Geosyntec Consultants, Inc. v. United States (2015)

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Main Issue:

  • Funded Research


  • Taxpayer claimed the research credit for client projects related to environmental and geological infrastructure consulting and engineering
  • Taxpayer claimed research expenses associated with both fixed-price and cost-plus contracts
  • The Appellate Court allowed the fixed-price contracts but denied the cost-plus contracts


  • Cost-Plus contracts do not qualify
  • Fixed-price contracts may qualify for the credit as long as the taxpayer bears the economic risk for the research (both costs and profit)

Take-Away Point:

  • The taxpayer must demonstrate that progress payments under a fixed-price contract are “contingent on the success of the research”
  • The Fairchild case is still the seminal case regarding fixed-price contracts and should be referenced when analyzing contract language

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