In addition to all financial documentation related to the calculation of the R&D credit, it’s important to retain documentation illustrating the nexus between qualifying activities and QRE.  There is no specific documentation requirement mentioned in the 1.41 regulations, they simply state that a taxpayer claiming research tax credits must retain records in a sufficiently usable form and detail to substantiate that the expenditures claimed are eligible for the credit.

Examples of contemporaneous documentation include:

  • Internal status reports
  • Technical emails
  • Minutes, notes, or other similar recordings from budget, board of directors, managerial or other similar meetings concerning research activities.
  • Lab notebooks
  • Patent applications
  • Product specifications
  • Test result reports
  • Project timelines
  • Diagrams & drawings
  • Engineering reports

Recent Posts