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educational services. Petitioner also provides product and
software support for its systems, engages in research and
development, and provides consulting services.
During the years in issue, petitioner had approximately
6,600 to 7,200 employees worldwide, with about 70 percent of its
employees in the United States. Petitioner relocates both
current and newly hired employees as its business needs dictate.
Petitioner transfers employees to locations where it has
installed mainframe computers to provide maintenance services to
its customers. Petitioner also relocates employees as it expands
into new geographic markets to ensure that it has employees at
the new location who are familiar with the company, its products,
and its customers.
To induce employees to relocate, petitioner provides various
kinds of employee benefits to assist in the move. Petitioner
reimburses employees for moving costs, including the costs of a
house-hunting trip to the new location; shipment costs for
household goods, personal effects, household pets, and family
vehicles; certain expenses incurred en route to the new location;
temporary living expenses; the costs of a return trip by the
employee to the former location; and additional income tax
incurred as a result of the relocation. As part of its
relocation program, petitioner also offers financial assistance
to employees in the sale of their homes at their former locations
and in the acquisition of new homes. Petitioner has provided
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