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Petitioner did not pay a fee to Desmond for his financial
advice. He assumed that, as with the sale of insurance, Desmond
would get a commission from the sale of the jojoba partnership
interest. Petitioner knows nothing about jojoba. Although it
was their first involvement with Desmond, petitioners based their
investment decision solely on what Desmond told them and showed
them.
Preparation of the Tax Return
When petitioners received the partnership Schedule K-1, Form
1065, Partner's Share of Income, Credits, Deductions, etc., for
1983 it was for the partnership Arid Land Research Partners (Arid
Land). The Schedule K-1 indicates that petitioners have a 2.67-
percent profits share interest and that their share of the
partnership loss for the year 1983 is $12,407. Petitioners never
received a Schedule K-1 for an entity named New Jersey Agri.
With reference to their jojoba investment, petitioners gave
their return preparer only the Arid Land Schedule K-1 for
preparation of their 1983 joint Federal income tax return. The
return preparer told petitioners to "file a tax return in
accordance with what is on the K-1". Petitioners deducted a
partnership loss from "Arid Land Research PTNR'S" of $12,407 on
Schedule E, Supplemental Income Schedule, of their 1983 joint tax
return.
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Last modified: May 25, 2011