Article
Claim research tax credit with new form 6765
Feb. 17, 2025 · Authored by Travis Riley and Josh Harbin
The IRS posted the new Form 6765, Credit for Increasing Research Activities, and associated instructions to its website on Feb. 10, 2025. Taxpayers must file and comply with the new Form 6765 requirements to claim the research tax credit under IRC Section 41.
In December 2024, the IRS released draft instructions to Form 6765 seeking feedback from taxpayers. The instructions posted Feb. 10, 2025, follow the draft instructions, without any modifications.
Who is affected by new form 6765 requirements?
All taxpayers claiming the research tax credit are required to comply with the new Form 6765 requirements, with some exceptions regarding Section G — Business Component Information.
The instructions to Form 6765 provide that the new Section G — Business Component Information is optional for all filers for tax years beginning before 2025. Section G will be required for tax years beginning after 2024, unless the taxpayer:
- Is a qualified small business as defined under IRC Section 41 and checked the box to claim a reduced payroll tax credit
- Has total qualified research expenses equal to or less than $1.5 million, determined at the controlled group level, and the taxpayer’s gross receipts are equal to or less than $50 million of gross receipts, as determined under IRC Section 448(c)(3)
Background on form 6765
The IRS released an early preview of the Form 6765 modifications in September 2023, asking for comments on the proposed changes. In June 2024, the IRS released an updated draft Form 6765 stating, “The feedback and changes will alleviate taxpayer burden, provide taxpayers with a consistent and predefined format and improve the information received for tax administration.”
What changes with new form 6765 requirements?
In addition to some minor placement revisions for specific items, the new Form 6765 requires taxpayers to complete substantially more information than the previous version.
Some key changes
Additional information is required for members of a controlled group of corporations or group of trades or businesses under common control. There’s also a new Section F — Qualified Research Expenses Summary section to report qualified research expenses (QRE).
Section E — other information
The form adds a new section requiring:
- The number of business components generating qualified research expenses (QREs)
- The amount of officers’ wages included in wage QREs
- Whether any QREs related to an acquisition or disposition of any major portion of a trade or business in the tax year
- Whether any new categories of expenses were included as current year QREs
- Whether any of the QREs were determined under the ASC 730 Directive
Section G — business component information
This new section requires taxpayers to report information regarding its business components, including items such as:
- The controlled group member EIN and principal business activity code
- Business component name and component type
- If the business component is software, then the type of software
- Wage QREs by business component, broken down by activity type
- Supplies, contract research, and rental or lease of computers QREs by business component
Related sections
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.