Favorable Ruling in FedEx Case Provides Opportunity for Financial Institutions Developing Internal-Use Software to Claim the Research Tax Credit
Author: Michael A. Krajcer.
Source: Volume 25, Number 04, March/April 2012 , pp.57-59(3)
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Abstract:
In FedEx Corp. v. United States, a U.S. District Court held that the IRS could not require the FedEx Corporation to apply the so-called “discovery” test in order to claim the research credit for its development of internal-use software. After previously eliminating the test through final regulations, the IRS had tried to resurrect it via an agency announcement. Based on the district court’s ruling, however, financial institutions developing software for internal-use can avail themselves of more favorable standards, which will result in a substantially increased ability to qualify those projects for the research credit.Keywords: Announcement 2004-9, 2004-6 IRB 441; research credit; internal-use software; discovery test; innovative test; FedEx Corp. v. United States
Affiliations:
1: Global Tax Consulting LLC.