The IRS has issued a directive to tax examiners in the Large Business and International Division (LB & I) that taxpayers may use ASC 730 Financial Statements that follow US Generally Accepted Accounting Principles (GAAP) as evidence of their qualified research expenses (QRE's) to reduce the burden of independent determination on both taxpayer and examiner. The directive applies only to original returns timely filed (including extensions) on or after Sept. 11, 2017.
The LB & I taxpayers (those with assets of at least $10 million) who follow GAAP to prepare their Certified Audited Financial Statements must show the amount of the currently expensed ASC 730 Financial Statement R & D (as a separate line in the income statement or as a separately stated footnote) and attach a certification statement.
The research and development credits are thought to be preserved in Trump's tax plan. To discuss the above and any long term tax strategies contact your professional at UHY LLP in one of our many locations.