The updated Form 6765 now includes mandatory sections E and F for all taxpayers, while section G is optional for tax years before 2025 and mandatory starting in 2025.
The US Internal Revenue Service (IRS) has introduced a revised Form 6765, Credit for Increasing Research Activities, also known as the Research Credit, requiring taxpayers to provide additional information to claim the research credit.
The updated form includes three new sections: E, F, and G. Completion of sections E and F is mandatory for all taxpayers. Section G remains optional for tax years beginning before 2025 and will become mandatory starting in 2025. The IRS has also released accompanying instructions to guide taxpayers in completing the updated form.
Section E — Other Information
Section E requires taxpayers to disclose details on the total business components generating qualified research expenditures (QREs), including officer wages, significant acquisitions or dispositions of a trade or business, new expenditure categories, and compliance with the ASC 730 directive.
Taxpayers are required to report research and development (R&D) on their financial statements under Accounting Standards Codification (ASC) 730. ASC 730-10-50-1 states that, “Disclosure shall be made in the financial statements of the total research and development costs charged to expense in each period for which an income statement is presented. Such disclosure shall include research and development costs incurred for a computer software product to be sold, leased, or otherwise marketed.”
Section F — Qualified Research Expenses Summary
Section F of the new Form 6765 requires taxpayers to detail the categories of costs that make up Qualified Research Expenses (QREs), such as wages, supplies, and contract research.
Section G — Business Component Information
The updates in Section G mandate taxpayers to provide detailed qualitative and quantitative information for each business component generating Qualified Research Expenses (QREs). This includes reporting entity details, business component, and software types (if applicable), the information sought to be discovered, and a breakdown of costs such as direct research, supervision, and support wages, supplies, computer rentals or leases, and contract research expenses.
For tax years starting before 2025, Section G is optional for all filers. Beginning after 2024, it becomes mandatory unless the taxpayer qualifies for one of these exceptions:
- Qualified Small Business (QSB) taxpayers claiming a reduced payroll tax credit.
- Taxpayers with total QREs equal to or less than USD 1.5 million (at the control group level) and gross receipts equal to or less than USD 50 million claiming a research credit on an original return.
The IRS released the Form 6765, Credit for Increasing Research Activities, on 21 June 2024.
