Siemer Milling Company v. Comm. (2019)

Main Issue:

• Process of Experimentation

Facts:

• Taxpayer claimed the research credit for eight projects ranging from new products, process improvement, and machinery upgrades
• The Court determined that none of the project qualified

Conclusion:

• Court found many of the projects failing 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.
• Court relied heavily on the UCC case.