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9 that the general partner "has limited experience in dealing in
Jojoba beans and is mainly relying on the R&D Contractor to
develop technology and plant cultivars over the term of the R&D
Agreement", contrasted with the statement on page 34 that the
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,
before committing to invest some $33,000 in Blythe II, he did not
even bother to read the offering, nor did he make an effort to
have the investment explained to him. 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 an appeal in this
case 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,
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