Norwest Corporation and Subsidiaries - Page 94

                                       - 68 -                                         

          discovery required by the taxpayer, noting the legislative history          
          of section 41.  On the other hand, petitioner contends that "expand         
          or refine" is only illustrative and is intended to contrast the             
          mere use of a computer which in and of itself does not necessarily          
          involve fundamental reliance on the principles of computer science.         
               We believe the purpose of the first sentence of note 3                 
          ("Research does not rely on the principles of computer science              
          merely because a computer is employed.") is to emphasize that               
          Congress intended the R&E credit not for the use of the hard                
          sciences per se, but for the use of the principles of the hard              
          sciences in conducting research.  "Principle" is defined as "a              
          comprehensive and fundamental law, doctrine, or assumption".                
          Webster's Ninth New Collegiate Dictionary (1985).  Clearly, the use         
          of a computer does not necessarily require reliance on any                  
          fundamental laws, doctrines, or assumptions.                                
               The purpose of the second sentence of note 3 ("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.") is to indicate that the          
          taxpayer must discover information with respect to the principles           
          of the hard sciences on which it fundamentally relies.  Note 3 sets         
          forth two means of discovering information about the principles of          
          the hard sciences--either by "expanding", or by "refining"--either          







Page:  Previous  58  59  60  61  62  63  64  65  66  67  68  69  70  71  72  73  74  75  76  77  Next

Last modified: May 25, 2011