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On October 10, 1993, Mr. Matsuda, in his capacity as
Jojoba’s TMP, 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, adjusting the partnership
items of Jojoba by disallowing the research and development
expense deduction claimed for 1982 and upholding adjustments to
Jojoba’s reporting position regarding management fees and
interest income for taxable years 1983 through 1986.
Tax Returns
For the taxable years 1982 and 1983, Jojoba allocated
ordinary losses of $18,159 and $1,685, respectively, to the
Myerses, as reflected in their 1982 and 1983 Schedules K-1,
Partner’s Share of Income, Credits, Deductions, etc., issued by
Jojoba, which the Myerses deducted on their 1982 and 1983 Federal
income tax returns, respectively.
For each of the taxable years 1985 and 1986, Jojoba
allocated an ordinary loss of $1,685 to petitioner, as reflected
in her 1985 and 1986 Schedules K-1, issued by Jojoba, which
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