WENTWORTH, J.
This matter concerns Tell City Boatworks, Inc.s Motion to Strike the Report and Exclude the Testimony of John William Sullivan. Upon review, the Court denies Tell Citys Motion.
BACKGROUND
Tell City is a domestic corporation that designs and manufactures barges and other vessels. (See Jt. Stipulation of Facts (Second Stip) ¶¶ 1-4, 10 (filed 1/11/2019).) In 2015, Tell City filed an amended Indiana income tax return, claiming its work on six projects entitled it to both a qualified research expense credit (the QRE credit) and an income tax refund for 2010. (See Second Stip. ¶¶ 6, 29.) The Department subsequently determined that Tell City was not entitled to the QRE credit and denied Tell Citys refund claim. (See Second Stip. ¶¶ 7-8.)
On January 16, 2018, Tell City timely initiated an original tax appeal, claiming that the Departments final determination was erroneous. During the course of the litigation, the Department retained Robson Forensic, Inc. to investigate whether a process of experimentation would [have] be[en] necessary ... in order for [Tell City] to complete the six projects at issue. (See Petr Mem. Supp. Mot. Strike Report & Exclude Test. John William Sullivan (Petr Br.), Ex. A at 1.) Thereafter, Robson Foresnics employee, John William Sullivan, investigated the matter and prepared a report. (See Petr Br., Ex. A.) (See also Respt Resp. Oppn Petr Mot. Strike & Exclude Test. John William Sullivan (Respt Resp. Br.), Ex. 2.)
On January 24, 2019, Tell City moved to strike Sullivans report and exclude his testimony. On February 18, 2019, after the matter was fully briefed, the Court took Tell Citys Motion under advisement. Additional facts will be supplied when necessary.
LAW AND ANALYSIS
In its Motion, Tell City claims that Sullivans report and testimony are inadmissible for three interrelated reasons regarding their overall lack of relevancy and credibility. (See generally Petr Mot. Strike Report & Exclude Test. John William Sullivan (Petr Mot.).) In response, the Department maintains that Sullivans report and testimony are admissible because Tell Citys complaints simply go to the weight of the evidence, not its admissibility. (See generally Respt Resp. Br.)
1.
Tell City first maintains that Sullivans report and testimony are inadmissible because Sullivans opinions are exclusively based upon a defunct legal standard[:] the Discovery Rule. (Petr Br. at 4-11.) Tell City explains that [t]he Discovery Rule is an antiquated idea whereby a company would have to exceed, expand or refine the common knowledge of science in a given area to show qualified research was performed. (Petr Br. at 6 (footnote omitted).) Tell City contends that because the parties have previously stipulated that another standard applies, Sullivans report and testimony are not relevant, misleading, and potentially prejudicial. (See Petr Br., Ex. C.)
The parties arguments on the merits indicate that one of the issues before the Court involves whether Tell Citys activities constitute elements of a process of experimentation for purposes of IRC § 41 and the related Treasury Regulations. (See, e.g., Petr Br. at 8-11; Respt Resp. Br. at 4-9.) The resolution of that issue will depend on several factors. See, e.g., Treas. Reg. § 1.41-4(a)(3)(i) (2019) (implicating, for example, questions of whether Tell Citys activities were undertaken for the purpose of discovering information that is technological in nature[,] or were intended to eliminate uncertainty concerning the development or improvement of a business component (emphasis added) ).
The Treasury Regulations expressly provide, however, that a taxpayer does not need to show that it sought to obtain information that exceeded, expanded, or refined the common knowledge of science in the relevant field to meet the uncertainty requirement. See Treas. Reg. § 1.41-4(a)(3)(ii). Nonetheless, evidence of that type is not automatically irrelevant, misleading, or potentially prejudicial that would make it inadmissible. Indeed, other courts have considered similar evidence in determining whether a taxpayers activities were undertaken for the purpose of discovering technological information. Compare generally, e.g., Suder v. Commr, 108 T.C.M. (CCH) 354 (T.C. 2014)with Trinity Indus. Inc. v. United States, 757 F.3d 400 (5th Cir. 2014). The Court therefore finds that Tell City has not shown that Sullivans report and testimony are inadmissible on this basis.
2.
Next, Tell City maintains that Sullivans testimony regarding [its] compliance with inaccurate legal standards is inadmissible because it makes legal conclusions that invade[ ] the province of the court to determine the applicable law[.] (See Petr Br. at 11-12; Petr Reply [Respt Resp. Br.] (Petr Reply Br.) at 5-6.) Indiana Evidence Rule 704 generally allows opinions to embrace ultimate issues to be decided by the trier of fact, but prohibits opinions as to legal conclusions. See Ind. Evidence Rule 704. Sullivans report and testimony are based on his experience and expertise in the maritime industry and appear to provide opinions regarding Tell Citys activities in relation to the standards of practice in that field, not legal conclusions. (See Petr Br., Ex. A; Respt Resp. Br., Ex. 2.) Therefore, Tell City has not established that Sullivans testimony is inadmissible on this basis.
3.
Finally, Tell City claims that Rule 702 of the Federal Rules of Evidence precludes the admission of Sullivans report and testimony because: 1) Sullivan lacks sufficient facts, knowledge, background, or data to discuss the technical aspects of the design and construction of ships and barges[;] 2) Sullivans opinions are not the product of reliable principles or methods; and 3) Sullivan failed to apply the principles and methods reliably to the facts of the case. (See Petr Mot. at 2; Petr Br. at 12-25; Petr Reply Br. at 6-8.) The federal rules of evidence, however, do not govern the resolution of this issue because this case involves Indianas laws, and thus, Indianas rules of evidence. See, e.g., Malinski v. State, 794 N.E.2d 1071, 1084 (Ind. 2003) (explaining that the federal rules of evidence and federal case law may be helpful in analyzing Indiana Rule of Evidence 702(b), but they are not binding on state evidentiary law matters).
Indiana Rule of Evidence 702 provides:
(a) A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the experts scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue.
(b) Expert scientific testimony is admissible only if the court is satisfied that the expert testimony rests upon reliable scientific principles.
Ind. Evidence Rule 702. This Rule, among others, governs the admission of two types of expert evidence: 1) scientifically-based evidence; or 2) non-scientific evidence based on an experts specialized knowledge and experience. See Malinski, 794 N.E.2d at 1084-86. When expert evidence is based upon the experts skill or experience instead of the application of scientific principles, the proponent of the evidence must only demonstrate that the subject matter is related to some field beyond the knowledge of lay persons and that the witness possesses sufficient skill, knowledge or experience in the field to assist the trier of fact to understand the evidence or to determine a fact in issue. Norfolk S. Ry. Co. v. Estate of Wagers, 833 N.E.2d 93, 102 (Ind. Ct. App. 2005) (citation omitted), trans. denied.
Sullivan has a Bachelor of Science in Marine Engineering, he is a Licensed Chief Engineer and a Certified Marine Surveyor, and he has worked within the Maritime Industry for over 30-years in a variety of capacities. (See Respt Br., Ex. 1 at 5.) For instance, Sullivans curriculum vitae indicates that he has many years of experience in shipyards worldwide as a senior level manager on new builds from the design phase through delivery, commissioning, and operations[.] (Respt Br., Ex. 1 at 4.) Moreover, his report indicates that his opinions were based on his review of a variety of materials concerning Tell City and the six projects at issue. (See generally Petr Br., Ex. A; Respt Resp. Br., Ex. 2.) Sullivans knowledge, skill, experience, and training regarding designing and building vessels exceeds that of lay persons, and thus, the Court finds it to be reasonable that his report and testimony will assist the Court in understanding the evidence. Consequently, Tell City has not shown Sullivans report should be stricken or his testimony excluded pursuant to Indiana Evidence Rule 702.
CONCLUSION
For the foregoing reasons, Tell Citys Motion to Strike the Report and Exclude the Testimony of John William Sullivan is DENIED.
SO ORDERED this 18th day of April 2019.
Indiana incorporates certain provisions of the Internal Revenue Code and related Treasury Regulations for purposes of determining whether a taxpayer qualifies for the QRE credit. See, e.g. Ind. Code § 6-3.1-4-1 (2019).