Impact Research Corporation, Joan C. Benz, Tax Matters Person - Page 21




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               We view the record in the instant case in light of the                 
          foregoing.                                                                  
               As 1984 began, Systems existed; IRC and RIC had not yet been           
          created.                                                                    
               Systems was developing interactive educational videodiscs              
          and seeking to exploit the technology.  Systems needed an                   
          additional $5-8 million to bring its videodiscs to market.  IRC             
          and RIC were created in 1984 through the efforts of Systems and             
          Gould (Systems’ financial adviser); these efforts were motivated            
          by Systems’ need for additional financing.                                  
               Gould’s testimony makes it plain that IRC and RIC were                 
          created to meet Systems’ need for financing research that Systems           
          wanted to do so that Systems could exploit interactive videodisc            
          technology.  Gould selected IRC’s and RIC’s potential                       
          shareholders in order to have these individuals contribute funds            
          to IRC and RIC, in order to have IRC and RIC satisfy a portion of           
          Systems’ financial needs.  Gould was petitioners’ witness.                  
          Gould’s testimony completely negates any thought that IRC and RIC           
          had the trade or business ideas and merely sought out Systems to            
          do research in order to enable IRC and RIC to exploit new                   
          technology.  A February 27, 1984, letter from John P. Clark                 
          (hereinafter sometimes referred to as Clark) to Systems’                    
          president shows that Clark, too, understood that Systems was                
          looking for a source of funds that Systems could use to advance             






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