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purchasers, and did not make any financial projections regarding
the product.
Petitioner purchased two interests in Yuma Mesa. On
December 30, 1982, he executed a subscription agreement, a
promissory note in the amount of $17,348, and a partnership
agreement. Petitioner subsequently was issued a Schedule K-1 by
the partnership which reflected a $23,174 ordinary loss for
taxable year 1982.
On their joint Federal income tax return for 1982,
petitioners reported the following amounts of income and losses:
Wages (University) $43,978
Interest 984
Business (Consulting) 71,091
Business (Trucking) (19,610)
Royalties 2,878
Yuma Mesa partnership (23,174)
S corporation (79)
Total income 76,068
In the years following his investment in 1982, petitioner
received and reviewed financial statements and progress reports.
The reports were semiannual or quarterly, and discussed the
progress or problems at the sites. At one point, petitioner
traveled to the plantation in Yuma, where he spent approximately
1� days. While there, he spoke with individuals involved in the
project to ascertain the progress being made and the outlook for
the jojoba development. The partnership failed in 1987.
The private placement memorandum provided projections of
estimated cash expenditures and tax savings associated with
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