Research credits

The current state of the research tax credit.

Michael Brossmer

Michael Brossmer

Partner, Co-leader, Research Credit, KPMG (US)

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The U.S. research tax credit was made permanent in 2015 and was not directly impacted by this year’s U.S. tax reform.  However, the credit can now be even more advantageous due to the interplay with tax law changes for 2018 and beyond.

A discussion paper on this and other recent developments are included below.  KPMG has a dedicated team both in the U.S. and globally to help answer your questions on R&D tax incentives. Please visit this website for continual updates or contact us with any questions.


A New Way to Uncover R&D Tax Credit Opportunities

To increase your confidence in and improve the efficiencies of the R&D tax credit process and quality of IRS-ready deliverables, KPMG has built the first automated platform focusing on qualitative documentation for qualified activities and contracts using IBM Watson’s cognitive analysis.

With the ability to review and analyze thousands of documents with speed and accuracy—without increasing human labor—KPMG can reliably and comprehensively validate your company’s R&D activities, possibly discover unknown credits, and quickly complete robust IRS deliverables. By embracing this offering, companies with ongoing R&D potentially benefit from improved cash flow, reduction in tax liability, and increased EPS while simultaneously enabling their human resources to focus on strategic work.



KPMG Research Credit Services with Watson

KPMG’s dedicated Research Credit Services team combined with the IBM Watson® cognitive platform can help companies to increase the volume and success in capturing R&D tax credit subsidies.

Latest R&D tax credit news

U.S. Tax reform considerations Accounting methods and credit services (AMCS)

The new tax law enacted in December 2017 brings a multitude of changes to the Internal Revenue Code. It not only reduced the corporate tax rate but has had an immediate impact on income and expense recognition, cost, recovery, and credits. From considerations on increased expensing, income inclusion, mandatory repatriation, BEAT, to section 199 repeal, learn about the different areas in tax that may be affected by the new law.

Tax Reform: And the Winner Is … R&D

Tax reform changed the playing field for taxpayers engaged in research and development (“R&D”) activities. This article highlights new and modified provisions of the tax law that taxpayers engaged in R&D activities should consider, whether or not the taxpayers claimed the R&D tax credit in the past.

A Practical Analysis of the New IRS Research Credit Directive

The Large Business and International (LB&I) Division of the IRS recently issued guidance on the examination of the credit for increasing research activities under tax code Section 41 claimed by LB&I taxpayers (the Directive). The Bloomberg BNA article, written by KPMG’s Research & Credit professionals, provides an overview of the Directive, explores practical aspects to consider before complying, and analyzes the impact on various industries.

The 2017 KPMG Green Tax Index

The Green Tax Index is created to increase awareness of the green tax landscape worldwide and encourage companies to explore the opportunities of green tax incentives, and to reduce their exposure to green tax penalties.

Recent IRS Chief Counsel Advice

A recent advice from IRS Chief Counsel confirms taxpayer may retroactively change treatment of research and experimental expenses from capital to expense. The IRS stated that taxpayers may reclassify R&E expenditures from capital to current expenses on a retroactive basis by filing amended returns for tax years that remain open under the statute of limitations. Find out how this impacts your eligibility to claim additional R&D credit for prior years.

Final regulations: Research credit for internal use software

On October 4, 2016, the IRS released final regulations regarding Internal Use Software (IUS). Under these new regulations, taxpayers that develop software for their own internal use will be able to claim a credit for research and development (R&D) expenditures in certain cases, specifically if the development meets a three-part high-threshold-of-innovation test. Find out more about these final regulations and how to determine if you might be elligible for this credit.

Research Credit Made Permanent and New Potential Abilities to Use Credit to Offset ATM and Payroll Taxes

Now that research credit has been made permanent, taxpayers can engage in research activities and feel confident that the credit will be available to offset their costs in engaging in research activities. Along with the permanent reinstatement of this credit, certain small businesses may also take advantage of special tax benefits.

Our experience by industry

Our Research Credits Services group has a broad range of experience in different business sectors. Discover how we might be able to help you.

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