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generally all costs associated with the actual development of a
new product, but not expenses for "efficiency surveys, management
studies, consumer surveys, advertising, or promotions." Id.
Thus, the expenses claimed by petitioner for "advertising" and a
"market survey" on their face do not qualify as research and
experimental expenditures under section 174. As to the remaining
expenses--for bad debts, commissions and fees, depreciation and
section 179 expense, and meals and entertainment--petitioner
offered no evidence to show how any of his expenditures of this
nature was connected with the research and development of a
computer software package. Accordingly, we conclude on this
record that petitioner has failed to show eligibility for a
deduction under section 174.
Failure To File
Respondent also determined that petitioner is liable for an
addition to tax under section 6651(a)(1) for failure to file his
1990 return by its due date. The parties have stipulated that
the 1990 return was signed by petitioner on April 1, 1995, and
stamped as received by respondent on July 8, 1995. Therefore,
petitioner is liable for the addition unless he can show that the
failure to timely file was due to reasonable cause, and not to
willful neglect, and he bears the burden of proving both. United
States v. Boyle, 469 U.S. 241, 245 (1985). A showing of
reasonable cause requires that the taxpayer demonstrate that he
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