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a mechanism to disguise the capital contributions of limited
partners as currently deductible expenditures. The Court stated
that the activities of the partnerships were:
another example of efforts by promoters and investors in the
early 1980's to reduce the cost of commencing and engaging
in the farming of jojoba by claiming, inaccurately, that
capital expenditures in jojoba plantations might be treated
as research or experimental expenditures for purposes of
claiming deductions under section 174.
Id.
As a result of Jojoba Hawaii's TEFRA proceeding, and its
agreement to be bound, petitioners were assessed tax deficiencies
of $5,000 for 1982, $508 for 1983, $294 for 1984, and $346 for
1985, plus interest. Subsequently, respondent issued notices of
deficiency to petitioners for 1982 through 1985 for affected
items determining that petitioners are liable for the additions
to tax for negligence under section 6653(a)(1) and (2). These
additions to tax are the subject of the instant case.
Section 6653(a)(1) imposes an addition to tax in an amount
equal to 5 percent of an underpayment of tax if any part of the
underpayment is due to negligence or intentional disregard of
rules or regulations. Section 6653(a)(2) imposes another
addition to tax in an amount equal to 50 percent of the interest
due on the portion of the underpayment attributable to negligence
or intentional disregard of rules or regulations. Respondent’s
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