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B. The Discovery Test
The discovery test requires that the research be undertaken
for the purpose of discovering information which is technological
in nature. In the conference report accompanying the TRA 1986,
Congress explained the discovery test as follows:
The determination of whether the research is
undertaken for the purpose of discovering information
that is technological in nature depends on whether the
process of experimentation utilized in the research
fundamentally relies on principles of the physical or
biological sciences, engineering, or computer science3--
in which case the information is deemed technological in
nature--or on other principles, such as those of
economics--in which case the information is not to be
treated as technological in nature. For example,
information relating to financial services or similar
products (such as new types of variable annuities or
legal forms) or advertising does not qualify as
technological in nature.
3 Research does not rely on the principles of
computer science merely because a computer is employed.
Research may be treated as undertaken to discover
information that is technological in nature, however, if
the research is intended to expand or refine existing
principles of computer science.
H. Conf. Rept. 99-841 (Vol. II), supra at II-71 through II-72 &
n.3, 1986-3 C.B. (Vol. 4) at 71-72 & n.3.
The purpose of the discovery test is to limit the type of
information discovered to that which is technological in nature, as
opposed to nonscientific information, such as in the fields of the
social sciences, arts, or humanities, that is specifically excluded
by section 41(d)(4)(G). See TSR, Inc. & Sub. v. Commissioner, 96
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