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described purpose of conducting research and development (R & D)
involving the jojoba plant. The offering, dated November 30,
1982, provided for a maximum capitalization of $2,968,000
consisting of 350 limited partnership units at $8,480 per unit.
Each unit required a cash downpayment of $2,500 and a
noninterest-bearing promissory note in the principal amount of
$5,980 payable in 10 annual installments with an acceleration
provision in the event of default. The offering was limited to
investors with a net worth (exclusive of home, furnishings, and
automobiles) of $150,000, or investors whose net worth was
$50,000 (exclusive of home, furnishings, and automobiles) and who
anticipated that, for the taxable year of the investment, they
would have gross income equal to $65,000, or taxable income, a
portion of which, but for tax-advantaged investments, would be
subject to a Federal income tax rate of 50 percent.
Petitioners' investment was for eight limited partnership
units, which required an initial downpayment of $20,000 and
execution of a promissory note for $47,840. Petitioners were to
make payments of $5,200 each year from 1983 through 1985, $4,200
per year from 1986 through 1991, and a final payment of $7,040 in
1992 on the promissory note. The record reflects that
petitioners actually paid $20,000 in 1982, $5,200 per year from
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