Union Carbide Corporation v. Commissioner

Issue: (1) Whether, in determining the scope of the qualified research expenses tax credit provided under Internal Revenue Code § 41, the court of appeals erred in holding that “supplies used in the conduct of qualified research” includes only the cost of additional supplies specifically purchased for the research, thereby largely eliminating the credit afforded for supplies used in plant-scale testing; and (2) whether the court of appeals erred in deferring to the government’s position with respect to the meaning and application of one its own regulations, without independently conducting any searching inquiry into what that the regulations mean, in a case where the government advanced that position as a financially interested party.