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that the agreements between the partnerships and the
proposed research and development contractor, U.S. Agri
Research & Development Corp. (U.S. Agri), had been
designed and entered into solely to provide a mechanism
to disguise the capital contributions of limited
partners as currently deductible expenditures. The
Court stated that the activities of the partnerships
were “another example of efforts by promoters and
investors in the early 1980's to reduce the cost of
commencing and engaging in the farming of jojoba by
claiming, inaccurately, that capital expenditures in
jojoba plantations might be treated as research or
experimental expenditures for purposes of claiming
deductions under section 174.” * * * [Fn. ref.
omitted.]
More details concerning the partnerships and the investors are
found in the records and in the opinions in other cases in which
we have sustained additions to tax arising out of investments in
the jojoba plant partnerships. As the Court stated in Kellen v.
Commissioner, T.C. Memo. 2002-19:
We have decided many jojoba cases involving
additions to tax for negligence and substantial
understatement of tax liability. 15/ We have found the
taxpayers liable for additions to tax for negligence in
all of those cases; likewise, we have found the
taxpayers liable for the addition to tax for
substantial understatement of tax liability in all of
those cases that have presented that issue.
__________________
15/ See, e.g., Lopez v. Commissioner, T.C. Memo.
2001-278; Christensen v. Commissioner, T.C. Memo. 2001-
185; Serfustini v. Commissioner, T.C. Memo. 2001-183;
Carmena v. Commissioner, T.C. Memo. 2001-177; Nilsen v.
Commissioner, T.C. Memo. 2001-163; Ruggiero v.
Commissioner, T.C. Memo. 2001-162; Robnett v.
Commissioner, T.C. Memo. 2001-17; Harvey v.
Commissioner, T.C. Memo. 2001-16; Hunt v. Commissioner,
T.C. Memo. 2001-15; Fawson v. Commissioner, T.C. Memo.
2000-195; Downs v. Commissioner, T.C. Memo. 2000-155;
Glassley v. Commissioner, T.C. Memo. 1996-206;
Stankevich v. Commissioner, T.C. Memo. 1992-458.
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