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FINDINGS OF FACT1
Background
Petitioner is a group of affiliated corporations (the
Norwest affiliated group) that provides banking and other
financial services. Petitioner files consolidated Federal income
tax returns. At the time the petition was filed, petitioner's
principal place of business was located in Minneapolis,
Minnesota.
Petitioner extensively uses computers in processing data and
in providing essential accounting and other business functions.
During the years in issue, petitioner utilized three types of
computer systems: (1) large-scale “mainframe” computers, which
were used to process large amounts of data and transactions at a
central location, (2) minicomputers, which were typically used to
process self-contained single business applications, such as
processing transactions from automated teller machines (ATMs) or
controlling the work stations that tellers use to process
transactions in a bank, and (3) personal computers (PCs), which
were generally smaller stand-alone devices used for word-
processing and spread-sheet applications.
Each of the above-described computer systems requires
operating software (also called systems software) and
1 The stipulation of facts and accompanying exhibits are
incorporated herein by this reference. The trial Judge made the
following Findings of Fact, which we adopt.
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