4 ms·
I agree with your second paragraph, but quibble with the first. I don’t think there’s that much latitude. The IRS routinely questions companies large and small
by mercutio2 9y ago
I agree with your second paragraph, but quibble with the first.
I don’t think there’s that much latitude. The IRS routinely questions companies large and small, in detail, about whether they were really developing new products, or just polishing/improving existing products. The former counts as R&D (and gets favorable tax treatment), the latter is not.
The test is more complicated than this, but latitude is not a word I would associate with this term of art.
- snowwrestler 9y agoI get why the IRS would be interested in companies trying to hide operations inside the favorable tax treatment of R&D, but do you think the opposite is also true? Would the IRS (or SEC) care if a company underreported its R&D spending by choosing to classify new product development as a typical expense?
- mercutio2 9y agoPoint taken. I don’t know if the SEC would care, seems possible, but you’re right, it hadn’t occurred to me anyone would deliberately under report R&D, there probably is latitude in that direction.