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(3) Whether petitioners are liable for accuracy-related
penalties pursuant to section 6662 for the taxable years 1994,
1995, and 1996.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
The stipulation of facts, stipulations of settled issues, and the
attached exhibits are incorporated herein by this reference. At
the time of filing the petition, petitioners resided in Granite
Bay, California.
Research and Development Expenses
Petitioner has extensive familiarity with, and technical
expertise in, the computer software industry spanning more than
30 years. In 1991, Computer Power Group Limited (CPG) hired
petitioner on a contract basis to provide it with consulting
services. CPG is a large professional services company organized
under the laws of Australia. CPG was in the business of
providing professional computer programmers to companies to
create business software. Additionally, CPG was involved in the
worldwide marketing of several lines of business software
applications. CPG was losing money on the marketing of its
software applications. Petitioner was hired on a short-term
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