Michael G. Harvey and Penny B. Harvey - Page 6




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          of Hilltop were all listed as certified public accountants with             
          expertise in the tax field.  The private placement memorandum               
          listed no experience of any of the officer/directors or                     
          shareholders which is relevant to the farming of jojoba.                    
               The private placement memorandum contained language                    
          specifically alerting investors to the planned deduction of the             
          “research and development” costs, as well as other tax risks                
          involved in making an investment in the partnership.  The                   
          document also contained an opinion letter stating that the                  
          research and development agreement contained therein met the                
          requirements of section 174.  Potential investors were required             
          to provide information concerning any previous experience in tax            
          shelter investments, and the subscription agreement required                
          investors to initial a statement that the investor had been                 
          advised to consult with an attorney concerning the tax                      
          consequences of the investment.                                             
               Several weeks after meeting with Mr. Peterson, Mr. Harvey              
          decided to invest in the partnership.  Mr. Harvey made his                  
          investment because he felt he had insider knowledge concerning              
          jojoba and because he thought demand for the product was                    
          sufficient to meet a larger supply.  Petitioner did not research            
          the possible yield per acre of a jojoba plantation, did not                 
          analyze production costs, did not independently investigate the             
          available markets or means of transporting the jojoba to                    






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