THE SHOE TAX BECKONS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87B00858R000300440015-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: January 13, 2011
• Sequence Number: 15
• Publication Date: September 4, 1985
• Content Type: MISC

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September 4, 1985 C(Ji?IGRESSION/ L CORD - Extension of Remarks
Parliament that a "global campaign" was
necessary for democracy's survival and
growth. He urged a coordinated effort by
the major Western democracies, not only to
foster democracy elsewhere but to rejuve-
nate the commitment to democracy within
Western societies.
The promotion of democracy poses risks.
Democracy reflects a specific historical ex-
perience and no one should expect all de-
mocracies to develop the same way. The
promotion of democracy may look to some
like interference in another country's do-
mestic affairs. Also, proponents of democra-
cy sometimes attempt to establish demo-
cratic institutions in countries that lack the
social and economic structure to support
them. Democracies function best where
there is a pluralists structure of private en-
terprise, educational institutions, labor
unions, and other professional and interest
groups. Furthermore, there is need for cau-
tion in supporting individuals who claim to
back democracy. Sometimes these same
leaders later adopt anti-democratic meth-
ods.
The U.S. already has taken significant
steps to promote the spread of democratic
values. In 1983. Congress established the
National Endowment for Democracy, which
seeks to promote and support Initiatives
from the two major U.S. political parties,
labor organizations, business groups, and
university foundations. It also assists the
work of other government-supported offices
like the U.S. Information Agency, the Voice
of America, and Radio Free Europe.
Political party foundations in several
Western countries have also assisted the
growth of democracy through their support
of counterpart political parties in southern
Europe and Latin America. U.S. political
parties are not as Ideological as their Euro-
pean counterparts, but they are also begin-
ning to promote and assist the development
of political parties in countries struggling to
strengthen their democratic systems. Co-
ordinated policies supported by several
countries will have a greater chance of suc-
cess, and can give support to all democratic
parties in a nation rather than just one.
U.S. development assistance can also help
strengthen democratic institutions. Many
democracies now face serious debt problems
and their survival will depend In part on
how we can help them through this period.
Several other democratic countries have sig-
nificant development assistance programs.
These programs help address social and eco-
nomic deprivation and help nurture political
and cultural Institutions that enhance de-
mocracy. To realize these goals, the U.S.
needs to reassess the present imbalance in
its aid program favoring military assistance,
which does little to foster the emergence of
domestic conditions favoring democracy.
Another step the U.S. and its sister de-
mocracies can take Is to respect the political
independence and territorial integrity of
sovereign states. Promoting the overthrow
of governments because their principles and
system do not conform to democratic ideals
will not aid the cause of democracy. Demo-
cratic governments will help their cause
most by following accepted international
rules and using the tools of diplomacy.
Finally, the most important step we can
take to assist democracy is to live up to our
own ideals. Democratic societies are on trial
before the world as they address equal op-
portunity in education and employment,
and such Issues as drugs, crime and other
less attractive aspects of free and individual-
istic societies. They are rightly judged not
just by the freedoms and opportunities they
provide for the most capable, but also by
the compassion they show to those least
able. Each step taken by democracies to
E 3845
make Aeties a better place to live competition ought to determine the
will ae sa f of the value of democrat future of the industry, allowing smarter,
k gov more flexible domestic producers to find
their niche in a market dominated by low-
cost third-world producers. Indeed, the
THE SHOE TAX BECKONS growth of the American economy depends
HON. PHILIP M. CRANE
or ILLINOIS
IN THE HOUSE or REPRESENTATIVES
Wednesday, September 4, 1985
Mr. CRANE. Mr. Speaker, by September
1, President Reagan has to make a decision
in regards to the International Trade Com-
mission's [ITC] recommendation to impose
quotas on imported footwear. I recently co.
signed a bipartisan congressional letter to
President Reagan urging him to take into
consideration the interests of the American
public as a whole and reject the footwear
quotas.
The effect that the quotas would have on
American families, especially the elderly
and the low-income consumers, must be
weighed into this decision. Quotas would
slap a hidden tax on consumers that would
drive up shoe prices, costing consumers bil-
lions of extra dollars and they would re-
strict the freedom that Americans enjoy of
purchasing whatever shoes they want and
can afford. Over half the shoes sold in
America retail for under $15 and they are
virtually all imported. Quotas cost money-
and the people who would pay the price of
protectionism would be those least able to
afford it.
The ITC estimates that the shoe quota
would cost the US. consumer $50,000 per
year for each $14,000 a year job that is
saved. In terms of overall dollars, it would
result in at least a $1.5 billion per year
extra burden on the American consumer.
Mr. Speaker, in this case, the cost of re-
straints is too high and the benefits to the
domestic shoe manufacturing industry too
negligible to warrant any such action.
i am submitting the following article
on its gradual shift from low-wage, labor-in-
tensive to high-wage, high productivity in-
dustries that can sustain rising living stand-
ards.
What's good for most Americans, of
course, isn't necessarily good for those who
own or work in shoe factories. Of the re-
maining U.S. producers, the most marginal
couldn't possibly survive open world compe-
tition. Even the most productive would ben-
efit from protection. From the Carter Ad-
ministration they got temporary quotas on
imports from Taiwan and Korea. briefly
halting the industry's decline. To the shoe
makers' dismay, President Reagan chose to
Interpret "temporary" to mean just that;
quotas were allowed to lapse in 1981.
Last year the International Trade Com-
mission, an independent Federal agency,
denied the shoe makers' petition for import
relief, citing the high profitability of the
more modern shoe companies. So the indus-
try went back to work the new-fashioned
way: lobbying Congress. That changed the
commission's mind, and for an obvious
reason. The shoe makers speak with a single
voice and can point to job losses in 48 states.
Thus their influence in politics far exceeds
their importance to the economy. The
Senate Finance Committee insisted that the
Trade Commission reconsider.
This time around the commissioners voted
4 to 1 for a plan that would limit imports to
60 percent of the market saving an estimat-
ed 26,000 jobs. By the reckoning of the one
dissenting commissioner, that would cost
consumers $1.28 billion a year, three times
the wages of those 26,000 workers.
To resist, President Reagan may need
more than arguments. Though plainly de-
voted to free trade, he has already yielded
expensive import relief to the clothing, steel
and motorcycle industries. A nation benefit-
ing from open trade needs to offer some-
thing better than protectionism to workers
and communities caught in the tides of in-
dustrial change. But that Is a policy prob-
lem that Washington has never taken seri-
from the New York Times, appropriately ously.
titled, "The Shoe Tax Beckons." Although
the quotas would be aimed at protecting LET'S IMPROVE OUR COUNTER-
the domestic shoe industry, they would be INTELLIGENCE CAPABILITY
doing so by in effect adding an extra tax to
the current price of shoes. The article fol-
lows.
THx SHox TAx BscaoNs
The U.S. International Trade Commis-
sion, yielding to pressure, recommends
quotas that would reduce imports of shoes
sharply and drive up their price. President
Reagan must now decide whether consum-
ers should finance this remedy, saving
American jobs at an annual cost of $50,000
each.
HON. WM. S. BROOMFIELD
Or MICHIGAN
IN THE HOUSE OF REPRESENTATIVES
Wednesday, September 4, 1985
Mr. BROOMFIELD. Mr. Speaker, our
Government must do more to expand and
professionalize our Nation's counterintelli.
gence programs. Congress has been sup-
this effort and has made addi-
portive of
Shoes offer a model study in what's wrong
Shoes
protectionism, and why it's so hard to tional resources available. Given the dra-
matic rise in espionage directed against our
stop.
Manufacturing inexpensive shoes requires Government and the private sector, much
only simple machinery and abundant low- more needs to be done to counter this
cost labor. That is why Brazil. South Korea, growing threat to America's security. I
United States. Their competition has forced colleagues in the House.
American manufacturers to retrench, clos- While all Americans are both worried
ing two-thirds of their plants in the last 15 and disturbed about the recent Walker spy
years. Many of the remaining plants are cage, it is important to realize that our
profitable only because they produce high- Government can do more to limit the
quality shoes, whose style is more important
than price and whose main competition spying activities of foreign intelligence
comes from high-cost factories in Europe. services in this country. It is incredulous
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,h
E 3846 C30NGRFSSIONAi. RECORD '` ~ oiar of ~'' '~to ber4, 1985
that the Federd Sure" of Iavadigation, out to work for other they He cited recent reports of bugged type-
the aeeacy responsible for ceuwtesintelli- may have fuwed*ated or whose operations writers to the V.d. >smbsssy in Moscow and
gsooe ope racism M Yne Unites States. is they may have challenged. The result. the hiring Of fardgn Personnel in the s m-
unievmarmed in the evantetitntlelligence Wallop said. is a too casual effort, in which bars7. -rho 800013 (emplo WI haW the
the tough questions we not asked about the run of the first five tiooas of oar essbsssy In
area. I understand that the eon deresplo- credibility of agents, operation or even Moscow.' he said.' Itls ridiculmm"
nage eapa6311ties of other agencies In our technics] systems. Hamilton said, "The Soviets do have ex-
Government could be upgraded with the in. Although few others are so critical. inter. traordtnary technical *11k to penetrate our
troduction of more resources to include sd. views with current and former intelligence embassies and secure buildings and a Pin-
ditional personnel specializing in this ha- officials suggest that the Reagan adndnh- ton guard from the local plant lust Isn't
area tratioa's strong words shout counterintelli- aware of what ties up against. Training and
p A key donut of this question is Smiting gence have often been matched only by skins are critical. People have to be schooled
the number of foreign intelligence opera. half-stepL in the techniques of modern espionage."
President Reagan said In a radio speech In The Senate Intelligence committee, for ex-
tives in the United States. While it is possl? June that "we've developed a riot of things ample, reported earlier this year that a
ble for the FBI to monitor the movements to be accomplished is the counterintellt- Soviet facility at (lien Cove. N.Y.. Is be-
of some Soviet intelligence personnel as- gene and security areas-' He has signed Hewed to be intercepting so many U.B. tele-
signed to their Embassy in Washington. two secret directives to stuft and act on the phone and telex messages that it requires
hundreds of Soviet personnel assigned to counterintelligence puob]e . but little of the shipment of tons of material to Moscow
the United Nation's Secretariat in New substance has been accomplished because of each year. The National Security Agency
bureaucratic resistanm several sources said has embarked on a major program to pro-
'
York have free seem to ai! Snares and A separate directive to revamp personnel se?
cities in the United States. Among United eurity policies has been langulshint without
Nations employees, the large Soviet delega- action for more than It year.
tion has the reputation of not doing much agFts~ho are rem counterintelligence
FBI ~neaUy official United Nations work. They appsr- speed of Plonage operations in the United States-
ing around the e United States tea literally al-? has been added to recent budgets. but only
ng ar over the objections of admintstrattoa budget
phoning up saluadde intelligence Informs. officers. There are now about 1.200 CI
tion. It is understood that the Soviets cal- agents in the FBI, sources said. But they are
left so mach iadorsnation that they tuve still outnumbered. and squads of inexpert-
real difficulties in sorting, processing and eased clerks have been used for years to
collating much of It. Fortunately, Congress help keep track of potential foreign agents
is moving ahead and passing legislation de. to at lust four major cities.
signed to limit the number of Soviets who ntnistraUsin spokeesnnel declined to
are assigned to their Esabassy and to their speak on the record about the counterintel-
U.N. delegation. ligence issue. But several members of Con-
(D-
With those aomcerns in mind, I commend grew did. Rep. Lee Hamilton C mmi. chat
n
man of the permanent Select Committee o n
the following article to my colleagues in Intelligence, said 'sometimes It takes a
the House. Obviously, we cannot do enough strong blow across the snout," such is the
to protect America's security. The time for Walker caw, to to focus get one a administration problem. -
clans. and
action is now. clans, including myself. are responding to
Concanse AGscxns C3.ssa Ovxs it." he said.
CI The broad definition of counterintelli-
u.nwiu EMS CA araaursxxArlou srPoxt's Bence means protecting the nation's docu-
ments. communications and secret facilities
WE!-x from penetration. To most people. however,
(By Charles Babcock) ncutuiterintelliffence means the otuff of spy
ovels, the American agent trying to stop
the spring of 1 1984, Son ilimte the KGB from recruMug a U.S. spy or
Wallop W rya) received a spy In place.
naming him an "honorary ary aIntelligence a na te certtificate The main responsibility Is split between
gence specialist" . The e Inthe was Central
said ta to be in re the CIA. which keeps track of foreign Intel-
nition .T his award efforts to establish ligence agents overseas, and the FBI, which
notion tonamous of career counterintish tea llig semenence - does the same in the United States.
(13-
(CI) specialists lore ag Hamilton and Sen. Patrick J. Leahy (1}
(CI) then to cht the heairmaaenof the Senate In. Vt), vice chairman of the Select Coomlittee
Wallop,
tellince budget subcommittee, , was neither as on Intelligence. said long-term solutions are
honooreed rd mar required, In addition to the increased use of
hon amused.
"The CIA ridiculed the career specialist polygraphs and imposing the death penalty
by giving me the award." he said in an Inter- on military personnel for peacetime espio-
view. "It was designed In total cynicism, tinge, the two measures passed by Congress
with little boys laughing behind doors" so far.
So he wrote, and Congress approved, Ian- Hamilton said the least expensive and
guage in the classified intelligence agencies' most Instant step to protect national se-
authorization bill report for fiscal 1985 -re- ciets would be enforcing the "need to know"
qulring the CIA to reestablish Cl as a career policy. "A security clearance shouldn't enti-
service. It still has not been done, he and tle anyone to am anything. Someone should
it for his job "
d
f h
.
e nee
s
other tome sources say. have access only I
Doing something about counterintel.li? A theme in much of the criticism is that cause of the Angleton legacy. "IL was se
gence has been a hot topic since accusations counterintelligence is net viewed as a path easy for (DeputY CIA Director) John
in May that alleged spy John A. Walker Jr. to career promotion at the CIA or FBI, or McMahon to talk Bill Casey out of my idea
and others for years had passed D.S. Navy the State Department, where security has of multidisciplinary analysis on the basis of
long been a low priority. Jim Angleton. which was totally irrelevant.
secrets to the Soviets. To Wallop ann ctother Reg Dave McCurdy (D-Okla.), chairman To Bill's credit he later came around to the ctics Rea on th,e the soeci list" s man date r reflects oa a of the House intelligence oversight subcom- argument I was mating. But when it was
broader the "CI of commitment man mittee that has been holding closed hear- first presented Angleton was thrown up.*'
the fn's b coma protect to improving ims on counterintelligence, said he feels the The first Reagan presidential directive to
the nation's ability to protect secrets from biggest security problem is at the State De- take action an the Cl front was drafted by
fo...This hagents country." Wallop He said CIA Director William J. the National Security Council staff in 1981.
bias virtual- part
iysero counterintelligence ence capability.*' p. apability... Casey had accepted a recommendation by But some senior career intelligence officials
Be argued that the CIA's counterinteTh- an internal CIA commission to give more In- lobbied to change the order to a study,
gence system is Inadequate because the offi- dependence to the CI staff there. "It's fine- sources said
cep's now working in it will someday rotate tuning at CIA," McCurdy said. "It's trying NSA, which intercepts foreign communi-
to stop a flood at State." cations and attempts to break the coded
s
vide more scrambler phones for the nation
military and intelligence communications
systems.
Rep. Andy Ireland also a member
of the House committee. blamed the lack of
concerted action on "bureaucratic inertia
Sometimes there are no many facets of a
problem people are mesmerized Into doing
nothing."
The administration's uneven record on
counterintelligence seems. at least In part.
the result of longstanding and deeply felt
differences about the best way to counter
foreign spying here and abroad
Melvin Beck. a CIA agent who shadowed
KGB agents in Havana and Mexico City in
the 1960s and has written a book about it.
said he thought the experience was ungla-
morous and silly. Installing a microphone In
a KGB officer's apartment resulted only in
hours of tapes about his family life, not his
spying. he said. "It's all a big game for both
sides."
Counterintelligence is also an emotional
issue because it amounts at times to spying
on colleagues to a secret world where rela-
tionships must be based an trust. Mention
of the name James J. Angleton, deposed a
decade ago as chief of the CIA's counterin-
telligence staff, still generates controversy
because of accusations that he unfairly
wrecked the careers at some CIA officers he
suspected of being Soviet moles.
In 1980. then-Director Stanfield Turner
convinced Congress to approve a special
fund to compensate CIA officers considered
victimized by Angleton. Angleton supporters
argue that any steps he recommended were
approved by his superiors.
Wallop and others say an environment
must be created in which intelligence infor-
mation can be challenged and all potential
security risks assessed. "There's an Inherent
dislike on the part of Intelligence profes-
sionals to be second-guessed." Wallop said.
adding that the CIA needs "the skeptical
guy on the block."
Wallop said his ideas for changing coun-
terintelligence at the CIA weren't easy to
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September 4, 1985 CC GRESSIONAL RECORD - Extensio-.
messages of other nations, opposed sugges-
tions that It had not rigorously addressed
the possibility the Soviets were passing false
Information through Its t cbnk al collection
4ystema NSAs reluctance saw come about
because billions of dollars and careers are
invested in U.S. technical aystesos, Wallop
said.
When the study was completed, a new
action order was dratted. As a result, a new
national intelligence officer for deception
was created in late 1993. A former head of
the CIA's overhead photo interpretation
center. R.P. (Hap) Hazzard, was picked for
the fob. But executive branch and congres.
sfonal sources said that little else was done.
When the directives failed to get much
action;, Wallop led the fight to write part of
the counterintelligence agenda into the
fiscal 1985 Intelligence authorization bill.
Besides the Cl career specialty. he got the
Votes to order the agencies to set up units to
conduct 'Multidisciplinary counterintelli-
gence atrslyais "
Usually in *ntelligenoe work, an intercept-
ad communication or agent report that
tends to confirm something in satellite pho-
tography would be taken as corroboration
and, the more varied the sources, the more
credence the conclusion would be given. The
multidisciplinary counterintelligence ap-
proach would look at the same material for
signs that it bad been intentionally planted.
One Intelligence official Lmiliar with the
idea said the CIA does make a good-faith
effort to look for deception but often can't
find the evidence "Some things you just
have to believe or you will put a caveat on
everything you sty and then you might as
well go out of business," be said
Wallop said, The two things in the '85
budget. the career slot and the multidiscipli-
nary analysis are still not effective
creations ... To date the effort has been
accommodation rather than commitment. It
simply cannot succeed as an accommoda-
tion."
Wallop added that recent congressional
attempts to strengthen counterintelligence
"are literally cosmetic, absent a amore seri-
ous effort. The death penalty is not a ootm-
terintelti?enee policy. It can clearly be
useful as a deterrent and It satisfies the na-
tional mood to be outraged ... But It still
isn't at the core of the problem."
The best way to aid the FBI is not simply
to increase the number of counterintelli-
gence agents, several experts agreed, but to
try to shrink the problem by cutting the
number of Soviets in this country or putting
greater restrictions on their travel.
An amendment sponsored by Leahy and
Sen_ William S. Cohen (R-Maine) to snake
Soviet and U.S. diplomatic missions more
equal in size was passed by Congress late
last week. So was a proposal by Sen. William
V. Roth Jr. (R-Del) to limit the travel of
Soviet nationals who work for the U.N. sec-
retariat in New York.
Roth, a member of the intelligence com-
HON. ROY DYSON
OF auaTl.A7ro
IP THE HOUSE OF RETR=SffiRATIVES
Wednesday, September d, 1985
Mr. DYSON. Mr. Speaker, the following
article appeared In the News American no
Monday. July 29. 1985. 1 tiled it is worth re-
peating.
At first blush the Senate's proposal to
Impose a $5 per barrel tax on imported oil
sounds like a great revenue raiser--and a
way to reduce the national deficit. Its esti-
mated that the fee and the resultant In-
creased costs on refined products would
yield about $20 billion over the next three
years.
Right away there Is a problem with the
White House, because President Reagan
still is Insisting that the way to cut the defi-
cits Is not to raise taxes but to reduce feder-
al spending. The president hasn't reacted to
the Senate's proposal so far, but a senior
White House official said It would take "a
big horse pill to get him to swallow this.
But the Senate's proposal has a number
of economists concerned about the overall
negative impact on the economy.
For one thing, some economists claim.
the higher tax on energy would affect in-
dustry as well as motorists and bomeown-
en, and there would be a resultant slower
growth in the gross national product., off-
setting much of the gain from the increased
taxes. Also, oil prices have come down, and
If they come down further inflation likely
would fall and real economic growth would
increase. Faster growth would in turn In-
crease Federal revenues.
There is a further concern that with the
$5 fee increasing the price of crude oil and
natural gas in the United States but not in
other countries the domestic oil industry
would be placed in an unfavorable competi.
tive position with other parts of the world.
Other economists have found these argu-
ments, debatable, but the point is that the
Senate, in what appeared to be an easy way
to raise revenues. has opened by an eco-
nomic Pandora's Box.
It may be President Reagan will reject
the proposal outright. But if he doesn't it
would behoove the Senate to take a far
deeper look into the possible results before
going ahead.
HIGH TECHNOLOGY ACTIVE
BUSINESS ACT OF 1985
HON. FORTNEY H. (PETE) STARK
Or cALrloaxIa
IN THE HOUSE OF REPRESENTATIVES
mittee, said that with 4.3 million Americans Wednesday, September 4, 1985
with security clearances "the best choke
point is on the other side-better control of Mr. STARK Mr. Speaker, on High Tech-
those on the Soviet Ode." Be noted that the July Bl. 19ti5. I Introduced the High Tech-
committee issued a report In May charging aology Active Business Act of 1985, which
that 200 of the 800 Soviet U.N. employees was designed to eliminate problems associ-
were intelligence officers. sled with the imposition of personal hold-
"The good news," Leahy said. "is that as a irtg company tax on small software eompa-
rault of the Walker case and others, people riles. Because of the interest that this legis-
are actually focusing on this and the admin- ration has generated, I am printing in the
istration and CoWeas will look for long- RsCORD a detailed description of that legis-
term solutions." _ lation.
J Remarks E 3847
Dernnsa DzsarrrrIoo or THE "Hscia
Tsxaneot.ocy Ac?rvtc Btrsnefa Acr or 1985"
1. Treatment for Personal Holding Compa-
ny Tax Purposes of Computer Software
Royalties Derived by Active Businesses (Sec.
t of the Act).
A. Basic Problem: Imposition of the Per-
sona] Holding Company Penalty Tax on
Closely-Held Software Companies.
The basic problem to that small software
development companies often possess the
characteristics that can trigger application
of the personal holding company penalty
tax provisions
(i) The stock of the company is generally
held by relatively few shareholders who
participate directly in the software develop-
ment; and
(ii) Once developed. the corporation's soft-
ware product Is transferred to others by
means of a license to a particular computer
manufacturer or other customer or via a so-
called "box-top" license to the public (under
which the retail customer agrees to the li-
cense merely by opening the wrapper of the
software package). The use of a license is
necessary to protect the developer's proprie-
tary Interest In the software. This form of
transfer has been viewed by the I.R.S. as
giving rise, at least In many cases. to passive
royalty income deemed to be personal hold-
ing company Income. See Private Letter
Ruling 8450025 (September 7, 1984). Howev-
er. these companies clearly are engaging in
active, ongoing business activities, including
the development of new and improved soft-
ware and maintenance activities with re-
spect to existing software products.
The personal holding company penalty
tax provisions were adopted to prevent the
Incorporation of passive Investment activi-
ties at a time when corporate tax rates were
significantly lower than the top individual
rates. Accordingly, the application of the
personal holding company provisions to
Software development companies conduct-
ing substantial active, ongoing business op-
erations produces an unintended and ex-
tremely harsh result.
B. Exclusion for Computer Software Roy-
alties Derived by an Active Business.
The Act adds a new exclusion from the
definition of personal holding company
income for computer software royalties that
are derived by the corporation from the
active conduct of a trade or business.
C. Standard for Computer Software Roy-
alties from an Active Business.
For purposes of the new exclusion, com-
puter software royalties will be treated as
derived from the active conduct of a trade
or business if the corporation satisfied the
following objective tests.
(1) The royalties must be attributable to
computer software that has been.
(a) Developed, manufactured, or produced
(in whole or substantial part) by the corpo-
ration in connection with a trade or busi-
ness; or
"Developed, manufactured, or produced..
is intended to include software that has
been created by the corporation and soft-
ware that has been purchased from another
person for inclusion in a software or com-
bined hardware-software product of the cor-
poration.
"In connection with a trade or business" is
intended to mean software that the corpor-
tion has developed or acquired for nee in a
present or future business, so as to include
software that has been developed during the
corporation's start-up phase.
"Corporation (or Its predecessor)" is in-
tended to reach the case in which the soft-
ware is developed by a partnership that con-
verts Into a corporation once development
has been completed and marketing is to
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