Federal Tax, Tax

New Qualifications for R&D Tax Credit Eligibility

The IRS recently issued guidance regarding what research activities conducted by a contractor are “unfunded activities” eligible for the research and development (R&D) tax credit. Section 41 research expenses above a certain base amount qualify for the credit. They can be incurred for in-house or contracted research. Research performed for a client under a contract is considered unfunded research when the amounts paid to the contractor under the contract are contingent on the success of the research and the contractor retains substantial rights to the research. Each project expense must be considered when determining whether research is funded or unfunded. (Field Attorney Advice 20223401F). Contact us with any questions. © 2022