R&D Tax Credit Studies: The Elimination of Uncertainty Test

Jasmine Inge

99 percent of people would agree that by improving the look of something you make it better than it was. Well for the research and development tax credit, you need to do more than just improve the visual appeal of a product. To qualify, your company must pass four tests. Previously, we discussed part one of the four-part test in the blog, “What is the Permitted Purpose and why does it matter?” Today, we will talk about what it takes to pass the uncertainty elimination test.

The Internal Revenue Service states that “uncertainty exists if the information available to you does not establish how to develop or improve a product or the appropriate design of a product.” Essentially, this means that if you are creating, or improving, a product or process within your company through the means of hard science, that the time, materials, and wages spent doing this will most likely apply.

By now, you are probably wondering about all the failed attempts you made on a project that just never worked out. You don’t have to be afraid that you worked all year on a project and it still failed. All that effort you spent on research and development could still save you money. If it qualifies, you can still take the credit on it.

During the R&D study, a list of qualifying jobs will be compiled, and the validity of the processes will be accessed to help you receive the most beneficial credit for your company. Then you will be asked to provide some information on what you did, why you did it, and what kind of science was applied to achieve those results. If you can answer those questions, email us today to determine if you qualify.