Anthony B. and Jill Serfustini - Page 10




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               The facts pertinent to the instant case relating to the                
          structure, formation, and operation of Blythe II are as discussed           
          in Utah Jojoba I Research v. Commissioner, T.C. Memo. 1998-6,               
          with the exception of a few specific dates and dollar amounts.              
          Blythe II was organized in December 1982 as a limited partnership           
          for the described purpose of conducting research and development            
          (R&D) involving the jojoba plant.  The offering, dated November             
          30, 1982, provided for a maximum capitalization of $2,968,000               
          consisting of 350 limited partnership units at $8,480 per unit.             
          Each unit required a cash downpayment of $2,500 and a non-                  
          interest-bearing promissory note in the principal amount of                 
          $5,980 payable in 10 annual installments with an acceleration               
          provision in the event of default.  The offering was limited to             
          investors with a net worth (exclusive of home, furnishings, and             
          automobiles) of $150,000, or investors whose net worth was                  
          $50,000 (exclusive of home, furnishings, and automobiles) and who           
          anticipated that, for the taxable year of the investment, they              
          would have gross income equal to $65,000, or taxable income, a              
          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 down payment of $10,000 and                
          execution of a promissory note for $23,920.  Petitioners were to            
          make payments of $2,600 each year from 1983 through 1985, $2,100            





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