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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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