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Past Event
14 March 2017


  • William A. Schmalzl
    T +1 312 701 7225

Sustaining Your Research Credit Cost Allocations: Making the Most of What You Have

Disputes over research credit claims typically involve one (or both) of two issues: whether the taxpayer’s activity is qualified research and whether the taxpayer appropriately allocated expenses to its qualifying research activities. The cost allocation issue is particularly problematic given the complete lack of guidance in the legislative history of section 41 regarding which allocation systems are permissible. Adding to this uncertainty is the fact that the requirements of the credit do not align well with accounting for general financial purposes. Many expenses that are not research expenses for financial accounting purposes will fall within the scope of the research credit for tax purposes. Conversely, even where a cost center clearly relates to research, portions of those costs will fail to qualify for purposes of section 41. As a result, establishing the appropriate costs has been a major issue in litigated cases. This webinar will address how to use the tools you have available to reach the optimal result.

Focusing on ways to improve your systems to help you defend your research credit claim during audit, Bill Schmalzl and Mike Kaupa will discuss:

  • The typical methods used to track qualified wages for the research credit
  • IRS challenges to these methods and possible responses
  • Issues that can arise in determining costs related to supplies and contract research activities

As discussed during the webinar, more information on research documentation can be found at the following link:

Re-engineering Your Documentation Collection Process for the Research Credit.

CLE is not available when viewing a recording of this program. In order to receive credit you must have attended the live webinar program.


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