Question 1

What is the R&D tax credit?

Accepted Answer

The R&D tax credit (formally the Credit for Increasing Research Activities under IRC Section 41) is a federal tax incentive that rewards businesses for investing in qualifying research and development activities in the United States. It applies to a wide range of industries—not just labs or technology companies. Eligibility, credit calculation, and filing are handled by a qualified CPA or tax advisor.

Question 2

Does every experiment or improvement qualify for the R&D credit?

Accepted Answer

No. Not every test, process improvement, or design change qualifies. To potentially support an R&D credit claim, an activity generally needs to meet the four-part test: it must relate to a business component, be intended to discover technological information, involve technical uncertainty, and follow a process of experimentation. Routine improvements, cosmetic changes, style decisions, and adaptations of existing methods typically do not qualify. A CPA evaluates the specific facts of each situation.

Question 3

Can non-technical businesses have potential R&D activities?

Accepted Answer

Potentially, yes. R&D for tax purposes is broader than many business owners realize. Activities involving technical uncertainty and a process of experimentation—such as improving a manufacturing process, testing a new formula, or developing a custom fabrication method—may be worth documenting regardless of whether the business considers itself 'technical.' A CPA can evaluate whether specific activities meet the legal requirements.

Question 4

Can creative businesses or event companies have potential R&D?

Accepted Answer

Potentially, in specific circumstances. Creative decisions and aesthetic choices are generally not R&D. However, if a business is testing new installation methods, developing reusable build systems, evaluating material durability, or solving functional production problems through experimentation—and that work involves genuine technical uncertainty—it may be worth documenting for CPA review. A CPA should evaluate each situation against the four-part test.

Question 5

What is a business component?

Accepted Answer

A business component is any product, process, computer software, technique, formula, or invention that a company is developing or improving. In the context of R&D documentation, business components help organize activities and costs around specific areas of potential experimentation or improvement.

Question 6

What kinds of records should we save?

Accepted Answer

Useful records include project notes, test results, failed attempts, before/after metrics, photos and videos, design documents, meeting notes, prototype documentation, payroll and labor time allocations, contractor invoices, supply receipts, and any other evidence that documents the experimentation process. Saving records throughout the year is far more effective than reconstructing them at tax time.

Question 7

What is the difference between tracked R&D costs and Form 6765 QREs?

Accepted Answer

Tracked R&D costs are all expenses your company associates with potential R&D activities during the year—a broader documentation category. Qualified Research Expenses (QREs) on Form 6765 are a specific subset determined by your CPA based on IRS rules and the four-part test. The platform helps you track the broader set throughout the year so your CPA can identify, evaluate, and classify the qualifying portion.

Question 8

Does the app calculate the final R&D credit?

Accepted Answer

No. The platform provides preliminary cost summaries and Form 6765 line-item mapping, but it does not calculate the final credit amount. Final credit calculations depend on your specific tax situation, base amount, election method, and other factors determined by your CPA.

Question 9

What is Section G of Form 6765?

Accepted Answer

Section G asks for additional information about your research activities, including types of research conducted and how qualifying costs were identified. Whether and how to complete Section G is a determination your CPA makes based on your specific filing situation and the applicable rules for the tax year.

Question 10

Is this platform tax advice?

Accepted Answer

No. This platform is a documentation and record organization tool. It helps companies recognize potential R&D activities, organize supporting records, track costs, and prepare preliminary inputs for CPA review. It does not provide tax advice, legal advice, or accounting guidance, and it does not determine whether your activities qualify. All tax-related decisions, eligibility determinations, and filings must be handled by a qualified CPA or tax advisor.

Question 11

Does the platform file Form 6765?

Accepted Answer

No. The platform helps organize documentation and prepare preliminary line-item inputs aligned with Form 6765 structure, but it does not file any tax forms. Your CPA or tax advisor reviews the documentation, makes final eligibility determinations, calculates the credit, and handles the actual filing.

Question 12

What is a CPA handoff packet?

Accepted Answer

A CPA handoff packet is an organized export of your R&D documentation—including business component descriptions, activity summaries, cost allocations by category, evidence references, and preliminary Form 6765 inputs—formatted to support your tax advisor's review. It replaces the vague year-end summaries CPAs typically receive.

Question 13

How does this help my CPA?

Accepted Answer

Instead of receiving scattered records and year-end summaries, your CPA gets an organized documentation packet with business component descriptions, activity summaries, cost allocations by category, evidence references, and preliminary Form 6765 line-item inputs. This helps them evaluate your documentation more efficiently and make better-informed eligibility determinations.

Frequently asked questions about R&D documentation.

Qualification

Documentation

Qualified research expenses

Platform and workflow

CPA review and filing responsibility

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