Main Issue:
Process of Experimentation
Facts:
The taxpayer claimed the research credit for eight projects ranging from new products, process improvement, and machinery upgrades
The Court determined that none of the projects qualified
Conclusion:
The court found many of the projects failed multi-parts of the 4-part test.
Every project was found to fail the POE test
Reciting steps in a process does not explain how the process is scientific
Need a methodical plan involving a series of trials to test a hypothesis so that it constitutes an experimentation
Take-Away Point:
The taxpayer must demonstrate that there is a methodical process of experimentation and how it is used to test the hypothesis.
The court relied heavily on the UCC case.
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