William R. and Betty O. Bass - Page 6
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attorney. I don’t know whether exactly she was a
practicing attorney or what.
But they seemed to be people that understood
enough about the investment, and that it was viable,
and so I know at some point, having some knowledge of
taxes on some of the past investments, I thought it
would be a viable investment.
So I did enter into the investment, and paid the
$5,000 initial investment amount, and the rest was
financed, and interest payments were made for several
years, five or six years, and ultimately the
partnership went under.
Of course, if I had known that at the beginning, I
definitely would not have been involved in it,
especially since it looks like it was creating a
problem from the standpoint of taxability. But at the
time, it seemed to me that it was not an unusual
investment to make.
And so after doing the limited amount of checking
that I was able to do without spending days and days, I
guess, in the area where they resided. I think it was
during that time that they subsequently moved to
So my investigating from a due diligence to me was
sufficient to let me know that it was a viable
investment and it would stand up from a tax standpoint,
and so that’s basically my statement and my testimony
in that regard.
In other reported cases, notably the opinion in Utah
Jojoba I Research, the programs concerning Jojoba plants are
described in detail. As summarized in Lopez v. Commissioner,
T.C. Memo. 2001-278, affd. 92 Fed. Appx. 571 (9th Cir. 2004):
In the decided case, this Court 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 respondent’s disallowance of
research and experimental expenditures, the Court found
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Last modified: March 27, 2008