1. Section 41 – The primary tax code for R&D.
  2. Section 174 – Governs mandatory capitalization of research costs.
  3. Qualified Research Expenses (QREs) – Total costs eligible for the credit.
  4. Four-Part Test – Criteria to qualify a research activity.
  5. Permitted Purpose – Improving function, performance, reliability, or quality.
  6. Technological in Nature – Relies on physical or biological sciences.
  7. Elimination of Uncertainty – Solving unknowns regarding design or methodology.
  8. Process of Experimentation – Evaluating alternatives through testing or modeling.
  9. Business Component – The specific product, process, or software.
  10. Shrink-Back Rule – Evaluating sub-components if whole product fails.
  11. Wages – Box 1 W-2 taxable employee compensation.
  12. Supplies – Tangible items consumed during research.
  13. Computer Rental – Costs for hosting or cloud servers.
  14. Contract Research Expenses – Payments to third parties for R&D.
  15. Cloud Computing Costs – Fees for AWS, Azure, or Google.
  16. Regular Research Credit (RRC) – Calculation using complex fixed-base percentages.
  17. Alternative Simplified Credit (ASC) – Credit based on 14% of growth.
  18. Base Amount – Historical spending threshold to exceed.
  19. Fixed-Base Percentage – Ratio of R&D to gross receipts.
  20. Average Annual Gross Receipts – Revenue average over prior four years.
  21. Start-Up Provision – Special base rules for newer companies.
  22. Payroll Tax Election – Offsetting social security taxes instead.
  23. Qualified Small Business (QSB) – Revenue under $5M; under five years.
  24. PATH Act – Made the R&D credit permanent.
  25. Tax Cuts and Jobs Act (TCJA) – Mandated five-year amortization of R&D.
  26. Amortization of R&E – Spreading research costs over several years.
  27. Capitalization – Recording expenses as long-term assets.
  28. Mid-Year Convention – Half-year deduction rule for first-year amortization.
  29. Section 280C Election – Reducing credit to avoid double deduction.
  30. Reduced Credit – Lowered credit amount to preserve deductions.
  31. Controlled Group – Corporations linked by common parent ownership.
  32. Common Control – Entities managed by same small group.
  33. Aggregation Rules – Combining related entities for credit limits.
  34. Consistency Rule – Applying identical logic to all years.
  35. Internal Use Software (IUS) – Software developed for non-commercial internal operations.
  36. High Threshold of Innovation – Extra requirements for IUS qualification.
  37. Dual Function Software – Software used by employees and customers.
  38. Third-Party Subset – Customer-facing portion of internal software.
  39. Commercial Availability – Software offered for sale or lease.
  40. Significant Economic Risk – Potential financial loss if research fails.
  41. Funded Research – R&D paid for by another party.
  42. Financial Risk – Bearing the cost of failed attempts.
  43. Substantial Rights – Maintaining intellectual property ownership or usage.
  44. Fixed-Price Contract – Set payment regardless of research outcome.
  45. Cost-Plus Contract – Reimbursed costs plus a specific fee.
  46. Time and Materials Contract – Hourly billing for research services.
  47. Capped Contract – Payment limited to a maximum amount.
  48. Research After Commercial Production – Testing after product is ready.
  49. Adaptation – Modifying existing products for specific customers.
  50. Duplication – Copying an existing business component.
  51. Reverse Engineering – Deconstructing a competitor’s product.
  52. Routine Data Collection – Standard market research or business surveys.
  53. Quality Control Testing – Regular testing of finished products.
  54. Efficiency Surveys – Studies on management or operational flow.
  55. Management Functions – General administrative or executive decision-making.
  56. Social Sciences Exclusion – Psychology or economics research is ineligible.
  57. Foreign Research – Activities conducted outside the United States.
  58. Humanities Exclusion – Arts and history research is ineligible.
  59. Audit Defense – Substantiating claims during IRS examinations.
  60. Contemporaneous Documentation – Records created at time of research.
  61. Nexus – Direct link between expenses and activities.
  62. Project Accounting – Tracking costs at the project level.
  63. Credible Testimony – Employee statements supporting the R&D claim.
  64. General Business Credit – Category where R&D credit resides.
  65. Statistical Sampling – Using math models to estimate expenses.
  66. ASC 730 Directive – Simplified R&D reporting for large taxpayers.
  67. Form 6765 – The primary form for R&D credits.
  68. Form 8974 – Form for claiming payroll tax credits.
  69. Form 3800 – General Business Credit summary form.
  70. Amended Return – Filing to claim prior-year missed credits.
  71. Audit Techniques Guide (ATG) – IRS manual for examining R&D claims.
  72. Information Document Request (IDR) – IRS request for specific company records.
  73. Notice of Claim Disallowance – IRS rejection of a credit claim.
  74. Pilot Model – Functional representation used for testing.
  75. Prototype – Early model used for experimental evaluation.
  76. First-in-Class – Entirely new technology or product category.
  77. Direct Supervision – Management of researchers’ daily technical work.
  78. Direct Support – Assistance to researchers (e.g., cleaning labs).
  79. Qualified Services – Performance, supervision, or support of research.
  80. Substantially All Rule – 80% rule for capturing 100% wages.
  81. De Minimis Rule – Disregarding minor non-qualifying activities.
  82. Patent Safe Harbor – Presumed qualification for patented inventions.
  83. Incident to Development – Costs necessary for the research process.
  84. Specified Research or Experimental Expenditures (SRE) – Costs subject to mandatory capitalization.
  85. Research and Experimental (R&E) Expenditures – Section 174 definition for all R&D.
  86. General and Administrative (G&A) Functions – Indirect overhead costs (usually excluded).
  87. Interactive Software – Code allowing user input and response.
  88. Hardware-Software Integration – Testing how code and machines interact.
  89. Specially Designed Software – Custom code for unique business needs.
  90. ERP Implementation – Installing large-scale business management software.
  91. Clinical Trials – Testing drugs or devices on humans.
  92. Patent Perfection Costs – Expenses to secure and defend patents.
  93. Extraordinary Utilities – High energy costs specifically for research.
  94. Carry forward – Using unused credits in future years.
  95. Carryback – Applying unused credits to previous years.
  96. Section 41(g) – Rules for pass-through entity owners.
  97. Pass-Through Entity – S-Corps or Partnerships where tax flows.
  98. Qualified Organization – Universities or scientific research groups.
  99. Basic Research Payments – Funding for non-commercial academic science.
  100. Energy Research Consortium – Group research for energy-related improvements.