Norwest Corporation and Subsidiaries - Page 114

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          for numerous corporations and has served as a court-appointed               
          expert.                                                                     
               Dr. Davis concluded that all eight of the sample internal use          
          software activities failed to satisfy one or more of the seven              
          tests for the R&E credit.45   He summarized his findings as follows:        
               It is my opinion based on the sources [provided] * * *                 
               that the work performed by Norwest involved normal and                 
               routine software development.  The software produced, in               
               terms of the products and services provided, and the                   
               technology used to support it, was all within the then                 
               current state of the art in the industrial work of                     
               management information systems.  None of the documents                 
               provided suggest that any of the software developed by                 
               Norwest was, among other things, innovative or involved                
               a significant degree of technical risk.                                
               Dr. Davis described five types of projects associated with             
          software development:  (1) Design and implementation (the de novo           
          creation of a body of software); (2) installation and testing (the          
          purchase and installation of software from a vendor); (3)                   
          maintenance (ongoing adjustments to the code); (4) enhancement              
          (adding of functionality to the program); and (5) research                  
          (attempting to do something for the first time).  Dr. Davis found           
          that each of Norwest's activities involved at least one of the              
          first four types of projects, and generally characterized Norwest's         
          work as installation, interfacing, and testing.  When asked to rank         
          the eight activities in order from most to least characteristic of          
          research, Dr. Davis provided the following list:  SBS; Success and          

               45   However, Dr. Davis opined that one of the activities              
          not included in the eight sample activities, known as Expert                
          Systems, qualified as research and experimentation under sec. 41.           



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