- 79 -
we should apply these higher threshold requirements reasonably and
practically and assume that Congress set standards that are not
impossible to meet. See United States v. American Trucking
Associations, Inc., 310 U.S. 534, 543 (1940); Venture Funding, Ltd.
v. Commissioner, 110 T.C. 236, 264 (1998) (Ruwe, J., dissenting).
In applying each of the seven tests under section 41 to the facts
herein, we shall consider the facts and circumstances in
determining whether the taxpayer performed qualified research.
5. United Stationers, Inc. v. United States
Both parties rely on the District Court's decision in United
Stationers, Inc. v. United States, 982 F. Supp. 1279 (N.D. Ill.
1997), in advancing their differing positions as to whether Norwest
engaged in qualified research under section 41. In United
Stationers, the taxpayer, a large office supply wholesaler, sought
the R&E credit with respect to eight software projects. To
automate its business operations, the taxpayer acquired from a
vendor a software package which it then customized to meet its
particular needs. The court principally relied upon the report and
recommendation of a magistrate judge to find the facts in the case,
see United Stationers, Inc. v. United States, 79 AFTR 2d 97-1761,
39(...continued)
Commentators argued that the "time-line" approach of
the 1989 proposed regulation was unrealistic because
progress in research and development is often achieved
only in small, incremental steps. * * *
58 Fed. Reg. 15819 (Mar. 24, 1993).
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