United States Second Circuit

In a corporation's request for a research credit for three research projects conducted at its production plants, the Tax Court's conclusion that the corporation was entitled to a credit for only those additional supplies that were used to perform the reseach, and not for the entire amount spent for the supplies, is affirmed, as the Commissioner's interpretation of section 1.41-2(b)(2) of the Treasuring Regulations, that supply costs are indirect research expenditures if they would have been incurred regardless of any research activities, is entirely consistent with the purpose of the research tax credit, which is to provide a credit for the cost that a taxpayer incurs in conducting qualified research that he would not otherwise incur. Here, affording a credit for the costs of supplies that the taxpayer would have incurred regardless of any qualified research it was conducting simply creates an unintended windfall.

Appellate Information

• Decided 09/07/2012
• Published 09/07/2012

Judges

• Korman,

Court

• United States Second Circuit

Counsel