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Year Amount
1982 $2,806,250
1983 233,061
1984 148,897
Unless otherwise noted, all section references are to the
Internal Revenue Code in effect for the years in issue, and all
Rule references are to the Tax Court Rules of Practice and
Procedure. The issue we must decide is whether Research II was
entitled to deduct for its 1982 taxable year certain amounts owed
to CemCom Research Associates, Inc. (CemCom), for research and
development services.1
FINDINGS OF FACT
Some of the facts and certain exhibits have been stipulated
for trial pursuant to Rule 91. The parties' stipulations of fact
are incorporated herein by reference and are found as facts in
the instant case.
1 In their briefs the parties appear to pose a second issue of
whether Research II is entitled to miscellaneous deductions of
$56,250, $233,061, and $174,828 for taxable years 1982, 1983, and
1984, respectively. Petitioner, however, presented almost no
argument on that issue. Rather, petitioner states that, if the
Court finds that Research II is not engaged in a trade or
business, the Court should allow Research II to amortize those
expenses as organizational expenses under sec. 709(b).
Respondent argues that Research II is not engaged in a trade or
business but also states that Research II is entitled to amortize
the organizational expenses under sec. 709(b). As there appears
to be no dispute over the issue, we will address only the sec.
174 research and development deduction.
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