- 5 -
26213-93 1989 10,532,064
Respondent also determined additional interest under section
6621(c)2 for 1983, 1984, 1986, 1988, and 1989.
Following the filing of petitions contesting respondent's
determinations, petitioner engaged Coopers & Lybrand, LLP (Coopers
& Lybrand), to ascertain whether it was entitled to credits for
increasing research activities pursuant to section 41 (the research
and experimentation credit, or R&E credit) between 1986 and 1993
with respect to certain internal use software development
activities.3 Coopers & Lybrand concluded that 67 of 118 internal
use software development activities petitioner engaged in
qualified for the R&E credit. On the basis of the Coopers &
Lybrand study, petitioner sought and was permitted to amend its
petitions to claim the R&E credit for 1986 through 1989.
Subsequently, petitioner again sought and was permitted to
amend its petitions in order to carry back the R&E credit from 1990
2 Unless otherwise indicated, all section references are
to the Internal Revenue Code as in effect for the years in issue,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
3 Petitioner did not claim the R&E credit on any of its
U.S. Corporation Income Tax Returns for 1986 through 1991. The
engagement of Coopers & Lybrand in August 1994 followed the
Department of the Treasury's issuance of proposed regulations
that further defined research and experimental expenditures under
sec. 174. See sec. 1.174-2, Proposed Income Tax Regs., 58 Fed.
Reg. 15821 (Mar. 24, 1993).
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