Discussion Archives:Credit for Increasing Research

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Discussion Forum Index --> Advanced Tax Questions --> Credit for Increasing Research

Discussion Forum Index --> Tax Questions --> Credit for Increasing Research

Mothero3 (talk|edits) said:

17 January 2011
I do the accounting for a small company developing a vaccine. Most of the R&D expenses are covered by federal grants, but there are some R&D expenses paid by us. We are operating at a loss and don't know if we will ever have enough profit to use our NOLs and credits before we are sold or a similar event happens. Therefore we have decided to take a chance at internally calculating this credit since the cost of hiring out may never actually be equalized by any subsequent benefit. And we intend to be pretty conservative with this in mind.

I'm comfortable reading the code on this but it is still missing some specifics I am wondering about. As stated, "'Supplies' is tangible property other than..." Would that include the cost of rental of tangible property (for instance chemical tanks that hold our chemicals for processing materials)?

Also, how far is the net thrown over "contract research expenses"? We are a small company using contractors and consultants to do work that could otherwise be done by a paid employee. This gives us the flexibility to have the help when we need it, but not when we don't. Do these amounts paid to contractors and consultants for work that is in direct support of our research qualify as contract research expenses?

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