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These cases have been consolidated for trial, briefs, and
opinion. After a concession by respondent,6 the issues for
decision as to each of the S corporations are as follows:
(1) Whether the S corporation made research or
experimental expenditures (within the meaning of
section 174) in 1984 and, if so, then in what amount.
(2) Whether any such expenditures by the S
corporation were made in connection with that
corporation’s trade or business.
FINDINGS OF FACT
Some of the facts have been stipulated; the stipulations and
the stipulated exhibits are incorporated herein by this
reference.7
5(...continued)
differences between these breakdowns do not affect our
substantive analysis or our conclusions, for convenience, we
treat respondent’s determinations as one adjustment.
6Shortly before trial, respondent raised the question of
whether IRC had a valid S corporation election under sec. 1362(a)
in effect for 1984. Two months after the trial, the parties
stipulated the document that constituted the election form and
showed on its face that it had been timely received and accepted
by respondent. Respondent thereupon conceded that IRC had a
valid S corporation election in effect for 1984.
7Six of the stipulated exhibits were offered for limited
purposes only and (as was made clear in the trial transcript)
were received subject to those limitations. We have carefully
observed those limitations in making our findings and arriving at
our conclusions. See Fed. R. Evid. 105.
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