- 54 -
358, and to "encourage business firms to perform the research
necessary to increase the innovative qualities and efficiency of
the U.S. economy", S. Rept. 99-313, at 694 (1986), 1986-3 C.B.
(Vol. 3) 1, 694; H. Rept. 99-426, at 177 (1985), 1986-3 C.B. (Vol.
2) 1, 177.
ERTA adopted the definitions of "research" and
"experimentation" as those terms are generally defined under
section 174. ERTA sec. 221(a).33 ERTA failed to address how
33 ERTA sec. 221(a) defined qualified research as follows:
For purposes of this section the term "qualified
research" has the same meaning as the term research or
experimental has under section 174, except that such
term shall not include--
(1) qualified research conducted outside of the
United States,
(2) qualified research in the social sciences or
humanities, and
(3) qualified research to the extent funded by any
grant, contract, or otherwise by another person (or any
governmental entity).
In TSR, Inc. & Sub. v. Commissioner, 96 T.C. 903 (1991), we
considered a taxpayer's claim to the R&E credit under then sec.
44F for 1981. The taxpayer, a manufacturer of historical and
fantasy games, sought the credit for its historical research into
the development of the games. In considering the taxpayer's
claim, we applied the plain meaning to the terms "experimental"
("relating to, or based on [experiment]") and "laboratory" ("a
place devoted to experimental study in any branch of natural
science or to the application of scientific principles in testing
and analysis"). We ultimately rejected the taxpayer's claim
because we found that the R&E credit was originally intended by
(continued...)
Page: Previous 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 NextLast modified: May 25, 2011