Any company that engages in U.S.-based activities that satisfy the four-part test can potentially qualify for the R&D credit.

The four tests are:

  1. New or Improved Business Component (Product, Process, Software, Invention, or Formula)
    • Functionality
    • Performance
    • Reliability, or
    • Quality
    • NOT qualified if related solely to style, taste, cosmetic, or seasonal design factor
  2. Elimination of Uncertainty
    • Related to the capability or methodology for developing or improving a product or process
  3. Process of Experimentation (to resolve uncertainty)
    • Includes Trial and Error
    • Prototyping
    • Modeling and simulation efforts
  4. Technological in Nature (based in a hard science) – process of experimentation is reliant on the principles of:
    • Physical Sciences
    • Biological Sciences
    • Engineering, or
    • Computer Science

Recent Posts