- 7 -
Petitioners were well aware of the substantial tax savings
the investment would provide. Petitioners argued that giving
Utah I $23,000 for a $10,000 tax savings would not be a logical
tax dodge. But at the time they invested, petitioners expected
to receive both the tax benefits and the royalties and profits
from the investment. They did not expect to lose the money
invested.
In making the decision to invest in Utah I, petitioners
relied on a cursory reading of the offering and an article.
Petitioners did not have any expertise in or knowledge of jojoba
farming, and they did not seek the advice of an expert in this
area. The offering clearly stated that the investment was risky.
Petitioners did not have an experienced attorney review the
offering as the offering itself suggested. In contrast to their
approach to this investment, petitioner relied upon attorneys for
legal advice in the formation of a personal service corporation,
in the establishment of the corporation’s pension plans, in the
preparation of contracts with doctors, and in the preparation of
wills and estate plans. A close reading of the offering by an
experienced attorney would have alerted petitioners that the
"partnership was merely a passive investor seeking royalty
returns pursuant to the licensing agreement." Fawson v.
Commissioner, supra. Petitioner's minimal reading about jojoba
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 Next
Last modified: May 25, 2011