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IRS Issues Guidance on Allocation of Research Credit in Controlled Groups

Monday, March 11, 2013

The Internal Revenue Service unveils guidance on the allocation of the research credit to corporations and trades or businesses in controlled groups. In Notice 2013-20, IRS discusses circumstances involving QREs, or the proportionate shares of qualified research expenses, basic research payments, and amounts paid or incurred to energy research consortiums. IRS explains that under Treasury Regulations Sections 41(f)(1) and 41-6(b), all members of a controlled group are treated as a single taxpayer for purposes of computing the research credit.