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R&D - What Qualifies as Research?

To be eligible for the research credit, a business must have engaged in “qualified” research activities. To be considered “qualified,” activities must meet the following four-factor test:

1. The purpose must be to create new (or improve existing) functionality, performance, reliability or quality of a product, process, technique, invention, formula or computer software that will be sold or used in your trade or business.

2. There must be an intention to eliminate uncertainty.

3. There must be a process of experimentation. In other words, there must be a trial-and-error process.

4. The process of experimentation must fundamentally rely on principles of physical or biological science, engineering or computer science.

Expenses that qualify for the credit include wages for time spent engaging in supporting, supervising or performing qualified research, supplies consumed in the process of experimentation, and 65% of any contracted outside research expenses.

Your advisor can also answer any additional questions you may have about claiming the research credit.




R&D - What Qualifies as Research?

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Brian is an experienced tax professional who devotes his professional time to structuring tax strategies in the areas of compliance, consulting, planning, and transactional work. He works closely with a broad range of high-net-worth individuals and privately owned commercial businesses, specializing in the areas of energy, financial institutions, professional services, and real estate, and serves as the tax practice leader for our manufacturing niche. Brian joined Lumsden McCormick in 2006 as a staff accountant; he was named partner in 2018.


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