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The US Research and Development Tax Credit

Innovation, Research and Development

The U.S. Research and Development (R&D) tax credit was introduced in 1981 but only became permanent in 2016.
Here we examine the intricacies of the program and its benefit to businesses. 

Table of Contents

How to navigate: Click on the name of a section to be taken to that area of the page.

Background

In 1981, the US Congress passed The Economic Recovery Tax Act (ERTA). Embedded in the Act was the Credit for Increasing Research Activities (CIRA). This credit was designed to reverse the decline in research spending and, in the context of the larger ERTA, stimulate economic growth in industries such as automaking, which was seen to have fallen behind foreign competitors. The R&D credit extension, part of the Protecting Americans from Tax Hikes (PATH) Act of 2015, was signed into law by the President on Dec. 18, 2016, and became permanent thereafter.1

The credit rewards “qualified research,” which generally constitutes private sector or commercially driven development efforts intended to yield innovation within a scientific or technological field. Taxpayers and the IRS have had divergent opinions on what constitutes as being “qualified research.” This had lead to revisions to the Tax Code and related Treasury Board documents. Also, a large body of case law has further complicated matters. Thus, applying for the credit is not always cut and dry.

The research tax credit is often thought of as a single tax credit, instead it is four distinct tax credits. These include:

  • basic research tax credit.
  • regular research tax credit.
  • alternative simplified tax credit.
  • energy research tax credit.

For tax years ending prior to 2008, the research tax credit also included an alternative incremental research credit (AIRC), which is discussed in further detail later.

The energy research tax credit is worth “20 percent of the amounts paid or incurred by the taxpayer in carrying on any trade or business of the taxpayer during the taxable year (including as contributions) to an energy research consortium for energy research.”2

Four-Part Test

According to the IRS’ Audit Techniques Guide,3 in order to qualify for the tax credit, research undertaken for the purpose of claiming the credit must be considered “qualified research.”

The term “qualified research” means research:

  • With respect to which expenditures may be treated as expenses under section 174, (also known as the section 174 test).
  • Which is undertaken for the purpose of discovering information which is technological in nature, (also known as the discovering technological information test).
  • The application of which is intended to be useful in the development of a new or improved business component of the taxpayer (also known as the business component test).
  • Substantially all of the activities of which constitute elements of a process of experimentation for a qualified purpose (also known as the process of experimentation test).

To qualify as “qualified research,” all the above four tests must be passed.

The Section 174 Test

Under Treasury Regulation section 1.174,4 the expenditure must:

  • Be incurred in connection with the taxpayer’s trade or business.
  • Represent a research and development cost in the experimental or laboratory sense.

Expenditures represent research and development costs in the experimental or laboratory sense if they are for activities intended to discover information that would eliminate uncertainty concerning the development or improvement of a product. Uncertainty exists if the information available to the taxpayer does not establish the capability or method for developing or improving the product or the appropriate design of the product.

Whether expenditures qualify as research or experimental expenditures depends on the nature of the activity to which the expenditures relate, not the nature of the product or improvement being developed or the level of technological advancement the product or improvement represents.

Expenditures for land and depreciable property cannot be claimed as section 174 expenses. However, in some cases, land depreciation CAN be claimed as a section 174 expense.5

Exclusions

According to the IRS,6 the following cannot be claimed for R&D expenditures, specifically under the Section 174 test:

  • Quality control testing.
  • Advertising or promotions.
  • Consumer surveys.
  • Efficiency surveys.
  • Management studies.
  • Research in connection with literary, historical, or similar projects.
  • The acquisition of another’s patent, model, production, or process.

Under section 41(d)(4)(E), no research credit is allowed for internal use software development except as provided by regulations. In essence, the software has to meet additional requirements, known as the three-part “high threshold of innovation test” to be considered for the tax credit.

High Threshold of Innovation Test

Under the regulations,7 software is developed by (or for the benefit of) the taxpayer primarily for internal use if the software is developed by the taxpayer for use in general and administrative functions that facilitate or support the conduct of the taxpayer’s trade or business. This can include, for example, software developed for human resources use.

To pass the “high threshold of innovation” test, the software must:

  • be innovative in that it is intended to result in a reduction of cost, improvement in speed, or other improvement which is substantial and economically significant.
  • involve significant economic risk in that the taxpayer commits substantial resources to the development of the software and there is substantial uncertainty, because of the technical risk, that such resources would be recovered within a reasonable period.
  • not be commercially available for use by the taxpayer.

It is not necessary to have a “revolutionary discovery” to qualify for the innovation portion of the test. The IRS also recently revised the regulations to clarify that the high-threshold-of-innovation test applies only to internal-use and dual-function software. Software that serves both general and administrative functions and other functions is called dual-function software.

The Discovering Technological Information Test

According to the IRS’ Audit Techniques Guide,8 in order to satisfy the technological in nature requirement for qualified research, the process of experimentation used to discover information must fundamentally rely on principles of the physical or biological sciences, engineering, or computer science. A taxpayer may employ existing technologies and may rely on existing principles of the physical or biological sciences, engineering, or computer science to satisfy this requirement.

Research is undertaken for the purpose of discovering information if it is intended to eliminate uncertainty concerning the development or improvement of a business component. Uncertainty exists if the information available to the taxpayer does not establish the capability or method for developing or improving the business component, or the appropriate design of the business component.

The final regulations state that the issuance of a patent by the Patent and Trademark Office under 35 USC sections 51 is conclusive evidence that a taxpayer has discovered information that is technological in nature that is intended to eliminate uncertainty concerning the development or improvement of a business component. This is known as the “patent safe-harbor”. However, patents are usually filed years after research has taken place. Also, the research must pass the other three tests in this section to qualify.

The Business Component Test

Again, according to the IRS’ Audit Techniques Guide,9 the taxpayer must intend to apply the information being discovered to develop a new or improved business component of the taxpayer. A business component is any product, process, computer software, technique, formula, or invention, which is to be held for sale, lease, license, or used in a trade or business of the taxpayer.

The Process of Experimentation Test

The IRS Audit Techniques Guide 10 notes that this requires that qualified research be research that is “substantially all of the activities of which constitute elements of a process of experimentation.” The final regulations clarify the requirement that a process of experimentation is a process designed to evaluate one or more alternatives to achieve a result where the capability or the method of achieving that result, or the appropriate design of that result, is uncertain as of the beginning of the taxpayer’s research activities.

In addition to requiring that the research be undertaken for the purpose of discovering information that is technological in nature, the taxpayer must:

  • Identify the uncertainty regarding the development or improvement of a business component that is the object of the taxpayer’s research activities.
  • Identify one or more alternatives intended to eliminate that uncertainty.
  • Identify and conduct a process of evaluating the alternatives.

Exclusions

The following activities are deemed to occur after the commencement of commercial production, and are excluded from being qualified research for this test:

  • Preproduction planning for a finished business component.
  • Tooling up for production.
  • Trial production runs.
  • Troubleshooting involving detecting faults in production equipment or processes.
  • Accumulating data relating to production processes.
  • Debugging flaws in a business component.

Expenses That Can Be Claimed

Expense are the sum of “in-house research expenses” and “contract research expenses.”

In-house Research Expenses

The IRS’ Audit Techniques Guide notes that In-house research expenses are defined as:11

  • any “wages” paid or incurred to an employee for “qualified services” performed by such employee.
  • any amount paid or incurred for “supplies” used in the conduct of “qualified research.”
  • under regulations prescribed by the Secretary, any amount paid or incurred to another person for the right to use computers in the conduct of qualified research.

Wages

Three types of employee wages can qualify for R&D expenditures:

  • Those employees who engage in qualified research.
  • Those employees who directly supervise qualified research.
  • Those employees who directly support qualified research.

Examples:

  • “Engaging in qualified research” would be a scientist conducting lab experiments.
  • “Direct supervision” would be a research scientist who directly supervises lab experiments, but does not actually perform them him or herself. This is NOT a higher-level manager to which first-level managers report.
  • “Direct support” would be a machinist who needs to machine a part of an experimental model used in qualified research. This does NOT include general and administrative services, or other services that only indirectly benefit qualified research.

Supplies

A “supply” means any tangible property used in qualified research other than:

  • Land or land improvements
  • Property that can depreciate.

Things that are not supplies include:

  • Costs for travel, meals or entertainment.
  • Telephone expenses of researchers.
  • Relocation or rental/lease expenses.
  • Professional dues or royalty/license expenses.

Again, to be a qualified research expense, a supply must be directly related to the performance of “qualified services.” Expenses for property used in general and administrative activities are not expenses for this purpose.

As the IRS Audit Techniques Guide says, “Supply QREs, in general, should represent a small portion of total QREs. When supply QREs are substantial, you should be alerted to the possible inclusion of capital or other ineligible expenses being claimed as QREs.”12

Contract Research Expenses

“Contract research expenses” are defined as 65 percent of any amount paid or incurred by the taxpayer to any person (other than an employee of the taxpayer) for qualified research.

Treasury Regulation section 1.41-2(e) provides a three-part test for determining if the payment is for the performance of qualified research where a third party performs the research for the taxpayer.

Such an expense is paid or incurred pursuant to an agreement (in writing or orally) only when:

  • It is entered into prior to the performance of qualified research.
  • Provides that research is performed on the taxpayer’s behalf.
  • Requires the taxpayer to bear the expense even if the research isn’t successful.

As the Audit Techniques Guide further notes:13

Qualified research is performed on behalf of the taxpayer if the taxpayer has a right to the research results. Qualified research can be performed on behalf of the taxpayer notwithstanding the fact that the taxpayer does not have exclusive rights to the results Also, if the expense is paid or incurred pursuant to an agreement under which payment is contingent on the success of the research, then the expense is considered paid for the product or result, rather than the performance of research, and the payment is not a qualified contract research expense.

When to Claim Expenditures

According to the IRS,14 taxpayers — particularly those who are in business for themselves — generally make the choice to deduct R&D expenditures in the first year they are incurred, rather than capitalizing them. However, if the taxpayer fails to choose the method such expenditures are deducted during the first taxable year, they cannot choose a method to deduct them in subsequent taxable years without obtaining the consent of the Commissioner of Internal Revenue.

How Expenditures are Calculated

The Research and Experimentation Tax Credit hinges on the quantification of eligible expenses during one of three possible base periods. The three base period calculation methods are referred to as the:

  • Traditional Credit Calculation.
  • Alternative Simplified Credit Calculation
  • Start-Up Credit Calculation.

Traditional Credit Calculation

The research credit 15 is an incremental credit that equals 20 percent of a taxpayer’s excess QREs (if any) for the taxable year over their base amount. The current carry-back is one year and carry-forward is 20 years. Simply put, a tax ‘carry forward’ is an IRS income tax rule that allows a taxpayer to save an unused deduction, credit or loss, and use it in a later year. A carry-back is an accounting technique with which a company retroactively applies net operating losses to a preceding year’s income in order to reduce tax liabilities present in that previous year.

In general, for tax years beginning after December 31, 1989, the base amount is computed by multiplying the taxpayer’s fixed-base percentage by its average annual gross receipts for the preceding four years.

A taxpayer’s fixed-base percentage is the percentage determined by taking aggregate qualified research expenditures (QREs) of the taxpayer for taxable years beginning after December 31, 1983, and before January 1, 1989, over aggregate gross receipts of the taxpayer for the same such taxable years.

The maximum fixed-base percentage is 16 percent.

In no event may the base amount be less than 50 percent of the QREs for the credit year.

Here is an illustration of this concept:16

Current Year QREs$125,000
1984–1988 aggregate QREs$250,000
Divided by: 1984–1988 aggregate gross receipts$1,000,000
Equals: Fixed-base percentage (FBP)25%
Lesser of FBP or 16%16%
Multiplied by: Average annual gross receipts previous four years$700,000
Equals: Base amount$112,000
Greater of base amount or 50% current QREs$112,000
Excess of current QREs over minimum base amount$13,000
Multiplied by 20% equals credit$2,600
Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.

For the years that it was available, the Alternative Incremental Research Credit (AIRC) 17 was equal to the percent of the taxpayer’s qualified research expenses in excess of the taxpayer’s average annual gross receipts (AAGR) for the previous four tax years. When taxpayers can no longer maintain or increase spending on qualified research relative to gross receipts, they would often transition to the AIRC. However, the AIRC was phased out for tax years beginning after December 31, 2008.

The percentage is equal to:18

  • 3% of QREs above 1% but less than 1.5% of AAGR.
  • 4% of QREs above 1.5% but less than 2.0% of AAGR.
  • 5% of QREs greater than 2% of AAGR.

Alternative Simplified Credit Calculation

This is the tax credit calculation that smaller companies tend to use. Since 2007, taxpayers have been able to elect the ASC,19 which equals 14 percent (for tax years beginning on or after Jan. 1, 2009, and 12 percent previously) of the QREs for the taxable year that exceed 50 percent of the average QREs for the three taxable years preceding the credit determination year.

If the taxpayer has no QREs in any one of the three preceding tax years, the ASC rate equals 6% of the QREs for the credit determination year. The election to claim the ASC must be made on the original tax return and cannot be made retroactively.

Current-year QREs$125,000
Less: Average QREs previous three years $100,000 x 50%$50,000
Difference$75,000
Multiplied by 14% equals credit$10,000
Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.

According to the IRS Audit Techniques Guide,20 a “start-up company” is generally defined as a company that did not have both gross receipts and QREs in at least three of the base period years, or the first taxable year in which there were both QREs and gross receipts begun after December 31, 1983. (The second provision did not take effect until July 1, 1996). For a start-up company, a fixed-base percentage of 3 percent is set.

Start-up Credit Calculation

The 3 percent start-up rate continues each of the first five years beginning after 1993. In years 6 through 9, a statutory fraction of the ratio between aggregate QREs and aggregate gross receipts is used to determine the start-up’s fixed-base percentage. Only years in which the taxpayer has QREs are counted in this computation.

Spun-off companies may or may not be considered start-up companies for purposes of computing the base amount. Their base year activities carry over with them. A taxpayer that is created as a result of a spin-off may refer to themselves as a start-up, but if it had the relevant base year QREs and gross receipts, then it will not be treated as a start-up company.

This is an illustration of a start-up credit given for the first five years.21

Current-year QREs$125,000
Fixed-base percentage3%
Lesser of FBP or 16%3%
Multiplied by: Average annual gross receipts previous four years$700,000
Equals: Base amount$21,000
Greater of base amount or 50% current QREs$62,500
Excess of current QREs over minimum base amount$62,500
Multiplied by 20% equals credit$12,500
Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.

The following is the tax credit given for year six:22

Current-year QREs$125,000
Aggregate QREs for years 4 and 5$100,000
Divided by: Years 4 and 5 aggregate gross receipts$400,000
Percentage of QREs/AGRs x 1/64.17%
Lesser of FBP or 16%4.17%
Multiplied by: Average annual gross receipts previous four years$700,000
Equals: Base amount$29,190
Greater of base amount or 50% current QREs$62,500
Excess of current QREs over minimum base amount$62,500
Multiplied by 20% equals credit$12,500
Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.

Special Rules

There are a few special rules associated with filing a tax credit:

The Consistency Requirement

QREs and gross receipts that are used for computing the fixed base percentage must be consistent with the qualified research expenses for the credit year. That is, the taxpayer must show consistency between the QREs in the credit year and its QREs during the base years, as well as consistency between gross receipts in the base years and the prior four years’ average. If an expense is not qualified in the current credit year, that expense must be removed from the base year.

This is to ensure that the amount of QREs that the taxpayer spent in a credit year is in relation to QREs in base years. Thus, spending more money on R&D that results in higher QREs after a period of time won’t typically reward you in the eyes of the IRS.

I.R.C. §280C Election

Taxpayers can avoid reducing the deduction for research expenses or the amount charged to a capital account by making an election under Sec. 280C(c)(3) to take a reduced research credit.23 This doesn’t really impact how much tax they would pay at the federal level if they’re already in a top tax bracket, but this election may help gain further deductions on state taxes (since state taxes use federal taxes as their starting point) — and that’s typically why taxpayers (companies) make the election.

This election must be made in the taxable year and must be made before the extended due date of that year’s tax return. Once made, the election is non-revocable.

Controlled Groups

A controlled group is any two or more corporations connected through stock ownership.24 Changes to tax law were made recently so that a taxpayer makes only one research tax credit calculation on a group basis, and then allocates the aggregate credit to each member in proportion to the qualified research expenses incurred by each member. Taxpayers are no longer required to do separate credit calculations for each member of the group, in addition to the overall group credit calculation.

Recordkeeping

According to the IRS Audit Techniques Guide,25 a taxpayer must retain records in sufficiently usable form and detail to substantiate that the expenditures claimed are eligible for the credit. Failure to maintain records in accordance with these rules is a basis for disallowing the credit.

Some examples of requested items are:

  • Taxpayer’s base amount and fixed base percentage calculations.
  • General info: chart of accounts, organization charts.
  • Acquisitions and dispositions from 1984 through the tax year under audit.
  • Accounting method: Are costs accumulated by department or by project?
  • Activities: What are they, and why are they eligible for the R&E credit?
  • Wages: Names, amounts, % of annual wages, departments, job titles and descriptions.
  • Supplies: Categories, how they tie in to general ledger, amounts by category.
  • Contracts: With whom, amounts, categories.

Changes that Happened When the Tax Credit Became Permanent

Under prior law, the R&D tax credit could only be used to offset regular tax;26 this rule limited many small to mid-sized businesses in their ability to use the credit if they were subject to the alternative minimum tax (AMT). This is especially true for many owners of pass-through entities. (Pass-through entities are sole proprietorships, partnerships, LLCs and S corporations, which are not subject to income tax. Rather, the individual who owns this companies is directly taxed.)

However, starting Jan. 1, 2016, “Eligible Small Businesses” were able to use the R&D tax credit to offset AMT. An Eligible Small Business is defined as a business with less than $50 million in average gross receipts for the three preceding years.27

In addition, “Qualified Small Businesses,” defined as a business with less than $5 million in annual gross receipts and having gross receipts for no more than five years, will now be able to use the R&D tax credit to offset the FICA employer portion of payroll tax. The amount of credit that can be used to offset payroll tax is capped at $250,000 for each eligible year.

The enhanced ability for small businesses to currently use the credit should result in more immediate cash benefits for many companies, particularly start-ups, because they will not have to wait until they generate taxable income to take advantage of the credit savings.28

 

Additional Sources

  1. KPMG. (2017.) Final regulations: Research credit for internal use software. (Accessed: August 15, 2017.) Retrieved from: https://home.kpmg.com/us/en/home/insights/2016/10/tnf-final-regulations-research-credit-internal-use-software.html.
  2. Henry, R. (n.d.) R&D Tax Credits: Sometimes Overlooked, But Quite Valuable to Oil and Gas Companies. (Accessed: August 15, 2017.) Retrieved from: http://www.weaver.com/sites/default/files/R&D%20Tax%20Credits%20-%20Sometimes%20overlooked%20but%20quite%20valuable%20to%20oil%20and%20gas%20companies%20021714.pdf.
  3. Research Tax Credit. (February 7, 2017.) R&D Tax Credit. (Accessed: August 15, 2017.) Retrieved from: www.technologytax.com/research-tax-credit/.
  4. “R&D Tax Credit Enhanced and Becomes Permanent.” (2016, December 30). EideBalley. Retrieved from http://www.eidebailly.com/insights/articles/rd-tax-credit-enhanced-and-becomes-permanent

Show 28 footnotes

  1.  EideBailley. (December 30, 2016.) R&D Tax Credit Enhanced and Becomes Permanent. (Accessed: August 15, 2017.) Retrieved from: http://www.eidebailly.com/insights/articles/rd-tax-credit-enhanced-and-becomes-permanent.
  2. Cornell Law School. (n.d.) 26 U.S. Code § 41 – Credit for increasing research activities. (Accessed: August 15, 2017.) Retrieved from: https://www.law.cornell.edu/uscode/text/26/41.
  3. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  4. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  5. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  6. IRS. (April 26, 2017.) Current Year Deduction of R&D Expenditures. (Accessed: August15, 2017.) Retrieved from: https://www.irs.gov/businesses/small-businesses-self-employed/current-year-deduction-of-research-development-expenditures.
  7. Nevius, A.M. (October 3, 2016.) Final Rules Allow Credit for Development of Internal-Use Software in Some Cases. The Tax Advisor. (Accessed: August 15, 2017.) Retrieved from: http://www.thetaxadviser.com/news/2016/oct/internal-use-software-tax-credit-201615291.html.
  8. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  9. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  10. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  11. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  12. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  13. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  14. IRS. (April 26, 2017.) Current Year Deduction of R&D Expenditures. (Accessed: August15, 2017.) Retrieved from: https://www.irs.gov/businesses/small-businesses-self-employed/current-year-deduction-of-research-development-expenditures.
  15. Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.
  16. Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.
  17. Research Tax Credit. (February 7, 2017.) Alternative Incremental Research Credit. (Accessed: August 15, 2017.) Retrieved from: http://www.technologytax.com/research-tax-credit/alternative-incremental-research-credit/.
  18. Research Tax Credit. (February 7, 2017.) Alternative Incremental Research Credit. (Accessed: August 15, 2017.) Retrieved from: http://www.technologytax.com/research-tax-credit/alternative-incremental-research-credit/.
  19. Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.
  20. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  21. Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.
  22. Karnis, D. (March 1, 2010.) How the R&D Tax Credit Is Calculated. Journal of Accountancy. (Accessed: August 15, 2017.) Retrieved from: http://www.journalofaccountancy.com/news/2010/mar/rdcredit.html.
  23. Maillet, K.A., McLean, V.A., Culp, D., Kachinsky, C. (June 1, 2008.). Reduced Credit for Increasing Research Activities. The Tax Advisor. (Accessed: August 15, 2017.) Retrieved from: http://www.thetaxadviser.com/issues/2008/jun/reducedcreditforincreasingresearchactivities.html.
  24. Click, D. (April 3, 2017.) IRS simplifies controlled group research credit allocation method. (Accessed: August 15, 2017.) Retrieved from: http://rsmus.com/what-we-do/services/tax/tax-alerts/irs-simplifies-controlled-group-research-credit-allocation-metho.html.
  25. IRS. (February 27, 2017.) Audit Techniques Guide: Credit for Increasing Research Activities. (Accessed: August 15, 2017.) Retrieved from: https://www.irs.gov/businesses/audit-techniques-guide-credit-for-increasing-research-activities-i-e-research-tax-credit-irc-41-table-of-contents.
  26.  EideBailley. (December 30, 2016.) R&D Tax Credit Enhanced and Becomes Permanent. (Accessed: August 15, 2017.) Retrieved from: http://www.eidebailly.com/insights/articles/rd-tax-credit-enhanced-and-becomes-permanent.
  27.  EideBailley. (December 30, 2016.) R&D Tax Credit Enhanced and Becomes Permanent. (Accessed: August 15, 2017.) Retrieved from: http://www.eidebailly.com/insights/articles/rd-tax-credit-enhanced-and-becomes-permanent.
  28.  EideBailley. (December 30, 2016.) R&D Tax Credit Enhanced and Becomes Permanent. (Accessed: August 15, 2017.) Retrieved from: http://www.eidebailly.com/insights/articles/rd-tax-credit-enhanced-and-becomes-permanent.

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