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(d) Deductibility of Research or Experimental
Expenditures.
The General Partner anticipates that a substantial
portion of the capital contributions of the Limited
Partners to the Partnership will be used for research
and experimental expenditures of the type generally
covered by Sections 174 and 44F of the Code
(particularly in recently issued IRS regulations issued
thereunder). However, prospective investors should be
aware that there is little published authority dealing
with the specific types of expenditures which will
qualify as research or experimental expenditures within
the meaning of Section 174, and most of the
expenditures contemplated by the Partnership have not
been the subject of any prior cases or administrative
determinations.
There are various theories under which such
deductions might be disallowed or required to be
deferred. * * * No ruling by the Service has been or
will be sought regarding deductibility of the proposed
expenditures under Section 174 of the Code.
A section entitled “Tax Aspects” contains the following
information concerning a legal opinion from outside counsel
obtained by the general partner:
The General Partner has received an opinion of counsel
concerning certain of the tax aspects of this investment.
The opinion * * * is available from the General Partner.
Since the tax applications of an investment in the
Partnership vary for each investor, neither the Partnership,
the General Partner nor counsel assumes any responsibility
for tax consequences of this transaction to an investor. *
* * The respective investors are urged to consult their own
tax advisers with respect to the tax implications of this
investment. * * *
The opinion letter referenced in the private placement
memorandum was one which purportedly had been written for Mr.
Cole by outside counsel based on information provided by Mr.
Cole. The letter, dated December 7, 1983, concludes by stating
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