The Federal Research and Development (R&D) Tax Credit is an activities-based tax credit for companies that that incur R&D expenses in the United States.

Eligible taxpayers may claim qualifying expenses – wages, supplies, contract research, cloud hosting – for a dollar-for-dollar reduction in tax liability.

The Credit may be calculated using the Regular Research Credit (RRC) Method, or the Alternative Simplified Credit (ASC) Method.

The choice of Method shouldn’t be taken lightly, and taxpayers are encouraged to consult an R&D provider to advise based on specific facts and circumstances.

​​Regular Research Credit Method (RRC) [Section A, Form 6765]
Under the RRC Method, the Federal Credit is 20% of a Company’s Current Year QREs that exceed a Base Amount.

The calculation is quite complex:

Step 1: Determine the time period from which you will be gathering data — the “Base Period.”

In a base analysis all companies start as “80s Base Companies.”

1984 is your starting point. Ask these two questions:
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