The Research Credit: Valuable but Often Overlooked

Peter Woodlock, PhD, CPA, ABV, CVA, and Karin Petruska, PhD, CPA

The federal research tax credit is designed to encourage long-term increases in the amounts spent on research and experimental activities for research conducted in the United States. With the passage of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, the research tax credit can be claimed for qualified research expenditures incurred from January 1, 2010 through December 31, 2011 for U.S.-based qualifying research to promote innovation. Although difficulties that exist in securing the credit can often cause firms to overlook it, the benefits of the Internal Revenue Code (IRC) section 41 research credit can far outweigh the costs incurred to secure the credit.