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Mr. Cannito also prepared petitioners’ 1984 joint Federal income
tax return, claiming a deduction for another loss arising from
the Arid Land investment in the amount of $798.
As the result of partnership level proceedings concerning
Arid Land Research Partners, this Court ultimately entered a
decision disallowing in full the partnership’s claimed ordinary
loss in each of the taxable years 1983 and 1984. This decision
was based upon a stipulation by the partnership and the
Commissioner to be bound by the outcome of the case in which this
Court rendered our opinion in Utah Jojoba I Research v.
Commissioner, T.C. Memo. 1998-6. In that case, we found that the
Utah Jojoba I Research partnership (“Utah I”) was not entitled to
a section 174(a) research or experimental expense deduction (or a
section 162(a) trade or business expense deduction) because (a)
Utah I did not directly or indirectly engage in research or
experimentation, and (b) the activities of Utah I did not
constitute a trade or business, nor was there a realistic
prospect of Utah I ever entering into a trade or business. Id.
Following the entry of the decision concerning the
partnership, respondent adjusted petitioners’ returns by
disallowing their claimed shares of the partnership losses,
$34,739 in 1983 and $798 in 1984. In the statutory notices of
deficiency which provide the basis for our jurisdiction in this
case, respondent determined that petitioners are liable for
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