Prototype Memo and Attachment
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Transcript of Prototype Memo and Attachment
1
DRAFT FOR DISCUSSION PURPOSES
Inclusion of Prototype Cost as Qualified Research Expenditures
In general, when a prototype is placed in inventory for sale to customers, the wages, contract
research (for which the taxpayer bears the risk), and supply costs incurred to develop the
prototype are qualified research expenditures (QREs), but the wages and contract research
related to construction and the supply costs for component parts are not. The same is true
when a prototype is used for rotable spare parts or is used as depreciable property by the
taxpayer.
However, when a prototype is scrapped by the taxpayer, all of the wages, contract research (for
which the taxpayer bears the risk), and supply costs incurred to develop and construct the
prototype are QREs. Similarly, when the taxpayer pays a third party to develop a prototype and
does not obtain an ownership interest in the prototype all of the costs incurred by the taxpayer
to develop the prototype are QREs.
Finally, when the taxpayer develops the prototype for a customer and does not obtain an
ownership interest in a prototype, all of the costs incurred by the taxpayer to develop the
prototype are QREs as long as the taxpayer’s compensation for services is contractually subject
to performance guarantees relating to the prototype.
Under section 174(a), “a taxpayer may treat research or experimental expenditures which are
paid or incurred by him during the taxable year in connection with his trade or business as
expenses which are not chargeable to capital account. The expenditures so treated shall be
allowed as a deduction.” However, under section 174(c) no deduction is allowed for “any
expenditure … for the acquisition or improvement of property … of a character which is subject
to the allowance under section 167.”
The regulations clarify that expenditures for depreciable property are not subject to an
allowance for depreciation even if the property that is acquired or improved is used for
research and development; however, expenditures that result in depreciable property to be
used in the taxpayer's trade or business may be allowable as a current expense deduction. QREs
for the acquisition or production of depreciable property do not include the cost of component
materials, construction labor, or other costs attributable to acquisition/ improvement.
Additionally, the regulations provide that expenditures paid to third parties for the construction
of depreciable property that is acquired by the taxpayer are deductible if such construction is
done at the taxpayer’s specification and risk.
Any amount paid or incurred for supplies used in the conduct of qualified research is a
qualifying in-house research expense. However, property of a character subject to the
allowance for depreciation is excluded from qualifying as supplies. The legislative history of the
section 41 credit suggests that the costs of component parts could be included in the credit
2
calculations as qualifying supply expenditures; however, neither the IRS nor the courts have
taken this approach.
Revenue Rulings
In general, Revenue Rulings have been favorable regarding the deductibility of costs incurred to
develop prototypes, but somewhat limited in their reasoning and discussion of the law.
Rev. Rul. 69-484 held that payments made by a taxpayer airline, in concert with other airlines
and the Federal Aviation Administration, to an aircraft manufacturer to design, develop, and
test a supersonic transport aircraft were deductible under section 174. These payments did not
entitle the taxpayer to any rights in the prototype and were made because the development of
the aircraft would benefit the taxpayer in general.
Rev. Rul. 73-20, which cited Rev. Rul. 69-484 as precedent, similarly held that payments made
by a taxpayer utility to a non-profit research and development organization formed to develop
a model that would benefit the utility field were deductible under section 174. Notably, the
Ruling held that even the portion of the payments that were administrative and operating
expenses were deductible. Like the payments in Rev. Rul. 69-484, the payments in Rev. Rul. 73-
20 did not entitle the taxpayer to any rights in the prototype and no mention was made about
the eventual use or disposition of the prototype.
Similarly, Rev. Rul. 73-324 determined that payments made by a taxpayer in concert with other
industry members and a government agency for the development of a product, were
deductible under section 174.
Rev. Rul. 73-275 considered whether a taxpayer was entitled to a section 174 deduction for
costs incurred in constructing special order manufacturing systems for its customers. The Ruling
held that the product engineering expenses qualified under section 174, but the production
costs did not. The Ruling emphasized that “section 174 covers costs incurred in developing the
concept of a product as opposed to the product itself.
Rev. Rul. 75-122 considered whether the taxpayer mining company’s costs to access a
previously unexploited mineral deposit, develop equipment to mine that deposit, and develop
equipment and processes to extract the mineral from the ore were deductible under section
174. The Ruling held that the costs to locate and access the ore were explicitly disallowed by
section 174(d). However, the costs for developing new mining equipment, developing new
refining processes and equipment, and shipping ore samples to the lab were deductible under
section 174.
3
Private Letter Rulings
A number of private letter rulings (PLRs) have also been favorable to the taxpayer.
In PLR 7921037, the Service ruled a taxpayer utility company that participated in a coal
gasification plant project funded by several utility companies was entitled to a deduction under
section 174.
PLR 7948031 was issued to a taxpayer chicken farmer that engaged an engineer to develop an
advanced system to extract uric acid from chicken manure so that the manure could be used
for animal feed. The Letter Ruling held that the engineering and plant costs incurred that
related to removing the uric acid from the manure were not deductible because that process
had already been tested and developed, but the plant and development costs attributable to
conversion of uric acid into fertilizer were deductible under section 174 except to the extent
that those costs were for the acquisition or improvement of land or property that were subject
to the allowance for depreciation under section 167.
PLR 8138145 was issued to a taxpayer partnership that was in the process of developing a pilot
residential energy efficiency program that would pay the taxpayer if it could provide energy
cost savings to customers that were greater than the cost to the utility of providing energy. The
Letter Ruling held “… the partnership may deduct all amounts which qualify as research and
experimental expenditures … in connection with the pilot test….”
In a slightly different situation, PLR 8835002 was issued to a taxpayer that developed a
prototype that used a new construction method in a laboratory. The Letter Ruling held that the
following constituted QRE under section 41: 1) wages and supplies used for research and
development in taxpayer's research and development department both prior to and after the
installation of the first prototype; 2) wages for on-site monitoring of the prototype installations;
3) supplies for modifying the prototype installations; and, 4) 65 percent of the amounts relating
to the testing of the prototypes paid to subcontractors to replace the original prototypes due to
method modifications and damage to the extent that these expenses were incurred during the
period the taxpayer was developing its new method.
Similarly, in TAM 199927001, a taxpayer that constructed molds and other tools for the
manufacture of plastic products was allowed to deduct the costs incurred in designing the
tools, but the costs incurred in constructing the tools were not deductible even though they
would not be depreciated by the taxpayer.
4
Court Cases
In Honeywell Inc. & Subsidiaries,1 the Court held that rotable spare parts were depreciable
assets rather than inventory. Honeywell used such parts to service computers owned by its
customers as part of its computer maintenance and service business. Honeywell consistently
capitalized cost of rotable parts and depreciated them over the same life span assigned to the
related computers. The parts were provided by Honeywell to its customers under computer
lease or maintenance agreements and were repaired after removal from customer's machines
to be used again. There was no direct relationship between the fixed fee charged to maintain
the computers and the price or cost of parts in taxpayer's replacement parts pool; thus, parts
were not considered an income-producing factor that would require treatment as inventory.
The pool of parts was necessary for Honeywell’s maintenance business and the fixed asset
method of accounting used by Honeywell properly matched the cost of establishing the pool
with revenue earned from maintenance agreements.
In Trinity Industries, Inc. v. US2, the Court held that under the substantially all rule, if 80 percent
of the activities to develop a prototype constituted a process of experimentation, then all of the
costs associated with the prototype project were eligible for inclusion in calculating the section
41 credit. Trinity operated several businesses as divisions, one of which built work boats for
offshore drilling rigs along with other special purpose boats. This division engaged in research
and development to design and build “first in class” ships or prototypes for specific customers.
Trinity claimed a credit for work done to design and build these prototypes. The IRS denied the
claim and argued that the ships developed by Trinity were not a “business component” because
the prototype ships being developed were for special orders and not to be sold out of general
inventory. The Court disagreed, finding that after Trinity completed the ships they were held for
sale and thus satisfied the business component requirement. The Court went on to hold that
under section 41(d), if 80 percent of the cost of developing a prototype was incurred as part of
the process of experimentation, the entire cost of the prototype qualified as a research
expense. Thus, Trinity was entitled to its claim for a credit.
In TG Missouri Corp. v. Commissioner, 3 the taxpayer manufacturer claimed research tax credits
for expenditures it incurred to develop prototypes of production molds used to make plastic
auto parts for customers. These parts were built to customers’ specifications and the prototype
molds became the customer’s property upon completion. The taxpayer manufacturer,
however, retained physical possession after it sold the molds to customers so the taxpayer
could produce auto parts for its customers. Importantly, the taxpayer guaranteed that the
molds would perform in the manner desired by its customers. The taxpayer claimed these
expenditures on its 1998 and 1999 tax returns. In 2006, the IRS audited the returns and denied
the credits on the basis that the molds were “property of a character subject to the allowance
for depreciation” and were not qualified research expenditures. The taxpayer argued the
expenditures did, in fact, qualify because they were depreciable in the hands of someone other
than the taxpayer. The Court agreed with the taxpayer and allowed the expenditures to be used
5
to calculate the research tax credit. The Court noted that the statute linked the proper financial
accounting treatment of the molds to the treatment of the expenditures incurred to develop
those molds for purposes of calculating the research tax credit.
Analysis
An overarching theme in the relevant authorities that consider whether the costs incurred by a
taxpayer in developing and producing prototypes are qualified expenditures for the purpose of
sections 41 and 174 is these sections allow a taxpayer benefits for developing the concept of a
product, but not for producing the product itself. When the prototype is placed in inventory for
sale to customers, the wages, contract research (for which the taxpayer bears the risk), and
supply costs incurred to develop the prototype are qualified expenditures, but the wages and
contract research costs related to the construction of the prototype and the supply costs for
component parts of the prototype are not. In Rev. Rul. 73-275, the IRS held that a taxpayer was
entitled to a section 174 deduction for the engineering costs incurred in constructing special
order manufacturing systems for its customers, but was not entitled to deduct the cost to
manufacture those systems. Therefore, in the case where prototypes are placed into inventory,
the costs to develop the prototype are qualified expenditures, but the costs to construct the
prototype are not.
The outcome is the same when the prototype is used for rotable spare parts; the wages,
contract research (for which the taxpayer bears the risk), supply costs to develop the prototype
are qualified expenditures, but the wages and contract research related to the construction of
the prototype and the supply costs for component parts of the prototype are not. Under
Honeywell rotable spare parts are depreciable assets rather than inventory. Generally, under
section 174, no deduction is allowed for any expenditure for the acquisition or improvement of
depreciable property. However, under the section 174 regulations, expenditures for research or
experimentation that result in depreciable property to be used in a taxpayer's trade or business
are deductible. Importantly, the regulations state that expenditures for component materials,
construction labor, or other costs attributable to acquisition and improvement do not qualify.
Like in the inventory situation, the distinction in the rotable spare parts situation is that the cost
of developing the property is deductible while the cost of producing the property is not;
therefore, the costs to develop the prototypes that become rotable spare parts are qualified
expenditure, but the costs to construct the prototypes are not. For the same reasons, when the
prototype is kept and used as depreciable property by the taxpayer, the wages, contract
research (for which the taxpayer bears the risk), supply costs to develop the prototype are
qualified expenditures, but the wages and contract research related to the construction of the
prototype and the supply costs for component parts of the prototype are not.
When the prototype is scrapped by the taxpayer, all of the wages, contract research (for which
the taxpayer bears the risk), and supply costs incurred to develop and construct the prototype
are qualified expenditures. Generally, a taxpayer can take a deduction for research or
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experimental expenditures that are paid or incurred in connection with the taxpayer’s trade or
business. A deduction is not allowed, however, for any expenditure made for the acquisition or
improvement of depreciable property. When a taxpayer develops a prototype that is later
scrapped, he or she is not creating depreciable property; therefore, the costs paid or incurred
by the taxpayer to create the scrapped prototype are deductible. When the taxpayer develops
the prototype for a customer and does not obtain an ownership interest in a prototype, all of
the costs incurred by the taxpayer to develop the prototype are qualified expenditures as long
as the taxpayer provides its customer with performance guarantees relating to the prototype.
TG Missouri showed that the depreciable property exceptions found in sections 174 and 41
only apply if the property is depreciable in the hands of the taxpayer.
When the taxpayer does not obtain an ownership interest in the prototype as a result of the
costs that it incurs, all of the costs are qualified expenditures. In Rev. Rul. 69-484, Rev. Rul. 73-
202, and Rev. Rul. 73-324, taxpayers that made payments to a third party in concert with other
industry members and a government agency for the development of a product prototype were
deductible under section 174. In these cases, the taxpayer and other industry members did not
obtain an ownership interest in the prototypes that were created as a result of their payments.
Lockheed Martin
In LOCKHEED MARTIN CORPORATION, No. 8:12-cv-03725 (AW), filed 5-14-13, Lockheed
amended its complaint against the IRS to take R&D credits as described by a few examples
below for the following (See Exhibit A copy of amended complaint):
(The disputed QREs include the costs of wages, supplies, and contract research incurred in
connection with the design, development, testing, integration, and fabrication of innovative
and unproven prototypes, including four different first-configuration Atlas V launch vehicles
and an advanced electronic surveillance and security system).
1. Atlas V launch vehicle consists of a complex array of integrated systems, including the
propulsion systems, vehicle and payload structures, and avionics systems. To meet a
particular customer’s mission specifications, these systems and their respective
components and subsystems must work together flawlessly under extreme conditions.
Each new configuration of Atlas V components presents new and different engineering
and scientific challenges.
Lockheed Martin (previously on its own and now as part of the ULA joint venture)
undertakes extensive preproduction design and development efforts with respect to
each new configuration of the Atlas V. To the extent feasible, each part, component,
and system is subjected to extensive laboratory testing and analysis. Throughout the
production process and up to launch, the launch vehicle and its various systems are
subjected to rigorous preflight testing.
7
A new launch-vehicle-configuration design cannot be proven or validated until it is
actually assembled and successfully launched.
For each launch, an array of sensors gathers information about the status of all critical
components and systems. This information is carefully analyzed as part of a formal post
flight review. Anomalies identified through this process are analyzed in order to
understand their causes and to develop engineering solutions for future missions.
At the time of their respective launches, the four Atlas V launch vehicles described
below represented new and unproven configurations for which Lockheed Martin
claimed QREs.
The costs Lockheed Martin incurred to design, develop, test, integrate, and fabricate the
launch vehicle that would be used to launch Inmarsat’s 4-F1 satellite included wages
paid to employees for qualified services (as that term is defined in section 41(b)(2)(B)),
amounts paid for supplies (as that term is defined in section 41(b)(2)(C)) that were used
in the conduct of qualified research, and contract research expenses (as that term is
defined in section 41(b)(3)).
2. To improve launch availability for the New Horizons mission, Lockheed Martin increased
the maximum gimbal angle for the common core booster engine. The increased angle
was needed to control the launch vehicle because of the additional thrust supplied by
the five solid rocket boosters.
Due to the configuration of the New Horizons spacecraft, Lockheed Martin had to design
a new umbilical system that mounted to the payload fairing. The new umbilical system
allowed for proper separation from the spacecraft.
The costs Lockheed Martin incurred to design, develop, test, integrate, and fabricate the
launch vehicle that would be used to launch NASA’s New Horizons spacecraft included
wages paid to employees for qualified services (as that term is defined in section
41(b)(2)(B)), amounts paid for supplies (as that term is defined in section 41(b)(2)(C))
that were used in the conduct of qualified research, and contract research expenses (as
that term is defined in section 41(b)(3)).
The launch services agreement with SES ASTRA S.A. was a firm fixed-price contract
under which Lockheed Martin was to receive a total purchase price of $62,500,000 for
Atlas launch services.
During the years at issue, Lockheed Martin incurred costs, including those to design,
develop, test, integrate, and fabricate a new configuration of the Atlas V launch vehicle
that would satisfy the customer’s specifications for the ASTRA 1KR mission.
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The launch vehicle for the ASTRA 1KR mission was the first Atlas V rocket to incorporate
a lone solid rocket booster.
The launch vehicle was the first Atlas V flight with an X-Stringer, or reduced part count,
extended payload fairing. This extended payload fairing allowed the ASTRA 1KR
spacecraft to properly fit within the fairing of the launch vehicle.
The costs Lockheed Martin incurred to design, develop, test, integrate, and fabricate the
launch vehicle that would be used to launch the ASTRA 1KR satellite included wages
paid to employees for qualified services (as that term is defined in section 41(b)(2)(B)),
amounts paid for supplies (as that term is defined in section 41(b)(2)(C)) that were used
in the conduct of qualified research, and contract research expenses (as that term is
defined in section 41(b)(3)).
Conclusion
It seems clear that expenditures incurred for prototypes qualify as R&D to the extent the
taxpayer does not retain ownership in the prototype or if the prototype is not included as
inventory.
Further, the legislative history of the section 41 credit suggests that the costs of component
parts could be included in the credit though the IRS and courts appear reluctant to endorse this
approach to date.
1
-IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF MARYLAND
SOUTHERN DIVISION
LOCKHEED MARTIN CORPORATION,
Plaintiff,
v.
UNITED STATES OF AMERICA,
Defendant.
))))))))))
No. 8:12-cv-03725 (AW)
FIRST AMENDED COMPLAINT
Plaintiff Lockheed Martin Corporation (Lockheed Martin), by and through counsel,
alleges as follows:
THE PARTIES
1. Lockheed Martin is a domestic corporation incorporated in the State of Maryland,
with its corporate headquarters at 6801 Rockledge Drive, Bethesda, Maryland 20817. Lockheed
Martin's employer identification number (EIN) is 52-1893632.
2. Defendant is the United States of America.
JURISDICTION
3. Lockheed Martin brings this complaint in accordance with the requirements of
section 7422 of the United States Internal Revenue Code (the Code), 26 U.S.C. § 7422, for
recovery of federal income taxes erroneously collected from Lockheed Martin for the tax years
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 1 of 25
2
ending December 31, 2004, December 31, 2005, December 31, 2006, December 31, 2007, and
December 31, 2008 (the years at issue).1
4. Lockheed Martin is the common parent of an affiliated group of corporations that
have elected to file consolidated federal income tax returns for the years at issue and is therefore
the sole agent that is authorized to act in its own name with respect to all matters relating to the
tax liability for those consolidated return years under 26 C.F.R. § 1.1502-77(a)(1).
5. This Court has jurisdiction over this action under 28 U.S.C. § 1346(a)(1).
6. Venue for this action properly lies in the United States District Court for the
District of Maryland under 28 U.S.C. § 1391.
7. Lockheed Martin is timely filing this complaint as required in section 6532(a)(1)
(the relevant notices of disallowance were dated May 24, 2012).
GENERAL ALLEGATIONS
8. Lockheed Martin seeks to recover the sum of at least $16,157,226, plus statutory
interest as the law provides, which sum represents an overpayment by Lockheed Martin of
federal income taxes for the years at issue.
9. Lockheed Martin timely filed federal income tax returns for its 2004 through 2007
tax years with the Internal Revenue Service Center in Ogden, Utah. Lockheed Martin timely
filed its 2008 federal income tax return electronically.
10. Lockheed Martin paid the full amount of income taxes shown on its federal
income tax returns or subsequently assessed for each of the years at issue.
1 Unless otherwise indicated, all “section” references are to the Internal Revenue Code of1986 (26 U.S.C.), as amended and as in effect during the relevant year.
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 2 of 25
3
11. This action arises out of administrative claims for refund that Lockheed Martin
submitted for the years at issue. In those administrative claims, Lockheed Martin claimed
(among other things) refunds attributable to (1) additional research credits under section 41 with
respect to four projects (which projects are described below), (2) increased deductions under
section 199, and (3) an increased amount of extraterritorial income (ETI) exclusion under former
section 114. These claims are described in more detail below.
Lockheed Martin’s Business Operations During the Years at Issue
12. Lockheed Martin is a global security and aerospace company principally engaged
in the research, design, development, manufacture, integration, and sustainment of advanced
technology systems and products. A substantial portion of Lockheed Martin’s sales during the
years at issue were to agencies of the U.S. Government.
13. During the years at issue, Lockheed Martin’s Space Systems business segment
provided launch services to both government and commercial customers. Under this line of
business, Lockheed Martin designed, developed, manufactured, and integrated expendable and
reusable space launch systems for the Department of Defense, NASA, and commercial
customers.
14. In 2005, Lockheed Martin entered into an agreement with The Boeing Company
to create a joint venture that would combine the production, engineering, test, and launch
operations associated with U.S. Government launches of Lockheed Martin’s Atlas launch
vehicles and Boeing’s Delta launch vehicles. The joint venture, named United Launch Alliance,
LLC (ULA), commenced operations on December 1, 2006.
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 3 of 25
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Section 41 Research Credit Claims
15. Congress enacted the research credit under section 41 “to encourage business
firms to perform the research necessary to increase the innovative qualities and efficiency of the
U.S. economy.” S. Rep. No 99-313, at 694 (1986). Congress has recognized that “research is
the lifeblood of our economic progress” and that “effective tax incentives for research and
development must be a fundamental element of America’s competitiveness strategy.” H.R. Rep.
No. 100-1104, Vol. II, at 88 (1988) (Conf. Rep.).
16. As in effect during the years at issue, section 41 generally provided for a tax
credit equal to 20% of incremental “qualified research expenditures” (QREs) over a base
amount. Section 41(c)(4) provided for an alternative incremental credit and section 41(c)(5)
provided for an alternative simplified credit. Under each version of the credit, the allowable
credit was a function of the taxpayer’s QREs for the tax year. Section 41(b)(1) defines
“qualified research expenditures.”
17. For its 2004 to 2006 tax years, Lockheed Martin elected to compute its allowable
research credit using the alternative incremental credit computation under section 41(c)(4).
18. For its 2007 and 2008 tax years, Lockheed Martin elected to compute its
allowable research credit using the alternative simplified credit computation under section
41(c)(5). In those tax years, the alternative simplified credit rate was 12%.
19. During the years at issue, Lockheed Martin incurred QREs, including wages,
supplies, and contract research costs, with respect to a variety of research projects.
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 4 of 25
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20. The Internal Revenue Service denied a portion of the research credits that
Lockheed Martin has claimed for the years at issue on the basis that some costs were allegedly
not QREs.
21. The disputed QREs include the costs of wages, supplies, and contract research
incurred in connection with the design, development, testing, integration, and fabrication of
innovative and unproven prototypes, including four different first-configuration Atlas V launch
vehicles.
Atlas V Launch Vehicles
22. Lockheed Martin developed the Atlas V launch vehicle pursuant to the U.S.
Department of Defense’s (DOD) Evolved Expendable Launch Vehicle (EELV) Program.
23. DOD initiated the EELV Program in 1995 to develop a new generation of
launch vehicles. The Atlas V is one of two families of launch vehicles developed under the
EELV Program to provide assured and affordable access to space for government satellites via
commercially owned and operated launch vehicles.
24. Atlas V launch vehicles are designed and marketed for commercial and
government launches.
25. The Atlas V launch vehicle family was designed as a multi-stage, medium- to
heavy-lift rocket with various potential configurations depending on mission specifications.
26. The Atlas V incorporates a common core booster. The Atlas V can be
configured to add up to five strap-on solid rocket boosters, an upper stage configured with one or
two engines, and various sizes of payload fairings.
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 5 of 25
6
27. Each Atlas V launch vehicle consists of a complex array of integrated systems,
including the propulsion systems, vehicle and payload structures, and avionics systems. To meet
a particular customer’s mission specifications, these systems and their respective components
and subsystems must work together flawlessly under extreme conditions.
28. Each new configuration of Atlas V components presents new and different
engineering and scientific challenges.
29. Lockheed Martin (previously on its own and now as part of the ULA joint
venture) undertakes extensive preproduction design and development efforts with respect to each
new configuration of the Atlas V. To the extent feasible, each part, component, and system is
subjected to extensive laboratory testing and analysis. Throughout the production process and up
to launch, the launch vehicle and its various systems are subjected to rigorous preflight testing.
30. A new launch-vehicle-configuration design cannot be proven or validated until it
is actually assembled and successfully launched.
31. For each launch, an array of sensors gathers information about the status of all
critical components and systems. This information is carefully analyzed as part of a formal post-
flight review. Anomalies identified through this process are analyzed in order to understand
their causes and to develop engineering solutions for future missions.
32. The first Atlas V launch vehicle was launched on August 21, 2002.
33. By the end of the years at issue, fourteen Atlas V launch vehicles had been
launched.
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 6 of 25
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34. At the time of their respective launches, the four Atlas V launch vehicles
described below represented new and unproven configurations for which Lockheed Martin
claimed QREs.
Atlas V, Type 431 (INMARSAT)
35. On May 10, 2005, Lockheed Martin entered into an amended and restated
contract with Inmarsat Launch Company Limited under which Lockheed Martin agreed to
launch Inmarsat’s 4-F1 satellite.
36. The contract with Inmarsat was a firm fixed-price contract under which Lockheed
Martin was to receive a total purchase price of $84,000,000 for launch services.
37. During the years at issue, Lockheed Martin incurred costs, including those to
design, develop, test, integrate, and fabricate a new configuration of the Atlas V launch vehicle
that would satisfy the customer’s specifications for the Inmarsat 4-F1 mission.
38. Inmarsat's 4-F1 satellite was at the time of launch the heaviest spacecraft to be
carried into orbit by an Atlas V launch vehicle.
39. The launch vehicle for the Inmarsat 4-F1 satellite was the first Atlas V rocket to
incorporate a four-meter payload fairing and three solid rocket boosters.
40. The launch vehicle was the first Atlas V flight with an extra extended payload
fairing (XEPF). It incorporated an additional 0.9-m (36-in.) high cylindrical plug to increase the
available payload volume. The XEPF was necessary to accommodate the satellite payload.
41. The launch vehicle was the first Atlas V launch vehicle to use pre-launch
pressurization of the upper stage to accommodate the heavy payload and to improve the launch
availability of the vehicle.
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 7 of 25
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42. The costs Lockheed Martin incurred to design, develop, test, integrate, and
fabricate the launch vehicle that would be used to launch Inmarsat’s 4-F1 satellite included
wages paid to employees for qualified services (as that term is defined in section 41(b)(2)(B)),
amounts paid for supplies (as that term is defined in section 41(b)(2)(C)) that were used in the
conduct of qualified research, and contract research expenses (as that term is defined in section
41(b)(3)).
43. For the years at issue, Lockheed Martin claimed these costs as QREs in the
computation of its allowable research credit on its original or amended corporate income tax
returns.
44. The IRS disallowed some of the claimed QREs associated with the design,
development, testing, integration, and fabrication of the launch vehicle for the Inmarsat 4-F1
mission.
45. For the years at issue, the IRS disallowed the following amount of QREs incurred
by Lockheed Martin with respect to the Inmarsat 4-F1 mission:
46. On March 11, 2005, Inmarsat’s 4-F1 satellite was successfully launched into orbit
from Cape Canaveral, Florida, atop an Atlas V launch vehicle, serial number AV-004.
Atlas V, Type 551 (New Horizons)
47. On June 16, 2000, Lockheed Martin entered into a contract with NASA to provide
launch services (the NLS contract).
YEAR DISALLOWED QREs
2004 $ 20,792,923
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 8 of 25
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48. The NLS contract is an indefinite delivery/indefinite quantity (IDIQ) minimum
order contract providing for the delivery of an unspecified number of launches and other services
over a period of time.
49. Under the NLS contract, Lockheed Martin was to receive a firm fixed total
purchase price of $130,725,294 for launch services for the New Horizons mission.
50. The New Horizons mission was intended to send the first spacecraft to fly by and
study Pluto and its moons.
51. During the years at issue, Lockheed Martin incurred costs, including those to
design, develop, test, integrate, and fabricate a new configuration of the Atlas V launch vehicle
that would satisfy NASA’s specifications for the New Horizons mission.
52. The launch vehicle was the first Atlas V rocket to incorporate a five-meter
payload fairing and five solid rocket boosters.
53. Due to the extended mission duration and distance from the sun, electric power
for the New Horizons spacecraft was supplied by a radioisotope thermoelectric generator (RTG)
fueled by radioactive plutonium. The RTG imposed additional design requirements for the New
Horizons launch vehicle.
54. The launch vehicle for the New Horizons mission incorporated an upgraded flight
termination system (FTS). This upgraded system allowed for termination of the vehicle at
various stages during the launch both autonomously and by radio signals from ground
controllers.
55. The launch vehicle was the first that contained four composite overwrapped
pressure vessels (COPVs). These four vessels were used to pressurize and expel the propellants
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 9 of 25
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to the engine in order to maintain the proper pressures in the tank. The new design reduced the
weight of the common core booster.
56. To improve launch availability for the New Horizons mission, Lockheed Martin
increased the maximum gimbal angle for the common core booster engine. The increased angle
was needed to control the launch vehicle because of the additional thrust supplied by the five
solid rocket boosters.
57. Due to the configuration of the New Horizons spacecraft, Lockheed Martin had to
design a new umbilical system that mounted to the payload fairing. The new umbilical system
allowed for proper separation from the spacecraft.
58. The costs Lockheed Martin incurred to design, develop, test, integrate, and
fabricate the launch vehicle that would be used to launch NASA’s New Horizons spacecraft
included wages paid to employees for qualified services (as that term is defined in section
41(b)(2)(B)), amounts paid for supplies (as that term is defined in section 41(b)(2)(C)) that were
used in the conduct of qualified research, and contract research expenses (as that term is defined
in section 41(b)(3)).
59. For the years at issue, Lockheed Martin has claimed these costs as QREs in the
computation of its allowable research credit on its original or amended corporate income tax
returns.
60. The IRS disallowed some of the claimed QREs associated with the design,
development, testing, integration, and fabrication of the launch vehicle for the New Horizons
mission.
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61. For the years at issue, the IRS disallowed the following amounts of QREs
incurred by Lockheed Martin with respect to the New Horizons mission:
62. On January 19, 2006, NASA’s New Horizons spacecraft was successfully
launched from Cape Canaveral, Florida, atop an Atlas V launch vehicle, serial number AV-010.
63. The New Horizons spacecraft is expected to fly by Pluto and its moons in July
2015.
Atlas V, Type 411 (ASTRA 1KR)
64. On October 14, 2005, Lockheed Martin entered into an amended and restated
launch services agreement with SES ASTRA S.A. under which Lockheed Martin agreed to
launch the ASTRA 1KR satellite.
65. The ASTRA 1KR was a new telecommunications satellite intended to provide
distribution of direct-to-home broadcast services across Europe.
66. The launch services agreement with SES ASTRA S.A. was a firm fixed-price
contract under which Lockheed Martin was to receive a total purchase price of $62,500,000 for
Atlas launch services.
67. During the years at issue, Lockheed Martin incurred costs, including those to
design, develop, test, integrate, and fabricate a new configuration of the Atlas V launch vehicle
that would satisfy the customer’s specifications for the ASTRA 1KR mission.
YEAR DISALLOWED QREs
2004 $ 46,393,602
2005 17,921,246
Total $ 64,314,848
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68. The launch vehicle for the ASTRA 1KR mission was the first Atlas V rocket to
incorporate a lone solid rocket booster.
69. The launch vehicle was the first Atlas V flight with an X-Stringer, or reduced part
count, extended payload fairing. This extended payload fairing allowed the ASTRA 1KR
spacecraft to properly fit within the fairing of the launch vehicle.
70. The costs Lockheed Martin incurred to design, develop, test, integrate, and
fabricate the launch vehicle that would be used to launch the ASTRA 1KR satellite included
wages paid to employees for qualified services (as that term is defined in section 41(b)(2)(B)),
amounts paid for supplies (as that term is defined in section 41(b)(2)(C)) that were used in the
conduct of qualified research, and contract research expenses (as that term is defined in section
41(b)(3)).
71. For the years at issue, Lockheed Martin has claimed these costs as QREs in the
computation of its allowable research credit on its original or amended corporate income tax
returns.
72. The IRS disallowed some of the claimed QREs associated with the design,
development, testing, integration, and fabrication of the launch vehicle for the ASTRA 1KR
mission.
73. For the years at issue, the IRS disallowed the following amounts of QREs
incurred by Lockheed Martin with respect to the ASTRA 1KR mission:
YEAR DISALLOWED QREs
2004 $ 19,048,985
2005 23,826,283
2006 4,282,342
Total $ 47,157,610
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74. On April 20, 2006, the ASTRA 1KR satellite was successfully launched into orbit
from Cape Canaveral, Florida, atop an Atlas V launch vehicle, serial number AV-008.
Atlas V, Type 421 (WGS SV-1)
75. On October 16, 1998, Lockheed Martin entered into a contract with the United
States Air Force to provide launch services (the ILS contract).
76. The ILS contract is a requirements contract providing for the delivery of a
specified number of launches and other services when and as ordered by the customer.
77. The Wideband Global SATCOM (WGS) system is a military communications
satellite network.
78. The WGS Space Vehicle 1 (SV-1) was the first satellite of the WGS system.
79. Under the ILS contract, Lockheed Martin was to receive a firm fixed total
purchase price of $117,893,019 for launch services for the WGS SV-1 launch.
80. During the years at issue, Lockheed Martin incurred costs, including those to
design, develop, test, integrate, and fabricate a new configuration of the Atlas V launch vehicle
that would satisfy the customer’s specifications for the WGS SV-1 mission.
81. The launch vehicle for the WGS SV-1 mission was the first Atlas V rocket that
incorporated a four-meter payload fairing and two solid rocket boosters.
82. The WGS SV-1 launch vehicle was the first Atlas V to use the newly designed
solid rocket booster staging thruster cartridge.
83. The WGS SV-1 launch vehicle was the first Atlas V that used minimum residual
shutdown software. This software was used to shut down the upper stage after the vehicle
launched.
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84. The WGS SV-1 launch vehicle was the first Atlas V to use an S/L band
reradiating antenna. This was a mission-unique modification that allowed payload radio
frequency telemetry transmission and command receipt communications after the payload was
enclosed in the spacecraft until launch.
85. The costs Lockheed Martin incurred to design, develop, test, integrate, and
fabricate the launch vehicle that would be used to launch the WGS SV-1 spacecraft included
wages paid to employees for qualified services (as that term is defined in section 41(b)(2)(B)),
amounts paid for supplies (as that term is defined in section 41(b)(2)(C)) that were used in the
conduct of qualified research, and contract research expenses (as that term is defined in section
41(b)(3)).
86. For the years at issue, Lockheed Martin has claimed these costs as QREs in the
computation of its allowable research credit on its original or amended corporate income tax
returns.
87. The IRS disallowed some of the claimed QREs associated with the design,
development, testing, integration, and fabrication of the WGS SV-1 mission.
88. For the years at issue, the IRS disallowed the following amounts of QREs
incurred by Lockheed Martin with respect to the WGS SV-1 mission:
89. On October 11, 2007, the WGS SV-1 satellite was successfully launched into
orbit from Cape Canaveral, Florida, atop an Atlas V launch vehicle, serial number AV-011.
YEAR DISALLOWED QREs
2004 $ 7,480,436
2005 18,999,587
2006 22,313,175
Total $ 48,793,198
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Additional Atlas V Design and Development Costs
90. In addition to the QREs disallowed with respect to the four new launch vehicle
configurations described above, the IRS disallowed additional Atlas V engineering design and
development costs claimed as QREs in the amounts of $2,403,639 for tax year 2004, $2,274,204
for tax year 2005, and $1,239,298 for tax year 2006.
91. The Atlas V engineering design and development costs Lockheed Martin incurred
included wages paid to employees for qualified services (as that term is defined in section
41(b)(2)(B)).
Section 199 Refund Claims
92. Enacted in 2004, section 199 allows a deduction based on a percentage of
qualifying production activities income (QPAI) subject to various caps and limits. QPAI is a
measure of, among other things, income from the sale or lease of property manufactured,
produced, grown, or extracted in whole or in significant part in the United States as well as
income from certain services performed in the United States.
93. Lockheed Martin generated QPAI during the years at issue and claimed
deductions under section 199. In computing its section 199 deductions for its 2005 through 2008
tax years, Lockheed Martin incorrectly reduced QPAI by the amount of its extraterritorial
income (ETI) exclusion for those tax years.
94. Under section 199, Lockheed Martin is entitled to additional deductions in its
2005 through 2008 tax years because Lockheed Martin is not required to reduce QPAI by the
amount of its ETI exclusion for those tax years.
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ETI Refund Claims
95. Enacted in 2000 and repealed (except for certain transition rules discussed below)
in 2004, former section 114 provided an exclusion from taxable income for qualified
extraterritorial income.
96. Under former section 114(a), “[g]ross income does not include extraterritorial
income.” Former section 114(b) provides that the exclusion under section 114(a) applies only to
“qualifying foreign trade income.” Former section 941(a)(1), in turn, provides that in general,
“qualifying foreign trade income” with respect to any transaction is “the amount of gross income
which, if excluded, will result in a reduction of the taxable income of the taxpayer from such
transaction” equal to the greatest of: (i) 30% of “foreign sale and leasing income”; (ii) 1.2% of
“foreign trading gross receipts” (FTGR); or (iii) 15% of “foreign trade income.”
97. Congress repealed section 114 effective for transactions after 2004 and provided
transition rules that (i) decreased the amount of ETI excludable from income to 80% (for 2005)
and then 60% (for 2006) and (ii) permitted the continued exclusion of ETI from certain “binding
contracts.” Pub. L. No. 108-357, § 101(d) and (f), 118 Stat. 1418, 1423, 1424. In 2006,
Congress struck the binding-contract transition rule applicable to tax years beginning after May
17, 2006. See Pub. L. No. 109-222, § 513(b), 120 Stat. 345, 366.
98. Lockheed Martin had transactions that generated ETI during the years at issue and
was eligible for ETI exclusions for the years at issue.
99. In computing its income exclusion under former section 114 for its 2005 through
2008 tax years, Lockheed Martin did not reduce gross income attributable to FTGR by the
amount of its section 199 deductions for those tax years.
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100. The IRS disallowed a portion of Lockheed Martin’s income exclusions under
section 114 for Lockheed Martin’s 2005 through 2008 tax years on the ground that in computing
its income exclusions under former section 114 for those tax years, Lockheed Martin should
have reduced gross income attributable to FTGR by the amount of its section 199 deductions.
101. Under former section 114 and the relevant transition rules, Lockheed Martin is
entitled to additional income exclusions in its 2005 through 2008 tax years because Lockheed
Martin is not required to reduce gross income attributable to FTGR by the amount of its section
199 deductions for those tax years.
COUNT ONE(2004 TAX YEAR)
102. Lockheed Martin incorporates herein by reference and realleges all allegations in
paragraphs 1 through 91 of this Complaint.
103. On or before September 15, 2005, Lockheed Martin timely filed a Form 1120
federal income tax return for its 2004 tax year with the IRS at Ogden, Utah. The name, address,
and identification number appearing on that return were as follows:
Lockheed Martin Corporation & Affiliated Corps6801 Rockledge DriveBethesda, MD 20817EIN: 52-1893632
104. During 2004, Lockheed Martin made estimated tax payments in excess of the tax
shown on its Form 1120 for its 2004 tax year. Lockheed Martin received a refund of some
portion of that overpayment and had some of the overpayment credited to its 2005 tax year.
Following its examination of Lockheed Martin’s 2004 tax year, the IRS assessed additional tax,
which Lockheed Martin satisfied in part by way of a payment and a capital loss carryback.
Case 8:12-cv-03725-AW Document 16 Filed 05/14/13 Page 17 of 25
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Following administrative review at IRS Appeals, the IRS assessed a small additional amount of
tax for Lockheed Martin’s 2004 tax year. As of the date of this complaint, Lockheed Martin has
paid in full all assessments for its 2004 tax year.
105. On February 21, 2012, Lockheed Martin timely filed an amended return on Form
1120X with the IRS, seeking a refund of tax for Lockheed Martin’s 2004 tax year on the basis
that Lockheed Martin is entitled to refunds attributable to additional research credits under
section 41 with respect to its Atlas V Launch Vehicle projects. In addition, the computations
contained in the Form 1120X assumed that all of the additional QREs claimed for the 2004
through 2007 tax years were qualified research expenses. Lockheed Martin claimed that if any
of these expenses did not qualify as qualified research expenses for the relevant year, the amount
of the research credit and any resulting refund may be larger or smaller.
106. The IRS disallowed that claim in full on May 24, 2012.
107. For the reasons described above, Lockheed Martin overpaid its federal income tax
for the 2004 tax year and Lockheed Martin is entitled to a refund of at least $2,135,139, plus
statutory interest as the law provides.
COUNT TWO(2005 TAX YEAR)
108. Lockheed Martin incorporates herein by reference and realleges all allegations in
paragraphs 1 through 34 and 47 through 101 of this Complaint.
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109. On or before September 15, 2006, Lockheed Martin timely filed a Form 1120
federal income tax return for its 2005 tax year with the IRS at Ogden, Utah. The name, address,
and identification number appearing on that return were as follows:
Lockheed Martin Corporation & Affiliated Corps6801 Rockledge DriveBethesda, MD 20817EIN: 52-1893632
110. During 2005, Lockheed Martin made estimated tax payments for its 2005 tax
year. Following the IRS examination and subsequent IRS Appeals review of Lockheed Martin’s
2005 tax year, the IRS determined that Lockheed Martin had tax overpayments for its 2005 tax
year. As of the date of this complaint, Lockheed Martin paid in full all assessments for its 2005
tax year.
111. On February 21, 2012, Lockheed Martin timely filed an amended return on Form
1120X with the IRS, seeking a refund of tax for Lockheed Martin’s 2005 tax year on the basis
that Lockheed Martin is entitled to refunds attributable to (i) additional research credits under
section 41 with respect to its Atlas V Launch Vehicle projects, (ii) increased deductions under
section 199, and (iii) an increased amount of ETI exclusion under former section 114. In
addition, the computations contained in the Form 1120X assumed that all of the additional QREs
claimed for the 2004 through 2007 tax years were qualified research expenses. Lockheed Martin
claimed that if any of these expenses did not qualify as qualified research expenses for the
relevant year, the amount of the research credit and any resulting refund may be larger or
smaller.
112. The IRS disallowed that claim in full on May 24, 2012.
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113. For the reasons described above, Lockheed Martin overpaid its federal income tax
for the 2005 tax year and Lockheed Martin is entitled to a refund of at least $3,701,781, plus
statutory interest as the law provides.
COUNT THREE(2006 TAX YEAR)
114. Lockheed Martin incorporates herein by reference and realleges all allegations in
paragraphs 1 through 34 and 64 through 101 of this Complaint.
115. On or before September 15, 2007, Lockheed Martin timely filed a Form 1120
federal income tax return for its 2006 tax year with the IRS at Ogden, Utah. The name, address,
and identification number appearing on that return were as follows:
Lockheed Martin Corporation & Affiliated Corps6801 Rockledge DriveBethesda, MD 20817EIN: 52-1893632
116. During 2006, Lockheed Martin made estimated tax payments for its 2006 tax
year. Following the IRS examination and subsequent IRS Appeals review of Lockheed Martin’s
2006 tax year, the IRS determined that Lockheed Martin had tax overpayments for its 2006 tax
year. As of the date of this complaint, Lockheed Martin paid in full all assessments for its 2006
tax year.
117. On February 21, 2012, Lockheed Martin timely filed an amended return on Form
1120X with the IRS, seeking a refund of tax for Lockheed Martin’s 2006 tax year on the basis
that Lockheed Martin is entitled to refunds attributable to (i) additional research credits under
section 41 with respect to its Atlas V Launch Vehicle projects, (ii) increased deductions under
section 199, and (iii) an increased amount of ETI exclusion under former section 114. In
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addition, the computations contained in the Form 1120X assumed that all of the additional QREs
claimed for the 2004 through 2007 tax years were qualified research expenses. Lockheed Martin
claimed that if any of these expenses did not qualify as qualified research expenses for the
relevant year, the amount of the research credit and any resulting refund may be larger or
smaller.
118. The IRS disallowed that claim in full on May 24, 2012.
119. For the reasons described above, Lockheed Martin overpaid its federal income tax
for the 2006 tax year and Lockheed Martin is entitled to a refund of at least $3,922,457, plus
statutory interest as the law provides.
COUNT FOUR(2007 TAX YEAR)
120. Lockheed Martin incorporates herein by reference and realleges all allegations in
paragraphs 1 through 21 and 92 through 101 of this Complaint.
121. On or before September 15, 2008, Lockheed Martin timely filed a Form 1120
federal income tax return for its 2007 tax year with the IRS at Ogden, Utah. The name, address,
and identification number appearing on that return were as follows:
Lockheed Martin Corporation & Affiliated Corps6801 Rockledge DriveBethesda, MD 20817EIN: 52-1893632
122. During 2007, Lockheed Martin made estimated tax payments for its 2007 tax
year. Following the IRS examination and subsequent IRS Appeals review of Lockheed Martin’s
2007 tax year, the IRS determined that Lockheed Martin had tax overpayments for its 2007 tax
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year. As of the date of this complaint, Lockheed Martin paid in full all assessments for its 2007
tax year.
123. On February 21, 2012, Lockheed Martin timely filed an amended return on Form
1120X with the IRS, seeking a refund of tax for Lockheed Martin’s 2007 tax year on the basis
that Lockheed Martin is entitled to refunds attributable to (i) additional research credits under
section 41, (ii) increased deductions under section 199, and (iii) an increased amount of ETI
exclusion under former section 114. In addition, the computations contained in the Form 1120X
assumed that all of the additional QREs claimed for the 2004 through 2007 tax years were
qualified research expenses. Lockheed Martin claimed that if any of these expenses did not
qualify as qualified research expenses for the relevant year, the amount of the research credit and
any resulting refund may be larger or smaller.
124. The IRS disallowed that claim in full on May 24, 2012.
125. For the reasons described above, Lockheed Martin overpaid its federal income tax
for the 2007 tax year and Lockheed Martin is entitled to a refund of at least $2,280,670, plus
statutory interest as the law provides.
COUNT FIVE(2008 TAX YEAR)
126. Lockheed Martin incorporates herein by reference and realleges all allegations in
paragraphs 1 through 21 and 92 through 101 of this Complaint.
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127. On or before September 15, 2009, Lockheed Martin timely filed a Form 1120
federal income tax return for its 2008 tax year with the IRS electronically. The name, address,
and identification number appearing on that return were as follows:
Lockheed Martin Corporation & Affiliated Corps6801 Rockledge DriveBethesda, MD 20817EIN: 52-1893632
128. During 2008, Lockheed Martin made estimated tax payments for its 2008 tax
year. Following the IRS Appeals review of Lockheed Martin’s 2008 tax year, the IRS
determined that Lockheed Martin had tax overpayments for its 2008 tax year. As of the date of
this complaint, Lockheed Martin paid in full all assessments for its 2008 tax year.
129. On February 21, 2012, Lockheed Martin timely filed an amended return on Form
1120X with the IRS, seeking a refund of tax for Lockheed Martin’s 2008 tax year on the basis
that Lockheed Martin is entitled to refunds attributable to (i) increased deductions under section
199, and (ii) an increased amount of ETI exclusion under former section 114. In addition, the
computations contained in the Form 1120X assumed that all of the additional QREs claimed for
the 2004 through 2007 tax years were qualified research expenses. Lockheed Martin claimed
that if any of these expenses did not qualify as qualified research expenses for the relevant year,
the amount of the research credit and any resulting refund may be larger or smaller.
130. The IRS disallowed that claim in full on May 24, 2012.
131. For the reasons described above, Lockheed Martin overpaid its federal income tax
for the 2008 tax year and Lockheed Martin is entitled to a refund of at least $4,117,179, plus
statutory interest as the law provides.
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RELIEF REQUESTED
WHEREFORE, Plaintiffs pray for judgment against the United States of at least the sum
of $16,157,226 representing overpayments in tax by Lockheed Martin, plus statutory interest as
the law provides, and such costs and attorneys’ fees as are available, and such other and further
relief that this Court deems equitable and proper.
DATED: May 2, 2013.
/s/ Kevin L. KenworthyKevin L. Kenworthy
[email protected] No. 18420
Patricia J. [email protected] No. 18427
Steven R. [email protected] No. 18415
MILLER & CHEVALIER CHARTERED655 Fifteenth St. N.W., Suite 900Washington, DC 20005-5701Tel. (202) 626-5800Fax: (202) 626-5801Attorneys for Plaintiff Lockheed Martin
OF COUNSELDavid A. HeywoodUrvi D. SoodJason M. RudinskyLOCKHEED MARTIN CORPORATION6801 Rockledge DriveBethesda, MD 20817
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CERTIFICATE OF SERVICE
I hereby certify that on May 2, 2013, I electronically filed the foregoing with the Clerk of
Court using the CM/ECF System, which will send notice of such filing to the following
registered CM/ECF users:
Katherine M. ReinhartU.S. Dep’t of Justice, Tax Div.P.O. Box 227, Ben Franklin StationWashington, D.C. 20044Email: [email protected]
Lindsay L. ClaytonU.S. Dep’t of Justice, Tax Div.P.O. Box 683Washington, DC 20044Email:[email protected]
Robert J. KovacevU.S. Dep’t of Justice, Tax Div.555 4th St NW, Room 7110Washington, DC 20001Email: [email protected]
/s/ Kevin L. Kenworthy
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