- 13 -
and a notice of final partnership administrative adjustment, FPAA,
was ultimately issued to the partnership. In December 1991,
Alfred M. Clancy (Mr. Clancy), the general partner and tax matters
partner of San Nicholas, commenced a TEFRA partnership proceeding
in this Court.7 Subsequently, in November 1993, Mr. Clancy and
the Commissioner agreed to be bound by the decision to be entered
in Utah Jojoba I Research v. Commissioner, docket No. 7619-90, a
TEFRA partnership proceeding involving Utah Jojoba that had
commenced by Mr. Kellen in his capacity as tax matters partner of
that partnership.
In Utah Jojoba I Research v. Commissioner, T.C. Memo. 1998-6,
the Court made detailed findings of fact related to the jojoba
limited partnerships,8 Mr. Kellen, U.S. Agri, and Mr. Pace. The
Court described the R&D contract between the partnerships and U.S.
Agri as “mere window dressing” and held that the partnerships did
not, directly or indirectly, engage in research or experimentation
and that the partnerships lacked a realistic prospect of entering
into a trade or business. In upholding the Commissioner’s
7 The TEFRA partnership proceeding was assigned docket No.
29994-91. TEFRA stands for the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, 96 Stat. 324. See
secs. 6221-6232; N.C.F. Energy Partners v. Commissioner, 89 T.C.
741, 744 (1987); Maxwell v. Commissioner, 87 T.C. 783, 789
(1986).
8 At least 18 docketed cases were bound by stipulation to
the outcome of Utah Jojoba I Research v. Commissioner, docket No.
7619-90.
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