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The heightened administrative burden placed on SMEs as a result of proposed changes to the UK's research and development (R&D) tax regime will be outweighed by plans to extend the [...]

UK companies could soon be subject to greater scrutiny and stricter processes when claiming research and development (R&D) tax credits, the government has said. In (https://www.gov.uk/government/publications/research-and-development-tax-relief-changes) draft legislation published this [...]

The research and development (R&D) tax credit system will be reformed in an effort to boost productivity growth, announced Chancellor Rishi Sunak as he delivered his Spring Statement to the [...]

On March 18, 2014, TEI President Terilea J. Wielenga urged the IRS to withdraw proposed regulations creating an "exception" to the single taxpayer rule under section 41 (f)(1) excluding gross [...]

Canadian investments in research and development may be hampered by stricter laws on R&D taxation. The legislation takes the form of new qualifications which define research and development activities, requiring such activities to have clear technological advancement implications to qualify for tax credits. While the law clearly states that qualification for tax credits in R&D spending must be supported by documentation, some cases may find merit in the depositions of expert witnesses, who can testify to the 'technological advancement' implication of the activity.

Revenue Canada has been witnessing a sharp decline in the number of claims for Scientific Research and Experimental Development (R&D) tax credits since the elimination of retroactive claims on Sep 13, 1994. The move compelled companies to disregard tax credit claims, believing that obtaining the benefits of tax incentives is not worth the trouble of filing one. In addressing the problem, Revenue Canada undertook a series of measures aimed towards enhancing its client service oriented activities. Professional advisers are also encouraged to promote the use of information reporting systems and disseminate technical and financial information.

Enactment of IRC sections 197 and 167(f)(1)(A) and the US Supreme Court's decision in INDOPCO, Inc. v. Commissioner do not signal that software research and development costs can no longer be deducted currently. Under IRC section 174, research and experimentation expenses are currently deductible, and some software development efforts should qualify as research. In recent legislation, there is no indication that Congress no longer thinks that research activities should receive favorable tax treatment, and INDOPCO did not make capitalization mandatory.

Basic models for structuring research and development (R&D) funding and technology transfer arrangements include the license/royalty, contract research, and cost sharing models, or combined license/royalty contract research or cost sharing models. These arrangements should be organized to make maximum use of the R&D expenditure deduction. Cost-sharing arrangements have become widely used because of fears about excessive taxation of technology intangibles income.

The UK tax regime provides little support for companies that engage in research and development (R&D). Under the government's narrow definition of R&D, only R&D activities that arise from scientific laboratories are eligible for tax incentives. Consequently, companies that have developed innovative products cannot claim any assistance from the government even if they face protracted expenditures in setting up production facilities, marketing research programs and training initiatives. Not surprisingly, private-sector R&D in the UK has been declining steadily, compounding the drop in defense-related R&D. In response to this looming R&D crisis, the Labour government has announced plans to introduce new R&D tax credits aimed at helping small- and medium-sized companies. It has also announced its intention to increase tax relief for R&D from the current 100% to 150%.

The IRS is proposing regulations under Section 174 which offer two alternative methods of accounting for research and development costs or for experimental expenditures. Expenditures can either be deducted during the year they are paid, or they can be deferred over a period 60 months or longer. The new regulations will clarify the definition of research and development and the definition of experimental expenditures.

According to accounts up to 2003, advisers LF Consulting claimed credits amounting to [pounds sterling]77,392 'recoverable in respect of research and development expenditure', a description that experts have said could [...]

Businesses in the United States will no longer be eligible to receive tax credits for expenses related to research and develop as of midnight Wednesday, when the federal R&D tax […]

The Canadian government's federal budget makes it easier to tap into tax credits for corporate research and development. However, these steps do not really go far enough to boost industrial research levels in Canada. Making these incentives at least partially refundable could help during tough economic times.

An analysis of the effects of the Tax Reform Act of 1986 on capital investments and expenditures related to purchases of new plants and equipment focuses on (1) accelerated cost recovery systems prior to the law and after the law for items of property with 3- and 5-year useful lives, and (2) tax credits available for qualifying research and development expenditures. Depreciation rate tables under the new law have not been published by the Internal Revenue Service, but are said to be forthcoming. Under the tax reform, the amount of expenditures that can be expensed in a single tax year has been increased from $5,000 to $10,000, subject to certain exceptions based upon the total dollar amount of equipment placed in service, and the corporation's total income, during the taxable year. The points at which capital expenditure costs may begin to be recovered are also changed under the tax reform, such that equipment placed in service during the taxable year must be accounted for as if placed in service at mid-year; similarly, mid-month and mid-quarter timing conventions have also been instituted under the new law. Class lives and recovery periods are listed for 13 types of capital equipment. The tax credit available to corporations for the performance of qualifying research and development activities has been reduced from 25 percent of expenses to 20 percent. Formulas for calculating depreciation and a table of possible depreciation rates by year under the new law are provided.

Comments on Proposed Regulations on the Definition of Research and Experimental Expenditures I. Introduction On May 16, 1989, the Internal Revenue Service issued proposed regulations under section 174 of the [...]

The IRS has released proposed regulations under IRC section 41 that employ a facts and circumstances test to determine whether expenses in the development of internal use software qualify for the research tax credit. Internal use software must be developed for use in an activity or as a part of a production process that also qualifies for the tax credit. Recent case law suggests that the IRS and the courts may take a hard line on whether internal use software is innovative in nature, involves significant economic risk and is not commercially available.