R&D tax credit glossary.
Definitions for the terminology used across R&D Ledger and professional R&D tax review.
A
- AI Review Summary
- An AI-assisted overview of documentation that may help identify possible gaps. It is supplemental, may be inaccurate, and does not determine eligibility.
B
- Business Component
- A product, process, software, formula, or technical improvement that a company tracks separately for documentation and CPA review.
C
- Contractor Research Costs
- Amounts paid to outside contractors for work that may support qualifying research. The platform helps track these costs; your CPA determines the reportable portion.
- CPA Workpaper Packet
- An organized export of documentation—business components, activity summaries, cost allocations, and evidence references—formatted to support your tax advisor's review.
- CPA Review
- The professional evaluation by a qualified CPA or tax advisor who determines eligibility, finalizes calculations, and handles filing. The platform supports—not replaces—this review.
D
- Documentation Gap
- Missing or incomplete records that may weaken CPA review. The platform helps flag these gaps so you can address them before review.
E
- Evidence Manifest
- An organized list of supporting documents—test results, photos, notes, design files—linked to business components and activities for CPA review.
F
- Form 6765
- The IRS form used to report qualified research expenses and compute the credit. The platform prepares preliminary inputs aligned to this form; your CPA reviews and files it.
- Four-Part Test
- The framework CPAs use to evaluate potential R&D activity: permitted purpose, technological in nature, technical uncertainty, and process of experimentation. The platform does not apply the test; your CPA does.
P
- Process of Experimentation
- A systematic approach to evaluating alternatives—prototyping, testing, refining—to resolve technical uncertainty. The platform helps document the process; your CPA evaluates it.
- Permitted Purpose
- An intent to develop or improve a product, process, or software function. One element of the four-part test your CPA evaluates.
Q
- Qualified Research Expense / QRE
- The specific subset of tracked costs—such as qualified wages, contractor research costs, and supplies—that may be reportable on Form 6765. Your CPA determines which costs qualify.
- Qualified Wages
- Wages paid to employees for work that may support qualifying research, typically allocated by time spent on potential R&D activities. Final qualification is determined by your CPA.
R
- R&D Tax Credit
- A federal tax incentive (under IRC Section 41) that may reward qualifying research and development investments. Eligibility and calculation are determined by a qualified CPA or tax advisor.
S
- Supplies
- Tangible materials and consumables used in experimentation or development that may be reportable as part of QREs, subject to CPA review and IRS rules.
- Section G
- The part of Form 6765 requesting additional information about research activities. Whether and how to complete it is determined by your CPA based on your filing situation.
- Substantially-All Review Flag
- A marker indicating that most of an employee's time was spent on potential R&D activities. Your CPA determines whether the threshold is met.
T
- Technical Uncertainty
- A genuine question about capability, method, or design that experimentation may help resolve. Documenting uncertainty helps your CPA assess whether activity may qualify.
- Technological in Nature
- Reliance on engineering, computer science, or other hard-science principles. One element of the four-part test your CPA evaluates.
This glossary is for educational purposes only and does not constitute tax, legal, or accounting advice. Final treatment should be reviewed by a qualified CPA or tax advisor.
Put these terms into context.
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