Page:United States Statutes at Large Volume 100 Part 3.djvu/366

 100 STAT. 2174

PUBLIC LAW 99-514—OCT. 22, 1986 "(C) substantially all of the activities of which constitute elements of a process of experimentation for a purpose described in paragraph (3). Such term does not include any activity described in paragraph (4). "(2) TESTS TO BE APPLIED SEPARATELY TO EACH BUSINESS COMPO-

NENT.—For purposes of this subsection— "(A) IN GENERAL.—Paragraph (1) shall be applied separately with respect to each business component of the taxpayer. "(B) BUSINESS COMPONENT DEFINED.—The term 'business component' means any product, process, computer software, technique, formula, or invention which is to be— "(i) held for sale, lease, or license, or "(ii) used by the taxpayer in a trade or business of the taxpayer. "(C) SPECIAL RULE FOR PRODUCTION PROCESSES.—Any plant process, machinery, or technique for commercial production of a business component shall be treated as a separate business component (and not as part of the business component being produced). "(3)

PURPOSES FOR

WHICH

RESEARCH MAY

QUALIFY FOR

CREDIT.—For purposes of paragraph dXC)— "(A) IN GENERAL.—Research shall be treated as conducted for a purpose described in this paragraph if it relates to— "(i) a new or improved function, "(ii) performance, or "(iii) reliability or quality. "(B) CERTAIN PURPOSES NOT QUALIFIED.—Research shall in no event be treated as conducted for a purpose described in this paragraph if it relates to style, taste, cosmetic, or seasonal design factors. "(4) ACTIVITIES FOR WHICH CREDIT NOT ALLOWED.—The term 'qualified research' shall not include any of the following: "(A) RESEARCH AFTER COMMERCIAL PRODUCTION.—Any re-

search conducted after the beginning of cornmercial production of the business component. "(B)

ADAPTATION OF EXISTING BUSINESS COMPONENTS.—

Any research related to the adaptation of an existing business component to a particular customer's requirement or need. "(C)

DUPLICATION OF EXISTING BUSINESS COMPONENT.—

Any research related to the reproduction of an existing business component (in whole or in part) from a physical examination of the business component itself or from plans, blueprints, detailed specifications, or publicly available information with respect to such business component. "(D) SURVEYS, STUDIES, ETC.—Any—

"(i) efficiency survey, "(ii) activity relating to management function or technique, "(iii) market research, testing, or development (including advertising or promotions), "(iv) routine data collection, or "(v) routine or ordinary testing or inspection for quality control.

�