A Missouri company that contracted with a third-party manufacturer to produce a prototype of a brain scanning device must pay Missouri sales and use tax on the transaction. Missouri tax law exempts from state sales and use tax “machinery, equipment, and materials used…in research and development related to manufacturing, processing, compounding, mining, or producing any product.” The brain scanning device is not a material. Materials were used to make the device. The device is also not machinery or equipment used in research and development related to manufacturing or producing a product. The device is the product, and is therefore subject to sales or use tax. The purchase of the prototype, even though it was being used to evaluate and refine the device, did not qualify for the research and development machinery exemption because it will not create or manufacture anything. (Letter Ruling No. LR 6791, Missouri Department of Revenue, July 22, 2011)