- 71 -
discernible and applicable as of the beginning of the
research activities, so that true experimentation in the
scientific or laboratory sense would not have to be
undertaken to develop, test, and choose among the viable
alternatives. On the other hand, costs of experiments
undertaken by chemists or physicians in developing and
testing a new drug are eligible for the credit because
the researchers are engaged in scientific
experimentation. Similarly, engineers who design a new
computer system, or who design improved or new integrated
circuits for use in computer or other electronic
products, are engaged in qualified research because the
design of those items is uncertain at the outset and can
only be determined through a process of experimentation
relating to specific design hypotheses and decisions as
described above.
H. Conf. Rept. 99-841 (Vol. II), supra at II-72, 1986-3 C.B. (Vol.
4) at 72.
Unlike the regulations under section 174, which are silent
about the means of discovering information, the conference report
accompanying the TRA 1986 made it clear that a more structured
method of discovery is required with respect to section 41. By
requiring that at the outset uncertainty exist about the ability to
develop the product in the scientific or laboratory sense, the
process of experimentation test is aimed at eliminating uncertainty
about the technical ability to develop the product--as opposed to
uncertainty as to whether the product can be developed within
certain business or economic constraints, even though the taxpayer
knew that it was technically possible to develop it.
As evidence of the required uncertainty, Congress mandated the
evaluation of more than one alternative, which in turn may require
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