R&D tax audit preparation: before you start

Identify the claim

• The company and the tax year.
• The state where the research was performed, and whether it runs a credit program.
• The business components listed in Section G of Form 6765. Each becomes a project with its own documents step.

Assemble the forms

• Form 6765 for the year, and the prior-year forms for the base amount.
• The state credit form or schedule, where there is one.
• The calculation workbook behind the amounts.

Assemble the evidence, per project

Use the evidence checklist. The eleven categories are payroll, time tracking, project documents, tickets and commits, specifications, test results, contracts, supply invoices, work locations, entity records and prior-year returns. Company records such as the payroll register can be added to every project.

Check coverage

The coverage page lists which tracks are assessed. In a state with no program you get a federal-only audit.

Keep the limits in mind