Businesses rendering automatic data processing services will be referred to herein as "data processing firms." (1) APPLICATION.The specific job performance by an automatic data processing installation.Thus, the transfer to a publisher of an original manuscript by the author thereof for the purpose of publication is not subject to taxation.The author is the consumer of the paper on which he has recorded the text of his creation.
Pattern generation tapes, wafer probe test tapes, final test tapes, schematic diagrams for the probe board, and schematic diagrams for the final test load board are informational items, if transferred for archival or other informational purposes not involving a functional use.A qualified research and development contract shall not include a contract for research for the purpose of improving a commercial product if the improvements relate to style, taste, cosmetic, or seasonal design factors. Property the purchaser wants for its intrinsic value as an item, and for which the purchaser is not interested in the data developed in the course of the manufacture of the custom-made item. Property the purchaser will use for purposes other than informational and testing purposes as defined in subdivision (a)(7). Property purchased for use by the purchaser or for resale. Production tooling—tooling produced and used for the manufacture of final production units. Use for which the property was designed which occurs after completion of the research and development. there are two separate contracts: one for the design service and the other for the manufacture of the custom-made item. Persons engaged in the business of rendering services pursuant to a qualified research and development contract are consumers of tangible personal property which they use incidentally in rendering the service. Tax does not apply to receipts derived from qualified research and development contracts except as provided below. Prototypes transferred in a qualified research and development contract for informational and testing purposes, as defined in subdivision (a)(7), are not subject to tax regardless of the fact the research contract may place a value on the prototype.A qualified research and development contract shall also not include a contract for the design and production of a custom-made item as defined in subdivision (a)(5). A planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service (product) or a new process or technique (process) or in bringing about a significant improvement to an existing product or process. The translation of research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or use. Custom-made items normally are intended for functional use and not for informational and testing use. Prototypes transferred are for verification that a design meets the required technical specifications of the contract."Development" includes the conceptual formulation, design, and testing of product alternatives, and construction of prototypes but does not include: a. Tangible personal property transferred in a qualified research and development contract includes, but is not limited to the following: a. Informational and testing use of a prototype by the contractor or its customer does not qualify as a functional use. No functional use, as defined in subdivision (a)(6), of the prototypes is made.routine or periodic alterations to existing products, production lines, manufacturing processes, and other on-going operations even though those alterations may represent improvements, and b. Appearance model—a non-operating model of a design that is a physical representation of the design which is used to convey the image, texture and appearance of the design. Prototype model—an operating model of a design the purpose of which includes: 1. Either the sales tax or the use tax applies with respect to sales of such tangible personal property to the contractor.