Research Tax Credit
The research tax credit provides a significant incentive to engage in research activities.
It is one of the largest tax incentives provided by Congress.
For many taxpayers, the tax savings can often far exceed any other legitimate tax planning strategy.
About the R&D Tax Credit
The credit is not limited to taxpayers in the hi-tech or science industries. Taxpayers in just about any industry may qualify. This includes manufactures, consultants (such as engineers or architects), or companies with in-house computer staff.
The calculation for the credit is complicated. Wages, contract costs, supply costs, and certain computer rental costs can be included as qualified research expenses or QREs. The taxpayers gross receipts are also factored into the computation. The formula then compares these amounts for the current tax year to those for base years.
Generally, activities to design a product or process can qualify. Congress has added a number of requirements and limitations to try to clarify which design work qualifies.
The IRS’s Aggressive Approach to Research Tax Credits
The credit has also generated quite a bit of controversy between the IRS and taxpayers.
The IRS frequently audits and litigates research tax credits. This is evidenced by the growing body of court cases for research credits.
Here are a few examples:
- Research Does Not Have to Be New to the World
- Gross Receipts from CFCs Excluded in Computing Research Tax Credit
- Ship Designs Qualify for the Research Tax Credit
- Revisiting Supply Expenses for the Research Tax Credit
- Foreign Branch Income is Gross Receipts for Research Tax Credit
- Research Was Not Routine, But Compensation Was Excessive
- Wages for Research Were Not Reasonable
- Taxpayer Can Pick & Choose Between Regulations
- Government Limits on Disclosing Information from Research Tax Credit Audit
We know these cases well.
Defending Your R&E Tax Credits
We help clients defend their research tax credits. This includes helping with IRS and state audits, appeals and litigation for research tax credits.
We have defended hundreds of research tax credits.
If you have taken a research tax credit and the IRS is auditing your return, we want to hear from you.
Call us at research tax credit case.or schedule an appointment to discuss your
R&D Tax Credit Articles
More articles about the research tax credit.