The funded research rules can present a number of challenges. The rules can also limit drastically the amount of research tax credits available to taxpayers (1) who are paid to perform research (it limits their wage and supply QREs) and (2) who pay others to perform research on their behalf (it limits their contract QREs). The article explores some of the difficulties presented by the “risk test,” which is one of the two “funded research” tests. You can read the Funded Research Tax Credit. We help R&D tax credit firms and clients apply and interpret these rules. Please reach out to us if you want to discuss these rules or how they apply.