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agreement with Agri-Research and Jojoba guaranteeing, to the
extent of the promissory note balance, Jojoba’s liability to
Agri-Research under the research and development agreement.
Petitioners’ 1982 Federal Income Tax Return
For the taxable year 1982, Jojoba allocated an ordinary loss
of $12,971 to petitioner, as reflected in his 1982 Schedule K-1,
Partner’s Share of Income, Credits, Deductions, Etc., issued by
Jojoba, which petitioners deducted on their 1982 joint Federal
income tax return.
On October 18, 1993, the tax matters partner of Jojoba
entered into a stipulation with respondent agreeing to be bound
by this Court’s decision in Utah Jojoba I Research v.
Commissioner, T.C. Memo. 1998-6. The facts regarding the
underlying deficiency in Utah Jojoba I Research are substantially
identical to those in this case. In Utah Jojoba I Research, we
held that the partnership was not entitled to deduct its losses
for research and development expenditures under section 174. On
June 17, 1998, we entered a decision against Jojoba, the
partnership involved in this case, disallowing the research and
expense deduction claimed for 1982.
On August 6, 1999, respondent issued a notice of deficiency
to petitioners for 1982 in which he determined that petitioners
are liable for an addition to tax for negligence pursuant to
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