Recently, the IRS sought to recover a $576,756 tax refund (plus interest) paid to a married couple. The tax agency argued the couple wasn’t entitled to a passthrough research tax credit they claimed for a construction S corporation in which the husband held a 73% interest. A U.S. District Court found the firm didn’t perform qualified research on a number of its projects. For purposes of the business component test, the taxpayers first submitted evidence on the development of new products. But then they argued the firm developed new processes, which they didn’t sufficiently support. The court found the couple wasn’t entitled to the refund. (Grigsby, DC LA, 10/19/22)
Our Blog 