R&D Tax Credit Documentation Template

R&D TAX CREDIT DOCUMENTATION TEMPLATE

IRC § 41 CREDIT FOR INCREASING RESEARCH ACTIVITIES

COMPANY INFORMATION

Company Name: [LEGAL NAME]

Federal EIN: [EIN]

Address:
[STREET ADDRESS]
[CITY, STATE ZIP]

Fiscal Year End: [DATE]

Tax Year: [YEAR]

NAICS Code: [CODE]

Industry: [INDUSTRY]

Contact Person:

• Name: [NAME]
• Title: [TITLE]
• Phone: [PHONE]
• Email: [EMAIL]

SECTION 1: R&D CREDIT OVERVIEW

1.1 Credit Calculation Method:

☐ Regular Credit (IRC § 41(a)(1))

• 20% of excess of QREs over base amount

☐ Alternative Simplified Credit (ASC) (IRC § 41(c)(5))

• 14% of QREs exceeding 50% of average QREs for prior 3 years

1.2 Payroll Tax Election (Qualified Small Business):

☐ Company elects to apply credit against payroll tax (up to $500,000/year)

Requirements for payroll tax election:

• Gross receipts less than $5 million in current year
• No gross receipts for any of the 5 years preceding the current year

1.3 Form 6765 Section G (2026 Requirement):

☐ Section G is required (mandatory for 2026)
☐ Section G exempt - QREs ≤ $1.5 million AND gross receipts ≤ $50 million

SECTION 2: FOUR-PART TEST DOCUMENTATION

Each research activity must satisfy ALL four parts of the test under IRC § 41(d):

2.1 SECTION 174 TEST

The activity must be eligible for treatment as expenses under IRC § 174.

Documentation:
☐ Activity relates to development or improvement of a product, process, technique, formula, invention, or software
☐ Activity is undertaken for purpose of discovering information
☐ Costs are research and experimental expenditures

2.2 TECHNOLOGICAL IN NATURE TEST

The activity must rely on principles of physical or biological sciences, engineering, or computer science.

Documentation:
☐ Technical discipline(s) used: [LIST]
☐ Technical personnel involved: [LIST]
☐ Technical tools/methods used: [LIST]

2.3 ELIMINATION OF UNCERTAINTY TEST

The activity must be intended to eliminate uncertainty concerning:

• Capability (Can we make it work?)
• Method (How do we make it work?)
• Design (What is the appropriate design?)

Documentation:
☐ Uncertainty identified at start of project
☐ Nature of uncertainty documented
☐ Resolution of uncertainty documented

2.4 PROCESS OF EXPERIMENTATION TEST

Substantially all activities must constitute a process of experimentation (evaluating alternatives through modeling, simulation, testing, etc.)

Documentation:
☐ Alternatives evaluated
☐ Testing methodology used
☐ Results analyzed
☐ Iterative process documented

SECTION 3: BUSINESS COMPONENT DOCUMENTATION

A business component is any product, process, computer software, technique, formula, or invention subject to IRC § 41 requirements.

BUSINESS COMPONENT 1

3.1 Component Identification:

3.2 Component Description:

[PROVIDE A DETAILED DESCRIPTION OF THE BUSINESS COMPONENT, INCLUDING ITS PURPOSE AND HOW IT DIFFERS FROM EXISTING PRODUCTS/PROCESSES]

3.3 Four-Part Test Analysis:

SECTION 174 TEST:
[DESCRIBE HOW THIS COMPONENT QUALIFIES AS R&E EXPENDITURES]

TECHNOLOGICAL IN NATURE:
[DESCRIBE THE SCIENTIFIC/ENGINEERING PRINCIPLES RELIED UPON]

ELIMINATION OF UNCERTAINTY:
[DESCRIBE THE TECHNICAL UNCERTAINTY THAT EXISTED]

Uncertainty Type:
☐ Capability - [DESCRIBE]
☐ Method - [DESCRIBE]
☐ Design - [DESCRIBE]

PROCESS OF EXPERIMENTATION:
[DESCRIBE THE EXPERIMENTATION PROCESS, INCLUDING ALTERNATIVES TESTED]

3.4 Qualified Research Activities:

3.5 Qualified Research Expenses (QREs):

BUSINESS COMPONENT 2

[REPEAT SECTIONS 3.1 THROUGH 3.5 FOR EACH ADDITIONAL BUSINESS COMPONENT]

SECTION 4: QUALIFIED RESEARCH EXPENSES (QREs)

4.1 Wage Expenses:

4.2 Supply Expenses:

4.3 Contract Research Expenses:

4.4 Cloud Computing/Hosting Costs (if applicable):

SECTION 5: QRE SUMMARY BY EXPENSE TYPE

SECTION 6: CREDIT CALCULATION

6.1 Regular Credit Calculation:

6.2 Alternative Simplified Credit (ASC) Calculation:

6.3 Elected Credit Method:

☐ Regular Credit: $[AMOUNT]
☐ Alternative Simplified Credit: $[AMOUNT]

SECTION 7: FORM 6765 SECTION E DISCLOSURES (REQUIRED)

Section E - Other Information:

SECTION 8: FORM 6765 SECTION G (2026 MANDATORY)

Section G - Business Component Information:

Top 80% or Top 50 Business Components (whichever is less):

SECTION 9: DOCUMENTATION RETENTION CHECKLIST

Retain for at least 7 years:

☐ Project documentation and technical records
☐ Employee time records and allocations
☐ Payroll records
☐ Supply purchase records
☐ Contract research agreements
☐ Technical reports and test results
☐ Meeting notes and correspondence
☐ Patent applications (if any)
☐ Form 6765 and supporting calculations
☐ Four-part test analysis for each business component

SECTION 10: EXCLUDED ACTIVITIES

The following do NOT qualify (IRC § 41(d)(4)):

☐ Research after commercial production begins
☐ Adaptation of existing products for specific customer
☐ Duplication of existing business component
☐ Surveys, studies, or similar activities
☐ Computer software developed for internal use (unless specific tests met)
☐ Foreign research
☐ Research in social sciences, arts, or humanities
☐ Research funded by another person

SECTION 11: CERTIFICATION

Taxpayer Certification:

I certify that to the best of my knowledge:

1. The qualified research activities documented herein satisfy the four-part test under IRC § 41(d)
2. The qualified research expenses are accurately calculated and supported by contemporaneous documentation
3. The company has maintained records sufficient to substantiate the credit claim
4. No excluded activities have been included in the credit calculation

Signature: ___________________________________

Printed Name: [NAME]

Title: [TITLE]

Date: [DATE]

Tax Professional Certification (if applicable):

I have reviewed the documentation and calculations for this R&D tax credit claim and believe they comply with IRC § 41 and related regulations.

Signature: ___________________________________

Printed Name: [NAME]

Firm: [FIRM]

PTIN: [PTIN]

Date: [DATE]

IMPORTANT NOTES

1. Contemporaneous Documentation: The IRS expects documentation to be created at the time research activities occur, not reconstructed at tax time.

2. Section G Mandatory (2026): Beginning with tax year 2026, Section G of Form 6765 is mandatory for most filers.

3. Amortization Requirement: For tax years beginning after 2021, IRC § 174 R&E expenses must be capitalized and amortized over 5 years (15 years for foreign research).

4. State Credits: Many states offer R&D credits with varying requirements. State documentation may be required.

5. Audit Defense: Well-documented files are essential for defending R&D credit claims in IRS examinations.

This template is provided for informational purposes and should be reviewed by qualified tax counsel before claiming R&D tax credits.