The stream of cases challenging disallowance of research tax credits continues in the Tax Court with Phoenix Design Group, Inc. v. Commissioner. The taxpayer in Phoenix Design designs mechanical, electrical, and plumbing...more
Key Takeaways -
..The Seventh Circuit torpedoed a taxpayer’s research tax credits for two watercrafts.
..The decision creates confusion about how a taxpayer should document research activities and arguably undermines...more
The IRS issued Interim Guidance that likely will increase the expense and burden of filing research credit refund claims. Research credits in original returns are not affected by the Interim Guidance....more
On October 15, 2021, the IRS published Information Release 2021-203, based on Memorandum 20214101F (the "Memorandum") prepared by Field Attorneys in the Office of Chief Counsel, setting out a detailed procedure requiring...more
In two recent cases, the IRS has tried to defeat research credit refund claims on procedural grounds, rather than simply litigating whether the substantive nature of the asserted research meets the requirements of section 41...more
8/6/2021
/ Audits ,
Failure To State A Claim ,
Internal Revenue Code (IRC) ,
IRS ,
Pending Legislation ,
Research and Development ,
SBA ,
Scientific Research ,
Small Business ,
Tax Credits ,
Tax Deductions ,
Tax Refunds
To claim federal income tax credits for a research project, a taxpayer must prove that the project satisfies each prong of a four-part test. In IRS Field Attorney Advisory 20212501F (June 25, 2021), the Large Business and...more
In Audio Technica U.S., Inc. v. United States, 2020 WL 3481702 (6th Cir. 2020), the Sixth Circuit has made clear that calculation of the federal income tax credit for increasing research activities may require a taxpayer...more
The IRS Large Business and International Division ("LB&I") announced a campaign on February 27, 2020, to examine taxpayers' returns claiming income tax credits and deductions for research expenditures under IRC Sections 41...more
A taxpayer may claim a credit against its federal income tax liability for research expenses paid or incurred during the tax year.
The definitions of research expenses for financial reporting purposes and federal income...more
All congressional committees that have issued explanations of the pending Tax Cuts and Jobs Act may not be speaking with one voice about supporting the federal income tax credit for research expenses. That is cause for...more