In September, 2017, the Internal Revenue Service (IRS) issued a directive to tax examiners concerning research expenditures for business entity taxpayers with assets of at least $10 million and that follow Generally Accepted Accounting Principles (GAAP) to prepare certified financial statements and records for research costs following ASC 730. Taxpayers are provided a federal credit for increasing research activities under IRC Section 41; the state of California has decided to follow the same directive for California business entity taxpayers.

For more information about the federal credit, click here.