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the R&D of jojoba plants and their potential commercial usage, if
any. Again, a reasonable and ordinarily prudent investor would
have at least attempted to make this type of inquiry under the
circumstances.12
Petitioners were not naive investors and should have
recognized the need for independent professional advice. See
LaVerne v. Commissioner, 94 T.C. 637, 652 (1990), affd. without
published opinion 956 F.2d 274 (9th Cir. 1992), affd. in part
without published opinion sub nom. Cowles v. Commissioner, 949
F.2d 401 (10th Cir. 1991); Glassley v. Commissioner, supra. In
fact, the offering cautioned that prospective investors should
not "construe this memorandum or any prior or subsequent
communications as constituting legal or tax advice" and urged
investors to "consult their own counsel as to all matters
concerning this investment." The offering was replete with
statements, including the cover page statement that "THIS
OFFERING INVOLVES A HIGH DEGREE OF RISK", warning of tax risks
involved with the investment and the highly speculative nature of
the commercial viability of the jojoba plant. The offering
contained inconsistent information, such as the statement on page
12 In Utah Jojoba I Research v. Commissioner, T.C. Memo.
1998-6, the Court noted that there were experimental jojoba
plantations located at the University of California at Riverside,
California, of which the general partner of Blythe II, Mr.
Kellen, was aware.
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