What do you want your QRE to be?

crop anonymous person calculating profit on smartphone calculator near banknotes

You’ve probably heard some version of this old account joke:

A mathematician, a statistician, and an accountant apply for the same job.

The interviewer calls in the mathematician and asks, “What does two plus two equal?”

The mathematician replies, “Four.”

Then the interviewer calls in the statistician and asks the same question, “What does two plus two equal?”

The statistician says, “On average, four – give or take ten percent, but on average four.”

Then the interviewer calls in the accountant and poses the same question, “What does two plus two equal?”

The accountant gets up, locks the door, closes the shades, sits down next to the interviewer and says, “What do you want it to equal?”

Sadly, this joke describes your R&D credit analysis when you hire an accountant to determine your QRE or your “Qualified Research Expenses.”

The core of your accountant R&D credit analysis is asking your employees to tell the accountant what qualifies for the credit. Your employees are asked if the projects are qualified and if their activities related to the projects are qualified. Question, shouldn’t the accountant be making the accounting decisions?

You may have thought you were hiring the mathematician in the joke above. You may have thought that you were hiring an R&D credit expert who would come in, gather data, analyze the data and make an informed tax decision. Nope, the jokes on you.

When you hire an accountant to compute an R&D credit, they simply ask your employees to make all the tax decisions. The accountant then types what they hear into the spreadsheet and once it’s in the spreadsheet it is treated as absolute truth…until the IRS comes knocking.

There is an alternative. Here at SPRX Technologies we gather your data, analyze the data, apply the tax rules to the data, and compute the credit. What we don’t do is lock the door, close the shades, sit down next to you and ask, “what do you want your QRE to be?”

Have a question? Contact a SPRX tax expert.

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