TaxRx Group, an agency specializing in federal tax benefits for healthcare professionals, has published a new report explaining how the term ‘experimentation’ is defined within the research and development tax credit guidelines.
The new report can be found at: https://www.taxrxgroup.com/the-rd-tax-credit-experimentation/
The new report was written in response to a recent webinar during which a commentator interpreted the term ‘experimentation’ as being ‘the discovery of something new’.
The word arises in The Audits Technique Guide, which is used by IRS auditors during R & D tax credit evaluations. The guide states that qualifying research “constitutes elements of a process of experimentation for a qualified purpose (also known as the process of experimentation test).”
In establishing what ‘experimentation’ actually means, the new report discusses several other excerpts from The Audit Techniques Guide, which help to clarify the term.
Firstly, the guide states that: “there is no ‘discovery’ requirement under section 41 separate and apart from… research undertaken to eliminate uncertainty concerning the development or improvement of a business component.”
The new report highlights the word ‘uncertainty’ as being the key factor in defining ‘experimentation’, and proceeds to examine what that means in the context of healthcare.
Statute is referred to by the report to understand what ‘uncertainty’ means, and it concludes that the term applies to both the method being used and the capability of the physician.
With regard to method, the report suggests that any issue which has multiple approaches to treatment can be considered ‘uncertain’.
The report also states that uncertainty in relation to capability could be demonstrated when there is a requirement for training or an adjustment to business processes.
TaxRx Group provides professional tax consultancy services to physicians throughout the US. The company works closely with doctors and important staff members to prepare tax submissions that comply with all areas of federal tax law.
A company representative stated: “Uniquely, TaxRx Group utilizes a recognized clinical trial process as we assist our clients as they frame their qualifying activities in the appropriate format.”
Interested parties can read the report by visiting: https://www.taxrxgroup.com/the-rd-tax-credit-experimentation/
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