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R&D tax credits were enacted to stimulate innovation and research investment in the United States. The stimulus provides material non-dilutive capital to companies that improves their cash flow through reduced federal and state taxes. Furthermore, companies can claim R&D tax credits each year, thus creating a significant reduction to future years’ federal and state tax […]

For United States federal R&D tax credit calculations, there are two methods available to taxpayers – the regular credit (RC) calculation method and the alternative simplified credit (ASC) calculation method. Taxpayers are allowed to calculate the credit using both methods, then select whichever method provides the better result. The value of the R&D tax credit […]

Taxpayers are allowed to file amended returns to reflect any changes or omissions from the original return if the amended return is filed within the three-year statute of limitations. Amended tax returns are an effective tool for capturing overlooked credits from prior years. There are many reasons a company, or individual, may decide to file […]

To stimulate research investment in the United States, Congress initially provisioned a general business tax credit under Internal Revenue Code section 41 in conjunction with The Economic Recovery Tax Act of 1981. Although the most substantial investment in research and development is a company’s people (and subsequently their wages), the supplies they use to create, […]

A contract research expense is paid or incurred for the performance of qualified research to the extent it is paid or incurred pursuant to an agreement that (i) is entered into prior to the performance of the qualified research, (ii) provides research be performed on behalf of the taxpayer (taxpayer retains substantial rights to the […]

Taxpayers must maintain and document base period detail for R&D credit calculations In the case of Research, Inc. v. United States of America, the court held Research, Inc. was not entitled to additional R&D tax credits for its tax year ending September 20, 1985, due to failure to accurately reflect its base period qualified research […]