Accounting professor Tony Billings to be published in Tax Notes
Professor of Accounting Tony Billings, along with co-author Kyungjin Kim, will have his article published in an upcoming issue of Tax Notes. The article is titled "Substantiating Credit-Eligible IRC Section 41 Research Expenses Using ASC 730." Tax Notes is a national publication with a very large readership consisting of practitioners, academics and policymakers. It is published by Tax Analysts and it is on the ACC B list.
This article provides a discussion of important R&D tax credit court cases addressing substantiation of research expenses, an overview of ASC 730, and a discussion of the Internal Revenue Service’s (hereafter IRS) Directive relating to Internal Revenue Code (hereafter IRC) Sec. 41 research and development (hereafter R&D) tax credit substantiation requirements imposed by Treas. Reg. Sec. 1.41-4(d). Although the Cohan decision loosened strict substantiation requirements for tax credits, businesses conducting R&D have faced significant uncertainty and time-consuming efforts in substantiating costs to qualify for the IRC Sec. 41 research credit. Taxpayers by necessity spent significant time and effort substantiating qualified research expenditures to avoid the denial of otherwise IRC Sec. 41 credit-eligible expenses. The IRS Directive brings much-needed clarity to tax practitioners in helping their clients avoid costly and time-consuming IRS examinations of the documentation required by Treas. Reg. Sec. 1.41-4(d). This article suggests that by accepting financial statement R&D costs.as sufficient evidence of qualified research expenses for the IRC Sec. 41 credit, the Directive will reduce the amount of effort required by taxpayers claiming IRC Sec. 41 R&D credit.