Tax News

CCH (cch.taxgroup.com) reports:

  A federal district court applied incorrect definitions for "discovering information" and "process of experimentation" in determining that several S corporations' projects did not involve qualified research for purposes of the research tax credit. The corporations relied on definitions contained in regulations adopted subsequent to the year at issue and those regulations expressly permitted taxpayers to rely on those provisions for prior years.

  While denying the credit, the trial court also stated that some of the corporations' activities may have constituted qualified research. Therefore, on remand, the trial court was required to apply the correct definitions to determine whether any qualified research occurred and, where records were inadequate, to estimate the expenses related to that research. Finally, the court was required to make factual determinations on whether a shareholder bonus was part of wages reasonably attributable to qualified research.

  Vacating and remanding a DC Tex. decision, 2008-2 USTC ¶50,583.

A.R. McFerrin, CA-5, 2009-1 USTC ¶50,430

Other References:

 
Code Sec. 41

  CCH Reference - 2009FED ¶4362.25

  CCH Reference - 2009FED ¶4362.33

 
Code Sec. 6001

  CCH Reference - 2009FED ¶35,111.35

  Tax Research Consultant

  CCH Reference - TRC ACCTNG: 3,166
CCH Reference - TRC BUSEXP: 54,158.05
CCH Reference - TRC BUSEXP: 54,158.10