Research and development IRS tax credit audit risk
If you are concerned about the IRS auditing you for taking research and development tax credits, then, follow the pointers below:
1. There must be a process of experimentation that is well established and documented! This is the main objective of the IRS audit. They need to see how you went through the experimentation of the test. Specifically, they need to see the process and how you developed the business component.
2. Pass the test in section 174 – A taxpayer may treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses that are not chargeable to the capital account.
3. It must be associated with a business component
4. That you are discovering something technological in nature
Research and development IRS tax credit audit risk
