BigA, Inc., is an auto parts wholesaler selling parts to companies like AutoZone, O’Reilly, and PepBoys. As you are aware, this industry is highly competitive. Three years ago, BigA decided to develop a new software program that maintains customer history files, creates paperless billing, has automatic order generation based on register data from local stores, and monitors inventory balances at each local store. BigA estimates it has spent $5 million on the development and testing of the new software and believes the software is ready to be used. BigA also believes the new software is so good that it will be able to sell the use of the software to other wholesalers. BigA wants to know what possible credits are available as it completes its 2011 tax return and if there are any reasons to delay the marketing of this software.

For discussion: Critically examine the tax code, regulations, and case law needed to prepare a tax memo. Drawing from your research, how you would approach application of tools to prepare your case?