufacturing, and
marketing of any product developed under the agreement. See id.
at 428-429. This Court held that there was no realistic
prospect, during the year in issue, that the technology to be
developed "would ever be exploited in any trade or business
carried on by anyone other than * * * [the corporation]." Id.
at 439. In that regard, we reasoned that, if the technology
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