Gilfred B. and Patricia Swartz - Page 7




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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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