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partnership units (a 7.8-percentage interest) in San Nicholas.2
The general partner and tax matters partner of San Nicholas
was Alfred M. Clancy, an individual whom petitioner did not know,
nor whom he had ever met, at the time that he invested in San
Nicholas.
Petitioner purchased the partnership units pursuant to the
aforementioned private placement memorandum. Petitioner paid
$2,790 per limited partnership unit, or a total of $27,900, for
his 10 units in San Nicholas. Of this amount, $1,140 per unit,
or $11,400 for 10 units, was paid in cash. The balance, $1,650
per unit or $16,500 for 10 units, was payable pursuant to a 10-
year promissory note.3
Prior to investing in San Nicholas, petitioner did not have
any expertise in either farming or agriculture in general or
jojoba in particular, nor did petitioner have any expertise in
the area of research and development.
2 The parties stipulated that petitioners acquired the
partnership interest in San Nicholas. However, at trial, the
parties proceeded as if petitioner himself was the only one who
had acquired the partnership interest. Our findings of fact
reflect the approach taken by the parties at trial. We hasten to
add that if we had taken the other approach, our decision in this
case would not have been different in any regard. We also hasten
to add that petitioners expressly declined to raise any issue
under sec. 6015.
3 The note, which was recourse in form, contemplated
payments of interest only for the first 5 years. As matters
actually transpired, in 1989, the limited partners were given the
option of paying a steeply discounted percentage of the principal
in cash. Petitioner elected this option.
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