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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