Research Tax Credit

In Procter & Gamble Co. v. United States, No. 1:08-cv-00608-TSB (Jun. 25, 2010), the District Court for the Southern District of Ohio concluded that the taxpayer did not have to include gross receipts from sales to a controlled foreign corporation in computing its research tax credit. The implications of this conclusion require some further thought.

The government recently issued Technical Advice Memorandum 201006027, applying the R&D tax credit rules for acquiring and disposing of business assets in the context of the I.R.C. § 963 possessions tax credit. This now defunct possession tax credit rewarded taxpayer’s for operating businesses in U.S. possessions, such as Puerto Rico. It incorporates the R&D tax [...]

In R.H. Donnelley Corp. v. United States, No. 5:08-cv-00501 (ED NC 2010), the court addressed a unique situation involving the carryback of an R&D tax credit. The facts were as follows. The R&D tax credit was for tax year 1994. The taxpayer’s 1994 tax return was audited. No changes were made as a result of [...]

The United States District Court for the Northern District of Texas issued its opinion in Trinity Industries, Inc. v. United States, 3:06-CV-0726, concluding that the shipbuilder was entitled to part of its R&D tax credit. The court reached this conclusion by determining that, for some of its projects, the shipbuilder’s business components were the prototype [...]