Companies that incur qualified R&D costs are eligible for a R&D tax credit, which could potentially save them thousands of dollars in annual state and federal taxes.
The R&D credit is based on four criteria:
- process of experimentation
- technological in nature
- qualified purpose
Companies that don’t perform an R&D tax credit study risk improperly calculating the credit and lacking sufficient documentation in the case of an IRS audit. The ASC 730 Safe Harbor Directive offers an opportunity to reduce this risk.
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