Research Two Limited Partnership - Page 15




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          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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