Examples of Contemporaneous Documentation Helpful in Supporting Your R&D Tax Credit
Taxpayers claiming the R&D tax credit should gather contemporaneous documentation that supports how each qualifying R&D activity and business component meets the IRS qualification requirements. Below is a breakdown of the common types of documentation they would likely be generated during the development process and that are typically helpful in supporting your credit. Note: This is not an exhaustive list and a taxpayer is not required to provide examples from each of these categories and subcategories (this is just intended to be a helpful list of common types of documentation that are generated and collected).
1. Technical & Project Documentation (Permitted Purpose Test)
Project Charters & R&D Plans – Outlining objectives, technical uncertainties, and development roadmaps.
Design Documents & Technical Specifications – Illustrating proposed functionality, iterations, and feasibility considerations.
Product Development Roadmaps – Showing the timeline and milestones for various stages of development.
Meeting Minutes & Internal Memos – Highlighting discussions around technological advancements and challenges.
2. Experimentation & Testing Records (Process of Experimentation Test)
Prototype Development Records – Detailing iterations of the business component(s) and adjustments made.
Lab Notebooks & Engineering Logs – Capturing real-time observations, design changes, and experimental results.
Test Plans & Results – Including performance testing, software/hardware validation reports, and stress testing results.
Version Control & Code Repositories – If software-related, GitHub or similar logs tracking coding efforts and iterations.
3. Technical Challenges & Uncertainty (Technological Uncertainty Test)
Emails & Internal Communications – Discussions among engineers, scientists, or developers regarding technical roadblocks.
Bug Reports & Issue Trackers – Showing challenges encountered and resolutions applied.
Change Logs & Decision Logs – Documenting how and why specific technical decisions were made.
Conclusion
By maintaining a robust set of these records, taxpayers claiming the R&D credit can create a strong contemporaneous documentation trail to support their R&D tax credit claim, improving claim defensibility.
