New R&E Tax Credit TAM: Business of Licensing Research Results

The IRS released TAM 13457207 today.  This Memorandum explains that contract research expenses incurred by a taxpayer can constitute qualified research expenses, even if the taxpayer’s only business was performing research to license to others to manufacture and market the inventions.  The IRS focused on the fact that the taxpayer retained ownership of all production and marketing rights for the inventions, which presumably would allow the taxpayer to continue that the taxpayer’s licensing business constituted a trade or business.