House Hearing, 104TH Congress - The Research and Experimentation Tax Credit and The Allocation of Research Expenses Under Internal Revenue Code Section 861
HOUSE HEARING, 104TH CONGRESS - THE RESEARCH AND EXPERIMENTATION TAX CREDIT AND THE ALLOCATION OF RESEARCH EXPENSES UNDER INTERNAL REVENUE CODE SECTION 861
House Hearing, 104TH Congress - The Research and Experimentation Tax Credit and The Allocation of Research Expenses Under Internal Revenue Code Section 861
THE RESEARCH AND EXPERIMENTATION TAX
CREDIT AND THE ALLOCATION OF RESEARCH
EXPENSES UNDER INTERNAL REVENUE CODE
SECTION 861
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
OF THE
COMMITTEE ON WAYS AND MEANS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
MAY 10, 1995
Serial 104-35
Printed for the use of the Committee on Ways and Means
a
U.S. GOVERNMENT PRINTING OFFICE
20-296 cc WASHINGTON : 1996
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402,
ISBN 0-16-052522-5COMMITTEE ON WAYS AND MEANS:
BILL ARCHER, Texas, Chairman
PHILIP M. CRANE, Ilinois SAM M. GIBBONS, Florida
BILL THOMAS, California CHARLES B. RANGEL, New York
E. CLAY SHAW, JR, Florida FORTNEY PETE STARK, California
NANCY L. JOHNSON, Connecticut ANDY JACOBS, JR., Indiana
JIM BUNNING, Kentucky HAROLD E. FORD, Tennessee
‘AMO HOUGHTON, New York ROBERT T. MATSUI, California
WALLY HERGER, California BARBARA B. KENNELLY, Connecticut
JIM McCRERY, Louisiana WILLIAM J. COYNE, Pennsytvai
MEL HANCOCK, Missouri SANDER M. LEVIN, Michigan
DAVE CAMP, Michigan BENJAMIN L. CARDIN, Maryland
JIM RAMSTAD, Minnesota JIM McDERMOTT, Washington
DICK ZIMMER, New Jersey GERALD D. KLECZKA, Wisconsin
JIM NUSSLE, iowa JOHN LEWIS, Georgia
SAM JOHNSON, Texas LF. PAYNE, Virginia
JENNIFER DUNN, Washington RICHARD E. NEAL, Massachusetts
MAC COLLINS, Georgia
ROB PORTMAN, Ohio
PHILIP 8. ENGLISH, Pennsylvania
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
PHILLIP D. MOSLEY, Chief of Staff
JANICE MAYS, Minority Chief Counsel
SUBCOMMITTEE ON OVERSIGHT
NANCY L. JOHNSON, Connecticut, Chairman
WALLY HERGER, California ROBERT T. MATSUI, California
MEL HANCOCK, Missouri SANDER M. LEVIN, Michigan
SAM JOHNSON, Texas BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota
DICK ZIMMER, New Jersey
ayCONTENTS
Advisory of April 19, 1995, announcing the hearing,
WITNESSES
US. General Accounting Office, Natwar M. Gandhi, Associate Director of
Tax Policy and Administration Issues, General Government Division
Advanced Micro Devices, Inc., Cliff Jernigan
AlliedSignal, Inc., Ronald A. Sinaikin 185
Aerospace Industries Association of America, Inc., Douglas McPherson 91
Anderson, Christopher R., Massachusetts High Technology Council, Ine 51
Baltimore Gas & Electric Co., Judith K. Pensabene 31
Battelle Memorial Institute, Douglas E. Olesen 36
7m
Biotechnology Industry Organization, Harry H. Penner, Jr
Capps, R. Randall, Electronic, Data Systems, Corp. “and information
chnology Association of America ..
Chemical Manufacturers Association, Ronaid A. Sinaikin
Conway, Kevin, United Technologies Cor
Electronic Data Systems Corp., R. Randall Caj
Electronic Industries Association, William A. Warren
Electric Power Research Institute, Judith K. Pensabene
Emergency Committee for American Trade, Raymond J. Wiacek
Eshoo, Hon. Anna G., a Representative in Congress from the State of
California
Generic Pharmaceutical Industry Association, Hi
Green, Robert H., National Foreign Trade Council, Ine
Gutman, Harry’ L. King & Spalding, Generic Pharmaceutical Industry
, National Associati
‘Association, jon of Pharmaceutical Manufacturers, and
National Pharmaceutical Alliance .. 49
Hewlett-Packard Co., Daniel Kostenbauder 131
Hooker, Michael, University of Massachusetts and New England Council 41
Information Technology Association of America, R. Randall Cappe 102
Jernigan, Cliff, Advanced Micro Devices, Inc 138
Jones, Kendall C., KPMG Peat, Marwick 143
205
Kaye, Tracy Anne, Seton Hall University, Newark, Nt
Kostenbauder, Daniel, Hewlett-Packard Co
KPMG Peat Marwick:
Kendall C. Jones
Rudolph G. Penner ..
Roger S. Siboni
Lockheed Martin Corp. Dougias McPherson 91
Lotus Development Corp., Bill Sample . 192
Massachusetts High Technology Council Inc. Christopher R. Andereog 51
Mechan, Hon. Martin T., a Representative in Congress from the State of
Massachusetts 8
Charles W. Rau .. 96
MCI Communications Corp.
McPherson, Douglas, Lockheed Martin Corp. and Aerospace Industries
Association of America, Inc
National Association of Pharmaceutical Manufacturers, Harry L. Gutman ..
National Foreign Trade Council, Inc., Robert H. Green
National Pharmaceutical Alliance, Harry L. Gutman .
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