In the News

IRS Facing New Challenge on R&D Tooling Costs, Tax Notes

November 01, 2018

Morgan Lewis partner Alex Sadler is quoted in an article by Tax Notes about the IRS’ position on tooling costs and whether they should be considered qualified research expenses (QREs). Sadler draws from his successful 2009 representation for TSK of America Inc. in Tax Court in which it was determined that molds and prototypes used for production are eligible for research credit. Sadler notes in the in the article that determining whether tooling costs are QREs “are highly factual issues” and an explains that in these instances the costs were “specially designed by the taxpayer for its customers and subjected to a battery of testing to ensure they met the end customers’ requirements.”

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