An R&D tax credit study, which could refer to the 4 Part Test, allows you to determine if your organization can claim the R&D tax credit. To qualify, organizations have to positively respond to these four areas.
Do Research Activities Attempt to Eliminate Uncertainty?
The R&D tax credit requires that the research be conducted in a scientific manner that answers questions that eliminate the uncertainty.
Does the Research Involve a Process of Experimentation?
This means that the activities must consider more than one approach as they work to eliminate the uncertainty. Organizations may explore different approaches with various techniques to do this.
Are the Experiments Technological in Nature?
The research conducted must measure the efficacy of the experiment using the principles of hard science. This may include physics, engineering, chemistry, or computer science. However, it does not allow for economics or psychology to be factors.
Are There Commercial Purposes for the Research?
There also must be some type of beneficial outcome to this research for the company. This could include developing a new product or service or improving an existing product or service.
Conducting an R&D tax credit study could provide more insight into whether or not the company should apply for and utilize the 4 Part Test to determine if they qualify for it. This effort may be worthwhile as it could provide a sizable tax credit at the federal or the state level.
Having a professional organization conduct an R&D tax credit study is the first step in determining if the work you are doing qualifies. When looking for a R&D tax credit study, look to Business Name. as they have team that you can rely on.
