See How Our R&D Credit Study Packages Are Organized.
Each engagement produces a structured work product designed for CPA review and examination support. Below is an outline of what a completed study package typically includes.See what a completed R&D credit study package includes, from executive summary to filing support.
Executive Summary
The executive summary provides a high-level overview of the credit study, designed for management and CPA review.
- •Total federal and state credit amounts
- •Filing year and entity information
- •Industries and business activities covered
- •Qualified activity overview with summary of R&D projects
- •Major assumptions and methodology highlights
Credit Computation Summary
A detailed breakdown of the credit calculation, showing how qualifying expenses translate into credit amounts.
Federal Credit
Total federal R&D credit computed under the selected method (ASC or Regular Credit), with line-item detail.
SC State Credit
South Carolina research credit computation, coordinated with the federal credit position.
QRE by Category
Qualified research expenses broken down by wages, contract research (at 65%), and supplies.
Method Used
Documentation of the computation method selected and the rationale for that selection.
Business Component Map
The business component map organizes qualifying activities at the project level, linking technical detail to expense categories.
| Business Component | Project Description | Technical Uncertainty | Experimentation Process | Employees Involved | QRE Category |
|---|---|---|---|---|---|
| Automated QC Module | Vision-based defect detection for production line | Detection accuracy under variable lighting | Iterative model training and threshold testing | 3 engineers | Wages |
| Thermal Barrier Coating | New coating formulation for high-temp components | Adhesion performance above 1200°F | Lab testing of 12 formulation variants | 2 engineers, 1 technician | Wages, Supplies |
| API Integration Platform | Custom middleware for legacy system interoperability | Data mapping consistency across disparate schemas | Prototype-test cycles with schema validation | 4 developers | Wages, Contract |
Sample data shown for illustration purposes only.
Project Narrative Sample
Each qualifying project includes a written narrative that addresses the IRS four-part test. Narratives are structured to provide clear, defensible documentation of the qualifying activity.
Permitted Purpose
Describes how the activity relates to developing or improving a product, process, software, or technique intended for functional use.
Technological in Nature
Establishes reliance on engineering, computer science, biological science, or physical science principles.
Elimination of Uncertainty
Documents the specific technical uncertainties faced at the outset — whether related to capability, method, or design.
Process of Experimentation
Details the systematic approach used to evaluate alternatives and resolve the uncertainty, including testing, modeling, simulation, or iterative development.
QRE Schedule Sample
QRE schedules provide the financial detail supporting each credit position, organized by expense category with clear source document references.
Wage QREs
Employee-level wage allocations based on time spent on qualifying activities, supported by payroll records and allocation analysis.
Contractor QREs
Payments to third-party contractors for qualifying work, calculated at the 65% inclusion rate per IRC Section 41(b)(3).
Supply QREs
Materials and supplies consumed in the research process, with purchase records and allocation to qualifying projects.
Exclusions & References
Documentation of excluded expenses, funded research adjustments, and source document references for each line item.
Methodology Memo
The methodology memo documents the analytical approach, assumptions, and basis for each position. Below is a representative table of contents.
Table of Contents
- 1.Scope of Engagement
- 2.Methodology Overview
- 3.QRE Identification Approach
- 4.Allocation Methodology
- 5.Computation Method Selection
- 6.Limitations
- 7.Assumptions
CPA Filing Support
The study package includes filing-ready schedules and computation detail for both federal and South Carolina credits.
Form 6765 Support
Line-item detail mapping directly to IRS Form 6765 (Credit for Increasing Research Activities), including QRE totals, base amount computation, and credit calculation by method.
SC Schedule TC-18 Support
South Carolina research credit computation detail aligned with Schedule TC-18 filing requirements, coordinated with the federal credit position.
Sample materials are illustrative only and are not based on a specific client engagement. Individual study packages vary based on the taxpayer's facts, qualifying activities, and filing requirements.
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