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Petitioner also contacted Jack Huntington (Mr. Huntington),
who operated Huntington Jewelers in Las Vegas, to inquire about
the use of jojoba bean oil in the jewelry and watch industry.
According to the offering, one of the potential uses for oil
extracted from jojoba beans was a substitute for sperm whale oil,
which had been banned from importation into the United States in
the early 1970's. Mr. Huntington advised petitioner that there
was some concern among those in the watch industry about the
availability of sperm whale oil as a lubricant and the prospects
for any viable substitute. Petitioner did not consult an
attorney or any independent expert in the area of agriculture or
jojoba plants regarding whether jojoba oil could be a viable or
competitive substitute for sperm whale oil. Petitioners,
nevertheless, invested in Blythe II.
On their joint 1982 Federal income tax return, petitioners
reported wages of $105,100 from petitioner's medical practice and
a loss of $20,933 from Blythe II. Including the loss reported
from Blythe II, petitioners reported total net losses from
various partnerships of $54,575 for 1982. Thus, petitioners
reported an adjusted gross income of $51,576 and a total tax
liability of $3,181.3
3 During May 1985, petitioners filed an amended return
for 1982 reporting an increase in adjusted gross income of
$17,265 due to the disallowance of another partnership loss
(continued...)
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