Norwest Corporation and Subsidiaries - Page 31

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               Mr. Teixeira reported that by late 1986, the money transfer            
          system used by Norwest, MoneyNet, was being used by 46 of the top           
          100 U.S. banks.  He stated that Norwest's modifications to the              
          system to satisfy regulatory and business requirements were                 
          consistent with the changes made by other users of the same system.         
          He found that although the technology may have been new to Norwest,         
          it was not new to the industry.                                             
               Although a taxpayer's making changes that are being made               
          concurrently by other users of a system does not mean that the              
          taxpayer cannot be engaged in qualified research, Norwest has not           
          demonstrated that any of its work on its money transfer system              
          involved technical risks or a process of experimentation--and thus          
          the activities do not constitute qualified research.  There were            
          obvious business risks involved with this project, e.g., failing to         
          implement critical security measures that ensured the safe and sure         
          transfer of funds, but there was no evidence of uncertainty about           
          the ability to complete the project.  The project did not involve           
          alternative designs or hypotheses but merely required conducting            
          good coding and eliminating bugs through testing--issues resolved           
          through cookbook approaches and skilled practice, not research and          
          experimentation.                                                            
               F.  Cyborg Payroll                                                     
               Dr. McDermott strained to conclude in his rebuttal report that         
          the Cyborg payroll system constituted qualified research.  He               
          insisted "it is possible that the process was one of mechanical             



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