The rules surrounding research and development (R&D) expenditures and credits have shifted dramatically in the last couple of years. There are now strict due diligence requirements that need to be met in order to claim the credit, and few of the credit providers are requesting and providing sufficient information to meet them.

To further muddy the mix, the accounting rules for expenditures have changed to where they must be amortized rather than deducted in the current year. Additionally, in some cases, Form 3115 must be filed to show a change of the accounting methods used. Now the IRS has come out with exemptions for Form 3115, but with a statement that will need to be attached to all tax returns that have R&D expenditures. 

Learning Objectives:

• Summarize the recent changes with R&D credits


• Determine what statements you need to attach and when


• Identify what is needed to meet the due diligence requirements