R&D Tax Credits (IRC §41)
Audit-Ready R&D Tax Credit Studies Under IRC §41
R&D Tax Credit Overview
The R&D tax credit under IRC §41 rewards businesses that incur qualified research expenses while developing or improving products, processes, software, or manufacturing methods.
Eligibility is determined by strict statutory criteria—not by industry labels or financial outcomes.
CSS Resources provides IRS-defensible R&D tax credit studies using a conservative, evidence-driven methodology.
Four-Part Test Evaluation
Every activity is evaluated against the Four-Part Test:
Permitted Purpose – Development or improvement of functionality, performance, reliability, or quality
Technological in Nature – Reliance on principles of physical or biological science, engineering, or computer science
Elimination of Uncertainty – Technical uncertainty existed at the outset
Process of Experimentation – Systematic evaluation of alternatives
If any element fails, the activity does not qualify.
Qualified Research Expenses (QREs)
We identify QREs conservatively and only where supported by evidence:
Wages
Evaluated by role, technical function, and time allocation
Non-technical management, sales, and marketing are excluded
Contract Research
Reviewed for rights, risk, and performance requirements
Subject to the statutory 65% limitation
Excluded Costs
Overhead
Routine operations
Post-commercialization activities
We do not inflate expenses or substitute estimates for technical justification.
R&D Credit Documentation & Narratives
Our R&D narratives are written for IRS examiners and assume familiarity with tax law—but not the taxpayer’s business.
Narratives:
Clearly describe technical uncertainty
Explain experimentation and alternatives evaluated
Tie activities directly to claimed expenses
Avoid outcome-based or marketing language
The focus is always on process, not success.
Who Is a Good Candidate for the R&D Tax Credit?
R&D credits may apply to businesses engaged in:
Manufacturing and process improvement
Software development
Engineering and product design
Construction methodology innovation
A feasibility review is recommended prior to claiming credits.