IRS provides final regulations on R&D credit controlled group allocations

Tax Hot Topics newsletterThe IRS has issued final regulations (T.D. 9832) on the allocation of the research and development tax credit to members of a controlled group. The regulations mirror the earlier temporary regulations issued in 2015 and became effective April 2.

Temporary regulations were issued in 2015 to implement changes made to Section 41 in the American Taxpayer Relief Act of 2012. Under the prior statute and related regulations, controlled groups were required to calculate the R&D credit at the group level and allocate it back to the group members based on each member’s separately calculated credit. The changes made to the statute, and the now-final regulations require that the group credit be allocated to each member based on the member’s qualified research expenditures. For more information on the 2015 temporary regulations, please click here.

Sharon Kay
Washington National Tax Office
T +1 202 861 4140

Mark Andrus
Strategic Federal Tax Services
T +1 214 283 8190

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