81 FR 76496 - Credit for Increasing Research Activities; Correction

DEPARTMENT OF THE TREASURY
Internal Revenue Service

Federal Register Volume 81, Issue 213 (November 3, 2016)

This document contains corrections to final regulations (TD 9786) that were published in the Federal Register on Tuesday, October 4, 2016 (81 FR 68299). The final regulations provided guidance regarding the application of the credit for increasing research activities.

[Federal Register Volume 81, Number 213 (Thursday, November 3, 2016)]
[Rules and Regulations]
[Pages 76496-76497]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26522]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9786]
RIN 1545-BC70


Credit for Increasing Research Activities; Correction

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Correcting amendment.

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SUMMARY: This document contains corrections to final regulations (TD 
9786) that were published in the Federal Register on Tuesday, October 
4, 2016 (81 FR 68299). The final regulations provided guidance 
regarding the application of the credit for increasing research 
activities.

DATES: This correction is effective November 3, 2016 and is applicable 
on or after October 4, 2016.

FOR FURTHER INFORMATION CONTACT: Martha Garcia or Jennifer Records of 
the Office of Associate Chief Counsel (Passthroughs and Special 
Industries) at (202) 317-6853 (not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Background

    The final regulations (TD 9786) that are the subject of this 
correction are under section 41 of the Internal Revenue Code.

Need for Correction

    As published, the final regulations (TD 9786) contain errors that 
may prove to be misleading and are in need of clarification.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Correction of Publication

    Accordingly, 26 CFR part 1 is corrected by making the following 
correcting amendments:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority: 26 U.S.C. 7805 * * *


0
Par. 2. Section 1.41-4(c)(6)(viii) is amended by:
0
a. Revising the fifth sentence of Example 14 paragraph (ii).
0
b. Revising the fifth sentence of Example 17 paragraph (i).
    The revisions read as follows:


Sec.  1.41-4  Qualified research for expenditures paid or incurred in 
taxable years ending on or after December 31, 2003.

* * * * *
    (c) * * *
    (6) * * *
    (viii) * * *

    Example 14. * * *
    (ii) * * * If X's research activities related to the development 
or improvement of Subset B constitute qualified research under 
section 41(d), without regard to section 41(d)(4)(E), and the 
allocable expenditures are qualified research expenditures under 
section 41(b), X may include $6,250 (25% x $25,000) of the software 
research expenditures of Subset B in computing the amount of X's 
credit, pursuant to paragraph (c)(6)(vi)(C) of this section.
* * * * *

    Example 17. * * *
    (i) * * * The ability to use the idle employees' computers would 
save X significant costs because X would not have

[[Page 76497]]

to buy new hardware to expand the computing power. * * *
* * * * *

Martin V. Franks,
Chief, Publications and Regulations Branch, Legal Processing Division, 
Associate Chief Counsel, (Procedure and Administration).
[FR Doc. 2016-26522 Filed 10-31-16; 4:15 pm]
 BILLING CODE 4830-01-P