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general partner "pioneered the development of the Blythe Airport
as an alfalfa ranch and jojoba farming in Desert Center" and was
"familiar with the development of jojoba, citrus, vineyards,
alfalfa and asparagus." Such inconsistencies should have raised
a healthy suspicion in the mind of a reasonable and ordinarily
prudent investor, even one lacking any legal, tax, or
agricultural background. However, petitioner testified that,
prior to investing some $33,000 in Blythe II, he did not even
bother to read the entire offering, nor did he make an effort to
obtain a reasonable understanding of those portions that he did
read. Moreover, petitioners failed to monitor the progress of
their investment after purchasing the limited partnership
interests.
The Court is mindful that the Court of Appeals for the Ninth
Circuit (Ninth Circuit), the court to which appeals in these
cases would lie, has held that experience and involvement of the
general partner and the lack of warning signs could reasonably
lead investors to believe they were entitled to deductions in
light of the undeveloped state of the law regarding section 174.
See Kantor v. Commissioner, 998 F.2d 1514 (9th Cir. 1993), affg.
in part and revg. in part T.C. Memo. 1990-380. In its holding,
the Ninth Circuit explained that the Supreme Court's decision in
Snow v. Commissioner, 416 U.S. 500 (1974), left unclear the
extent to which research must be "in connection with" a trade or
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