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September 16, 2020

LB&I directive updates guidance on reviewing research-credit claims

A new directive (LB LB&I-04-08200016) from the IRS Large Business and International Division (LB&I) gives examiners guidance on how to review research-credit claims under IRC Section 41. The directive, which updates a 2017 directive, is designed to provide an “efficient methodology” for determining qualified research expenses (QREs) eligible for the credit. For eligible taxpayers, the IRS will now accept the Adjusted Accounting Standards Codification (ASC) 730 Financial Statement R&D for the Credit Year as sufficient evidence of QREs. A Tax Alert on the directive is forthcoming.



Revised directive