General Dynamics Corporation and Subsidiaries - Page 9

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          petitioner has been prejudiced in terms of its opportunity to               
          have a fair trial on the merits of the items in controversy.                
               We find that respondent’s action was timely in the setting             
          of this case.  The parties were preparing for a trial to begin              
          April 29, 1996.  The litigation had proceeded only a few months             
          into the pretrial schedule and was about 6 months from trial date           
          when the Court of Appeals’ holding changed the slant of the legal           
          playing field concerning the funding issue.  This Court                     
          informally agreed with the parties that they would be given time            
          to consider the effect of the Court of Appeals’ holding.  In                
          addition, we were disposed to continue the funding issue from the           
          scheduled April 29, 1996, starting date.  Approximately 1 month             
          after the Fairchild reversal, respondent announced her concession           
          of the legal issue and that it would be necessary for petitioner            
          to tie the amount of the credit to the contract language.  At               
          that point, the parties agreed to proceed to trial on the other             
          unresolved issue(s) beginning April 29, 1996, and that any trial            
          concerning the funding issue should be delayed.  The Court agreed           
          to continue the funding issue for a reasonable time to give the             
          parties an opportunity to evaluate the effects of the concession            
          and respondent’s position on quantification of the research                 
          credit.                                                                     
               Petitioner refers us to Durkin v. Commissioner, 87 T.C.                
          1329, 1402-1403 (1986), affd. 872 F.2d 1271 (7th Cir. 1989), for            
          its contention that this Court’s Rules and Procedures are not to            




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