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portion of which, but for tax-advantaged investments, would be
subject to a Federal income tax rate of 50 percent.
Petitioners' investment was for four limited partnership
units, which required an initial downpayment of $10,000 and
execution of a promissory note for $23,920. Petitioners paid
$2,600 each year from 1983 through 1985 and $2,100 per year from
1986 through 1991 on the promissory note. In 1992, petitioners
made a final payment of $3,520.
The offering identified William Kellen (Mr. Kellen) as the
general partner and U.S. Agri as the contractor for the R & D
program under an R & D agreement. Additionally, a license
agreement between Blythe II and U.S. Agri granted U.S. Agri the
exclusive right to utilize technology developed for Blythe II for
40 years in exchange for a royalty of 85 percent of all products
produced. The offering included copies of both the R & D
agreement and the license agreement.8 The R & D agreement was
executed concurrently with the license agreement.
8 In the instant cases, the Blythe II offering is
included in evidence as a stipulated exhibit; however, the
stipulated exhibit contains an incomplete copy of the R & D
agreement that was attached to the original offering. To the
extent that relevant facts are omitted due to the incomplete copy
of the R & D agreement (or other incomplete pieces of evidence)
in the instant cases, the Court must rely on findings of fact in
Utah Jojoba I Research v. Commissioner, T.C. Memo. 1998-6, to
which the partners of Blythe II agreed to be bound. It is
petitioners' burden to establish the context in which their
deductions were taken. See Rule 142(a); Welch v. Helvering, 290
U.S. 111, 115; Bixby v. Commissioner, 58 T.C. 757, 791 (1972).
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